Rhode Island v. Atl. Richfield Co.

• Decision Date: 11 December 2018
• Docket Number: C.A. No. 17-204 WES
• Citation: 357 F.Supp.3d 129
• Parties: State of RHODE ISLAND, Plaintiff, v. ATLANTIC RICHFIELD COMPANY et al., Defendants.
• Court: U.S. District Court — District of Rhode Island

357 F.Supp.3d 129

State of RHODE ISLAND, Plaintiff,

v.ATLANTIC RICHFIELD COMPANY et al., Defendants.

C.A. No. 17-204 WES

United States District Court, D. Rhode Island.

Signed December 11, 2018

Benjamin Krass, Haens Berman Sobol Shapiro, LLP, Newton Centre, MA, Carla Burke Pickrel, Baron & Budd, P.C., Dallas, TX, Michael Rubin, Neil F.X. Kelly, Rhode Island Dept. of Attorney General, Rebecca Tedford Partington, Attorney General's Office, Sean H. Lyness, R.I. Office of the Attorney General, Providence, RI, William A. Walsh, Weitz & Luxenberg, New York, NY, for Plaintiff.

Bradley H. Weidenhammer, J. Andrew Langan, Andrew R. Running, Kirkland & Ellis LLP, Lisa S. Meyer, Nathan P. Eimer, Pamela R. Hanebutt, Eimer Stahl LLP, Mary Rose Alexander, Latham & Watkins LLP, Chicago, IL, John A. Tarantino, Nicole J. Benjamin, Patricia K. Rocha, Kyle M. Zambarano, Adler Pollock & Sheehan P.C., Matthew Thomas Oliverio, Oliverio & Marcaccio LLP, Stacey P. Nakasian, Duffy & Sweeney, Ltd., John E. Bulman, Stephen J. MacGillivray, Pierce Atwood, LLP, Mark P. Dolan, Rice Dolan & Kershaw, Douglas J. Emanuel, Robert D. Fine, Chace, Ruttenberg & Freedman, LLP, Gerald J. Petros, Ryan M. Gainor, Hinckley, Allen & Snyder LLP, Paul M. Sanford, Benjamin C. Caldwell, Burns & Levinson LLP, Jeffrey M. Padwa, Padwa Law LLC, Timothy K. Baldwin, Robert G. Flanders, Jr., Whelan, Corrente, Flanders, Kinder & Siket LLP, Providence, RI, Charles C. Correll, Jr., Jeremiah J. Anderson, King & Spalding LLP, Amy E. Parker, Carlton D. Wilde, III, Christopher L. Dodson, Bracewell LLP, Christopher H. Domingo, Diane L. Myers, Jones Day, Gabriel D. Kaim, Jessica Farley, Stephen Dillard, Norton Rose Fulbright U.S. LP, Houston, TX, James L. Messenger, Brian J. Wall, Gordon Rees Scully Mansukhani LLP, Shanna M. Boughton, LeClairRyan, Deborah E. Barnard, Michael T. Maroney, Holland & Knight LLP, Traci L. Lovitt, Jones Day, Boston, MA, Peter Condron, Crowell & Moring LLP, Christopher Danley, Joshua B. Frank, Baker Botts LLP, John S. Guttmann, Nessa Horewitch Coppinger, Beveridge & Diamond, PC, Matthew D. Thurlow, Latham & Watkins LLP, Washington, DC, James Anthony Pardo, Lisa Gerson, McDermott Will & Emery, James D. Herschlein, Glenn J. Pogust, Arnold & Porter Kaye Scholer, Daniel M. Krainin, Beveridge & Diamond, P.C., New York, NY, Erika M. Anderson, James F. Bennett, Kelly J.H. Murrie, Dowd Bennett LLP, St. Louis, MO, for Defendants.

OPINION AND ORDER

WILLIAM E. SMITH, Chief Judge.

The State of Rhode Island brings this case against various oil and chemical companies alleging that they collectively caused the widespread contamination of the State's waters by a hazardous gasoline additive — methyl tertiary butyl ether ("MTBE"). Defendants move to dismiss¹ the whole of the State's case, with limited success. (ECF No. 91).

I. Background²

MTBE is a synthetic gasoline additive that acts as an oxygenate, increasing gasoline's oxygen content. (Compl. ¶¶ 34, 61.) Oil companies began adding MTBE to gasoline in small doses beginning in the late 1970s. (Id. ¶ 55.) These companies escalated the amount of MTBE they used in the 1990s, after Congress required an increase in the oxygen content of gasoline sold in certain markets to combat smog. (Id. ¶¶ 59–62.) One of several options, MTBE soon became the oxygenate du jour, not because it was more effective or easier on the environment, but because it was the least expensive to manufacture, and therefore helped the oil industry turn the biggest profit. (Id. ¶ 61.) Gasoline continued to be laced with a sizable volume of MTBE into the 2000s, until states began instituting bans on its use like the one the Rhode Island General Assembly enacted in 2005. (See id. ¶ 185.)

The bans materialized as evidence of MTBE's severe impact on the environment became too great to ignore. (Id. ¶¶ 178–82.) MTBE, it turns out, was the most menacing component of the gasoline to which it was added: it is more water soluble and resists biodegradation better than the conventional constituents of gasoline; it is a known animal and suspected human carcinogen; and gives water a turpentine odor and chemical taste, rendering it unfit for human consumption at concentrations as low as one part per billion. (Id. ¶¶ 37–42.) "In sum," the State alleges, "when MTBE is released into the environment, it migrates far[ ] and fast[ ] through soil and groundwater, penetrates deeply into aquifers, ... and results in persistent contamination that is costly to address." (Id. ¶ 43.)

Worse is that the oil industry, including Defendants, knew this about MTBE early on, but instead of alerting the public or switching to a safer oxygenate, waged an obfuscation campaign, downplaying the risks it knew about and frustrating government efforts to learn more. (Id. ¶¶ 74–176.) As early as 1980, for example, certain Defendants learned of a serious incident of MTBE contamination in Rockaway, New Jersey, followed later in the decade by MTBE plumes discovered in Maryland and New York. (Id. ¶¶ 87–93.) These episodes fouled the water used by thousands, stalled residential development, and required the monitoring of regulators years after the initial contamination event. (Id. ¶¶ 87–92.) And all this before MTBE's '90s heyday. (Id. )

The science explaining the persistence of MTBE plumes was provided in a report authored in 1986 by the Maine Department of Environmental Protection. (Id. ¶¶ 94–95.) The report supplied evidence of the qualities, listed above, that make MTBE a potent environmental contaminant, and advised that MTBE be banned or that gasoline containing it be stored in double-lined tanks. (Id. ) Industry considered the report's recommendations not as a way to prevent future environmental damage, but rather as a "possible grave concern to the oxygenate producers" among them. (Id. ¶ 98.) They publicly assailed the report as "reactionary, unwarranted and counter-productive," while internally recognizing the plausibility of — and eventually replicating — its scientific conclusions. (Id. ¶¶ 99, 102.)

The federal government had suspicions of its own in the 1980s that MTBE might be a danger to the environment, and recommended further testing be done. (Id. ¶¶ 111–14.) Industry again sensed a threat, and in a concerted effort to assuage government concerns with disinformation, formed what they called the "MTBE Committee." (Id. ¶¶ 112, 115–16.) One of the Committee's first orders of business was to submit written comments regarding MTBE to the Environmental Protection Agency ("EPA"). (Id. ¶¶ 117, 120–21.) By then aware of the plumes on the East Coast and the work done by the Maine Department of Environmental Protection sounding the alarm bells about MTBE, the Committee wrote to the EPA in 1987 that "there is no evidence that MTBE poses any significant risk of harm to health or the environment, that human exposure to MTBE and release of MTBE to the environment is negligible, ... and that testing is therefore not needed." (Id. ¶¶ 120–21 (alteration omitted).) In fact, wrote the Committee, "requiring long term testing of MTBE will have a significant adverse environmental and economic impact," because such testing would slow demand for what they assured the EPA was an environmentally sound product. (Id. ¶ 121.) These and other efforts by industry were effective in convincing the EPA to delay testing on the effects of MTBE, which paved the way for the ramp up in production that occurred after amendments to the Clean Air Act passed in 1990. (See id. ¶¶ 126, 137, 146.)

Throughout the 1990s and into the 2000s, Defendants helped sustain the bull market in MTBE by continuing to feed the EPA what they knew were half-truths about MTBE's propensity to hurt the environment. (Id. ¶¶ 171–72.) As late as 1994, an industry representative wrote that there was "no basis to question the continued use of MTBE." (Id. ¶ 171.) And when, in 1996, the efficacy of MTBE as a groundwater contaminant could no longer be denied, an oil trade association invented a clever bit of spin, writing that MTBE's special powers of adulteration allow it to "serve as an early indicator of gasoline contamination in groundwater, triggering its cleanup and remediation." (Id. ¶¶ 173–74.) Pollution as public service. (See id. )

Demand for MTBE was so great by the mid-1990s that the amount of it produced in the United States was eclipsed by only one other organic compound. (Id. ¶ 177.) And more than a negligible amount ended up in the country's water: the United States Geological Survey reports that MTBE is the second-most detected chemical in groundwater, and has found MTBE-contaminated wells across the country, including in 20 percent of aquifers where MTBE was once prevalent in gasoline. (Id. ¶¶ 178–80.) Data such as these led to the EPA announcing that MTBE "has caused widespread and serious contamination," representing a "threat to the nation's drinking water resources." (Id. ¶ 180.)

Rhode Island did not escape the scourge. (See id. ¶¶ 183–89.) By predictable leaks and spillage up and down the gasoline distribution chain, as well as inevitable mishandling by consumers, MTBE has contaminated groundwater in the state, including public and private drinking water supplies. (Id. ¶¶ 35–36, 183.) Despite the state-wide ban on MTBE, contamination continues to spread as MTBE slithers its way across Rhode Island's water table. (Id. ¶¶ 184, 186.) This suit is the State's attempt to secure compensation from those it avers are responsible for the havoc MTBE has wreaked in the state. (Id. ¶¶ 11, 189, 192–296.) Its hopes for doing so hang on the fate of the nine causes of action it asserts — all of which Defendants claim are wanting as a matter of law.

II. Discussion

The Court treats below the issues raised in Defendants' motion to dismiss seriatim, keeping in mind that to survive, the State's Complaint "must contain factual allegations that ‘raise a right to relief above the speculative level, on the assumption that all the allegations in the complaint are true...