On May 27, 2016, Vermont’s Supreme Court, in State of Vermont v. Atlantic Richfield Company, et al., ruled that the State of Vermont’s “generalized injury” claims “to state waters as a whole due to groundwater contamination from gasoline additives” are not exempted from Vermont’s six-year statute of limitations for civil claims. The Court affirmed the trial courts dismissal of the State’s claims as time-barred, and confirmed that “the trial court properly interpreted [12 Vt. Stat. Ann.] § 462 as limited to claims of adverse possession” and, in addition, recently enacted 10 Vt. Stat. Ann. § 1390 did not “create a new cause of action that was retroactively enforceable, [empowering] the State to apply the statute to injuries discovered more than six years prior to its complaint.”

In June 2014, the State of Vermont filed a lawsuit claiming that dozens of gasoline delivery facilities knowingly distributed gasoline that was contaminated with methyl tertiary butyl ether (MTBE), an additive that is linked to a variety of adverse health effects. The State claimed that the contaminated gasoline had caused “generalized injury” to Vermont’s groundwaters through years of spills and releases by defendants and through ordinary consumer activities that used the gasoline (the operation of snowmobiles, watercraft and lawnmowers). It advanced claims based on 10 V.S.A. §§ 1390 and 1410, public and private nuisance, trespass, negligence, strict liability for design defect and defective product, strict liability for failure to warn, and civil conspiracy.

Defendants argued that, because Vermont had enacted a ban on MBTE use roughly nine years prior to its suit, this meant that the State was aware of any alleged injury to Vermont’s groundwater for more than six years, which is the State’s statute of limitations for civil actions. In response, Vermont pointed to a state law dating back to 1785 that exempts “lands belonging to the state” from any statute of limitations, and argued that the exemption applied because groundwaters were held in public trust by the State of Vermont, 12 Vt. Stat. Ann. § 462. Alternatively, it argued that its “claims arising under 10 V.S.A. § 1390, a statute that establishes a state policy that the groundwater resources of the state are held in trust for the public, are not time barred because that statute became effective less than six years before the State filed its complaint.” It further argued that because the “MTBE plumes continue to migrate and spread across the State, each new contamination creates a new cause of action under the continuing tort doctrine thus preventing the limitations period from running.”

In January 2015, the superior court dismissed the State’s claims and ruled that the statute of limitations exemption applies only to claims regarding ownership of the State’s real property, and not to all claims for injury related to real property belonging to the State.

The Supreme Court of Vermont upheld the lower court’s reading of the statute and ruled that the exemption does not apply to allegations of generalized injury to State groundwaters as a whole just because the waters belong to the State, but noted that its ruling does not necessarily apply to more specific sites of alleged groundwater contamination. It noted:

“The Legislature’s 1802 extension of [12 Vt. Stat. Ann. §] 462 to bar the application of all statutes of limitations to lands belonging to the state, as opposed to only the statute of limitation in the 1785 quieting act, does not 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.”

The Court recognized that its decisions have consistently reinforced the understanding that 12 Vt. Stat. Ann. § 462 was “designed to prevent adverse-possession claims with respect to interests in state property, or property dedicated to a public, pious, or charitable use.” This led to its conclusion that 12 Vt. Stat. Ann. § 462 “does not purport to apply to all claims relating to lands belonging to the state.” It further confirmed that “sound policy considerations reinforce our longstanding interpretation” ─ “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.'”

The Court further rejected the State’s argument that 10 Vt. Stat. Ann. § 1390 “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.” However, it left open whether 10 Vt. Stat. Ann. § 1390 “created a new cause of action in favor of the State.” But, even if it did, the Court concluded that even if it did “create a new cause of action that was retroactively enforceable, that would not empower the State to apply the statute to injuries discovered more than six years prior to its complaint.” Importantly, the Court recognized that:

“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 of 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 [10 Vt. Stat. Ann.] § 1390 based on conduct and injuries discovered decades ago, without limitation.”

It reasoned that “[w]hen 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.”

This well-reasoned opinion has clarified these vexing issues, which will benefit all litigants in the future.