State v. Hess Corp..

• Decision Date: 22 March 2011
• Docket Number: No. 2010–082.,2010–082.
• Parties: STATE of New Hampshirev.HESS CORPORATION and another.
• Court: New Hampshire Supreme Court

161 N.H. 426

20 A.3d 212

STATE of New Hampshire

v.HESS CORPORATION and another.

No. 2010–082.

Supreme Court of New Hampshire.

Argued: Nov. 10, 2010.Opinion Issued: Jan. 28, 2011.As Modified on Denial of Reconsideration March 22, 2011.

Michael A. Delaney, attorney general (Mary Maloney, assistant attorney general, on the brief), Sher Leff, LLP, of San Francisco, California (Victor M. Sher on the brief), Law Offices of Matthew F. Pawa, P.C., of Newton Centre, Massachusetts (Matthew F. Pawa and Benjamin A. Krass on the brief, and Mr. Pawa orally), for the plaintiff.Beveridge & Diamond, P.C., of Washington, D.C. (John S. Guttmann and Nessa E. Horewitch on the brief, and Mr. Guttmann orally), and Devine, Millimet & Branch, P.A., of Concord (Peter G. Beeson on the brief), for the defendants.DUGGAN, J.

This case comes before us on an interlocutory transfer without ruling from the Superior Court. See Sup.Ct. R. 9. We accept the facts as presented in the interlocutory transfer. See In re Kotey M., 158 N.H. 358, 359, 965 A.2d 1146 (2009).

In 1991, New Hampshire applied to the United States Environmental Protection Agency's (EPA) reformulated gasoline (RFG) program. The RFG program, which set specifications for formulating gasoline sold in metropolitan areas with high summertime ozone levels, was established by a 1990 amendment to the Clean Air Act and was intended to reduce vehicle-related air pollution. The program did not require gasoline manufacturers to utilize any specific oxygenate in reformulating their products. Instead, that decision was left to individual manufacturers.

Although not required to participate in the RFG program, New Hampshire decided to “opt-in.” The EPA accepted New Hampshire's application—effective January 1, 1995—for Rockingham, Hillsborough, Merrimack and Strafford Counties. Thereafter, between 1995 and 2006, gasoline containing methyl tertiary butyl ether (MTBE), which is a chemical compound that has been used as a gasoline additive to increase octane levels of fuel, was sold throughout the state. During this time, the State alleges that MTBE, which it asserts is a known animal carcinogen and probable human carcinogen, escaped into, and contaminated, the groundwater. In 2001, the State petitioned the EPA to opt-out of the RFG program on an expedited basis because of MTBE contamination, and then banned MTBE as a gasoline additive effective January 1, 2007.

The State exercises significant regulatory control over the State's groundwater and drinking water through the New Hampshire Department of Environmental Services (DES) and pursuant to the New Hampshire Safe Drinking Water Act (SDWA). The Commissioner of DES must adopt “primary drinking water standards” for contaminants in drinking water that “may have an adverse effect on the health of persons.” RSA 485:3, I(a) (2001). These standards include a maximum contaminant level (MCL), which establishes the maximum amount of a given contaminant that may be present in water for human consumption. RSA 485:3, I(b)(1) (2001). For groundwater, DES must also adopt ambient groundwater quality standards (AGQS) for contaminants that “adversely affect human health or the environment,” RSA 485–C:6, I (2001), which must meet drinking water standards, RSA 485–C:1, I (2001). In addition to these standards applicable to all contaminants, the legislature added a section to the SDWA in 1999, which specifically mandates DES to adopt such standards for MTBE. RSA 485:16–a, I (2001).

In 2000, DES, in consultation with the New Hampshire Department of Health and Human Services, established a primary MCL and an equivalent AGQS for MTBE of thirteen parts per billion “based on positive carcinogenic effects observed in experimental animals” reported in the publicly available literature at the time. Additionally, New Hampshire law provides that “[a]ny public water system delivering water with greater than 5 parts per billion of MTBE shall notify each customer of the MTBE content.” RSA 485:16–a, II (2001). However, both the MCL for MTBE and the notification requirement apply only to public water systems. RSA 485:3, I,:16–a. The SDWA defines a “public water system” as a “system for the provision to the public of piped water for human consumption, if such system has at least 15 service connections or regularly serves an average of at least 25 individuals daily at least 60 days out of the year.” RSA 485:1–a, XV (2001). All other wells, whether privately or publicly owned, that serve more than one individual home but do not qualify as a “public water system” are non-public water systems.

In 2003, New Hampshire and several other states filed suit in their respective state courts against several gasoline suppliers, refiners and chemical manufacturers (MTBE defendants) seeking damages for groundwater contamination allegedly caused by MTBE. The MTBE defendants initially removed New Hampshire's case to federal court, and it was subsequently transferred by the Judicial Panel on Multidistrict Litigation to the Southern District of New York and consolidated with numerous other MTBE lawsuits from around the country. Following the denial of its motion to remand, the State filed an interlocutory appeal with the United States Court of Appeals for the Second Circuit, which reversed and vacated the district court's order in May 2007. See In re Methyl Tertiary Butyl Ether (“MTBE”), 488 F.3d 112 (2d Cir.2007). Thus, this case was remanded to Merrimack County Superior Court for trial.

In the meantime, the cities of Dover and Portsmouth brought their own suits against the MTBE defendants. We affirmed the dismissal of these suits in January 2006. See State v. City of Dover, 153 N.H. 181, 891 A.2d 524 (2006). In that decision, we determined that the State, rather than the two cities, was the proper party to bring suit against the MTBE defendants because it “has a quasi-sovereign interest in protecting the health and well-being, both physical and economic, of its residents with respect to the statewide water supply.” Id. at 186, 891 A.2d 524. We also noted that “MTBE contamination has directly affected a substantial portion” of the State's population. Id. at 187, 891 A.2d 524. Accordingly, we held that the State had parens patriae standing to bring suit against the MTBE defendants on behalf of the residents of New Hampshire. Id. at 187–88, 891 A.2d 524.

In August 2009, the MTBE defendants in this case filed a motion for partial summary judgment, seeking to prevent the State from recovering damages

incurred by private individuals or private water supplies, including, but not limited to: (1) damages related to private property; (2) costs of alternative water supplies incurred by private parties; (3) business losses for any private entity; (4) costs of private treatment systems borne by private well owners and private water authorities; (5) increased operating expenses for private water authorities; (6) costs associated with testing/monitoring for MTBE by private parties; (7) costs associated with MTBE remediation at private wells or utilities that were incurred directly by private parties; and (8) any other similar purely private damages.

Additionally, in response to a request from the superior court, the State provided a “general explanation of the categories of damages” it seeks in this case. The State divided its requests into two categories: (1) “Damages Claims for MTBE Contamination at Any Level”; and (2) “Damages Claims for MTBE Contamination At or Above the AGQS/MCL.” With regard to the first category, the State seeks

1. Present and future public water system costs. All present and future costs associated with the presence of MTBE at any level in public water systems, including the full costs of treatment and removal of MTBE at any level.

2. Present and future private well and non-public water system costs. All present and future costs of implementing and maintaining a comprehensive, statewide investigation, monitoring and treatment program for private wells and other unregulated ... water systems, including the full costs of treatment and removal of MTBE at any level.

With regard to the second category, the State seeks

3. Past public and private well costs. All past public and private well costs associated with MTBE reimbursed through State reimbursement funds.... Because State fund expenditures are linked to the MCL for MTBE, the State is not seeking past public and private well costs associated with the presence of MTBE below the MCL.

4. Site remediation costs. All past, present and future costs paid by the State reimbursement funds ... attributable to the presence of MTBE at contaminated sites.

The Superior Court held a hearing on the defendants' motion and proposed an interlocutory transfer. Pursuant to Supreme Court Rule 9, the Superior Court ( Fauver, J.) transferred the following questions:

1. If the State is the trustee of the waters of New Hampshire, do all costs of investigating, monitoring, treating, remediating, replacing or otherwise restoring state water contaminated by MTBE, regardless of whether the MTBE is detected in a privately or publicly owned well, constitute damages the State is entitled to recover on its own behalf?

2. Did City of Dover hold that recovery of private damages to the State is permissible, or specifically authorized, in a parens patriae action?

Based upon the record available to us at this time, we hold, as explained below, that the State is not precluded from recovering damages related to MTBE contamination in a privately owned well. We remand to the Superior Court to determine the exact scope of damages available to the State within the limits explained below. Based upon our answer to the first question, we deem it unnecessary to reach the second question.

The MTBE defendants conceded at oral argument that the State may recover damages to test and treat statutorily defined public water systems. Thus, the crux of the current...