HARVEY BARTLE, Judge.
Before the court is the motion of defendant Lockheed Martin Corporation ("Lockheed") for summary judgment as to certain counts of the first amended complaint.
Plaintiffs, Alicia V. Barnes, Commissioner of the U.S. Virgin Islands Department of Planning and Natural Resources (the "Commissioner"), and the Government of the Virgin Islands have filed this multi-count environmental lawsuit against defendants who at various times owned portions of an industrial tract in Kingshill, St. Croix on which both an alumina refinery and an oil refinery have operated. They are Century Aluminum Company ("Century"), Virgin Islands Alumina Corporation ("VIALCO"), St. Croix Alumina, LLC ("SCA"), Lockheed, Alcoa World Alumina, LLC, ("Alcoa"), St. Croix Renaissance Group, LLLP ("SCRG"), HOVENSA, LAC ("HOVENSA") and Hess Oil Virgin Islands Corporation ("HOVIC").
The six counts in the first amended complaint relate to alleged environmental damage allegedly caused by the defendants' operation of the two refineries. In Count I, the Government of the Virgin Islands alleges that defendants are strictly liable for the environmental damage because they engaged in an abnormally dangerous activity. The Government avers in Count II that defendants are liable for environmental damage due to their negligence and in Count III that defendants acted negligently per se by failing to comply with certain Virgin Islands environmental laws and an order from the federal Environmental Protection Agency. Count IV pleads that the defendants' discharge of certain chemicals constitutes a public nuisance. Count V asserts defendants' liability to the Government for environmental damage under the Virgin Islands Oil Spill Prevention and Pollution Control Act, 12 V.I.C. § 701, et seq. Finally, in Count VI, the Commissioner has brought a claim under the federal Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA"), 42 U.S.C. § 9607, to recover for alleged natural resources damage to the environs surrounding the refineries.
Lockheed seeks summary judgment in its favor on Counts I through IV and Count VI to the extent plaintiffs seek in those counts to recover for alleged environmental damage to the ground water under the portion of the industrial tract that Lockheed previously owned. The issue before the court is limited to whether Lockheed had an ownership interest in the ground water so as to preclude any claims under CERCLA and the common law counts.
Summary judgment is appropriate "if the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(c)(2);
The following facts are undisputed or are viewed in the light most favorable to plaintiffs, the non-moving parties.
The property at issue in this litigation consists of approximately 1,400 acres on St. Croix's southern shore and is known as the South Coast Industrial Area. It is bounded by the Caribbean Sea on the south, Route 68 on the north, and Route 62 on the east, and contains the Alucroix Channel and an important commercial port. There is no dispute that the Kingshill Aquifer lies beneath the South Coast Industrial Area. The land of this industrial property consists of an eastern tract which is occupied by an oil refinery and a western tract on which once operated an alumina refinery. This motion concerns only the western tract, which we will refer to as the "alumina property."
Title to the alumina property, which lies above a portion of the Kingshill Aquifer, passed from Christian VII, King of Denmark, to its present owner, SCRG, in a series of transactions and devises spanning nearly 250 years. The details of these transactions and devises are undisputed and were explained in detail in the court's Memorandum of March 11, 2011.
Sometime between 1917 and 1962, the Government acquired title to what is now the alumina property from the West Indian Sugar Factory, Limited, a Joint Stock Company. On February 20, 1962, the Fourth Legislature of the Virgin Islands approved Act No. 814, which authorized the conveyance of several parcels of land to Harvey Alumina Virgin Islands, Inc. ("Harvey") for the purpose of the construction of an alumina refinery. At the time the Legislature passed Act No. 814, the parcels of land contained no industrial development, no channel, and no port.
Act No. 814 ratified and incorporated by reference an earlier agreement between Harvey and the Government (the "Grant Agreement"). The Grant Agreement contemplated that Harvey would construct an alumina refinery and a "channel and turnabout area" for access to the property. It delineated the various benefits and financial subsidies that the Government would bestow upon Harvey for the economic development of this parcel, including pre-approval of necessary zoning, exemptions from various taxes, fees, and duties, and reimbursement to Harvey from the Government for the costs of constructing the channel.
The Grant Agreement also specified that the conveyance of land from the Government to Harvey would include "without limitation (i) all mineral, riparian and littoral rights thereunto pertaining, (ii) all adjacent tidal flats, lagoons, shorelands and beaches, and (iii) all structures, substructures and improvements, if any, thereon." The Government promised to convey to Harvey the subject real property "in fee simple absolute, free and clear of all liens, charges, encumbrances, reservations, leases, tenancies, and restrictions on use, sale, exchange, mortgage, pledge or transfer, in whole or in part, whatsoever, except as may otherwise be agreed upon between Harvey and the Government." The Grant Agreement further provided, "The terms and provisions of this Agreement being contractual and proprietary in nature, it is understood and expressly declared that the Government will not adopt any legislation impairing or limiting the obligation of this contract."
In passing Act No. 814 and ratifying the Grant Agreement, the Legislature of the Virgin Islands found that the arrangement between the Government and Harvey was in the best interest of the people of the Virgin Islands. It concluded the deal would decrease the Territory's economic dependence on tourism, improve public infrastructure in the form of a new channel and pier, and create new and needed capacity for power and water generation.
After Act No. 814 became law, the Governor of the Virgin Islands signed a deed on May 16, 1962 transferring title of the alumina property to Harvey. The deed provided in part:
On May 16, 1962, the Government executed a quitclaim deed to the same real property. The quitclaim deed also included the language quoted above. Neither the deed nor the quitclaim deed specifically addressed title to ground water.
Harvey completed the construction of the alumina refinery in 1965.
12 V.I.C. § 151.
In 1972, after Martin Marietta Corporation gained a controlling share in Harvey's parent company, Harvey was renamed Martin Marietta Aluminum, Inc. ("Martin Marietta"). Martin Marietta processed alumina at the refinery until May 1985. It has since merged into defendant Lockheed.
In May 1989, VIALCO purchased the alumina refinery from Martin Marietta and processed alumina there until January 1995. In April 1995, Century acquired VIALCO, and in July 1995, VIALCO sold the alumina property to SCA. SCA, a subsidiary of Alcoa, owned the refinery between July 1995 and 2002 but operated the refinery only between 1998 and 2000. SCA sold the alumina property to SCRG, its current owner, in 2002. SCRG has never operated the refinery. The court will refer to Lockheed, VIALCO, SCA, Alcoa, and SCRG collectively as the "Alumina Defendants."
As noted above, the plaintiffs contend in this lawsuit that the Alumina Defendants' operation of the alumina refinery damaged the natural resources of the Virgin Islands. Plaintiffs allege that these defendants are responsible for a high-pH substance known as "red mud," an environmentally deleterious byproduct of alumina refining, which has caused injury to the environment of the Virgin Islands by contaminating, among other things, the ground water beneath the alumina property.
In its motion for summary judgment, Lockheed argues that the Alumina Defendants had exclusive ownership and control of the ground water on the alumina property as a result of the deeds that Harvey, their predecessor in interest, obtained from the Government. In Lockheed's view, the plaintiffs surrendered any interest in that ground water through the conveyances described above. Lockheed asserts that this surrender is fatal to the Government's common law claims in Counts I through IV and the Commissioner's CERCLA claim in Count VI of the first amended complaint.
As a preliminary matter, plaintiffs maintain that the court resolved the issue of ground water ownership in deciding an earlier motion for summary judgment. Defendant SCRG, which has now settled with plaintiffs, previously moved for summary judgment with respect to Count VI to the extent the Commissioner sought to recover under CERCLA for natural resource damage that red mud allegedly caused to the water in the Alucroix Channel.
The parties have not cited and the court has not found any Virgin Islands statute or case law specifically addressing whether a transfer of real property in fee at the time in question also conveyed ownership of ground water beneath that property. Accordingly, we must look to the common law as required in 1 V.I.C. § 4. It reads:
The American Law Institute's Restatement of the Law of Property states that the extent to which a fee simple estate includes percolating waters beneath the surface of real property is set forth in the Restatement of the Law of Torts.
Nonetheless, courts in the United States, while applying the English rule of ownership, have incorporated prohibitions on wasteful uses of water as well as protections for the wells and springs of adjacent property owners.
After surveying the various common law schemes, the Restatement sets forth a rule of tort liability that subjects overlying property owners to liability only if they make certain unreasonable uses of the ground water beneath their property or cause unreasonable harm to others.
Although property owners have the right to capture and use water found beneath their property, the Restatement of the Law of Torts makes it explicitly clear that "[t]here is no riparian right or privilege to pollute water, nor do landowners have rights to pollute surface and ground water found on or within their land."
When the Government sold to Harvey the parcels of real property on which the alumina refinery now stands, it transferred "the entire interest" that it "[had] and [had] the power to convey." 28 V.I.C. § 2.
We consider first whether Lockheed is entitled to summary judgment on Count VI under CERCLA. To prevail on its CERCLA claim, the Commissioner must prove the existence of "damages for injury to, destruction of, or loss of natural resources." 42 U.S.C. § 9607(a)(4)(c). As defined by CERCLA, "natural resources" means "land, fish, wildlife, biota, air, water, ground water, drinking water supplies, and other such resources belonging to, managed by, held in trust by, appertaining to, or otherwise controlled by" the Government of the Virgin Islands.
The definition of "natural resources" in § 9601(16) does not reach "purely private resources."
The parties have not cited and the court has not found any cases defining "purely private resources," explicating "governmental . . . interests in privately-owned property," or further elaborating on the statutory definition of "natural resources" in § 9601(16). Regulations promulgated by the Department of the Interior ("Interior") add nothing to the statutory definition.
Following a remand from the Court of Appeals for the District of Columbia Circuit to Interior in the
Natural Resource Damage Assessments, 59 Fed. Reg. 14,262, 14,268 (Mar. 25, 1994). Accordingly, federal law and the law of the Virgin Islands determines whether and to what extent the water beneath the alumina property is ground water "belonging to, managed by, held in trust by, appertaining to, or otherwise controlled by" the Commissioner, the Virgin Islands' natural resources trustee. 42 U.S.C. § 9601(16).
Virgin Islands law gives DPNR, over which the Commissioner presides, expansive authority over the water within the Territory's boundaries. The Legislature enacted the WRCA in 1965 "in recognition of its sovereign duty to conserve and control its water resources for the benefit of the inhabitants of the United States Virgin Islands" and in order to remedy "an emergency condition [that] exists with respect to the availability of surface and underground water in the United States Virgin Islands." 12 V.I.C. §§ 151, 152(d). The WRCA authorizes the DPNR to perform "comprehensive planning and regulation" of the Territory's waters in order to ensure a supply of water for competing uses now and in the future.
In 1976, the Virgin Islands enacted the Water Pollution Control Act ("WPCA"), 12 V.I.C. §§ 181-98. The WPCA states that it is the government's policy, among other things, "to provide that no waste be discharged into any waters of the United States Virgin Islands without first receiving the necessary treatment or other corrective action to protect the legitimate beneficial uses of such waters; [and] to provide for the prevention, abatement and control of new or existing water pollution."
Lockheed asserts that the Government was "forbidden" from enacting legislation subjecting the ground water beneath the refinery to government regulation. Lockheed contends that the Grant Agreement reflects the Government's intention to give Harvey and its successors complete dominion over the alumina property. Lockheed observes that the Government promised in the Grant Agreement to convey to Harvey the subject real property "in fee simple absolute, free and clear of all liens, charges, encumbrances, reservations, leases, tenancies, and
Lockheed does not specifically articulate what principle of law prevented the Legislature of the Virgin Islands from subjecting to regulation the ground water beneath the alumina property. In its brief, however, it cites
The Supreme Court has written that the provision in the United States Constitution forbidding a state from impairing the obligation of contracts
There can be no dispute that the Grant Agreement between the Government and Harvey, which was approved by Act No. 814, constitutes a contractual relationship. The Act ratifies and incorporates by reference the Grant Agreement, which "evince[s] a legislative intent to create private rights of a contractual nature enforceable against the State."
The WRCA purports to allow the Commissioner to regulate withdrawals of all ground water in the Virgin Islands even though, as explained above, the Government previously granted to Harvey and its successors ownership of the ground water on the alumina property, which included the right to withdraw and use ground water. RESTATEMENT (SECOND) OF TORTS ch. 41, topic 4, intro. note, § 858 cmt. b (1979). The Virgin Islands Government has acted for the benefit of the people of the Territory because of "an emergency condition . . . with respect to the availability of surface and underground water."
Nonetheless, even if the impairment caused by WRCA were substantial, the Virgin Islands Legislature was acting "to promote the common weal" and exercising powers "for the general good of the public."
The second Virgin Islands statute, the WPCA, cannot be said to impair the Government's obligations under Act No. 814 or the Grant Agreement. The statute authorizes DPNR, among other things, to regulate the discharge of pollutants into the waters of the Virgin Islands.
Lockheed's reliance on
In sum, the Government transferred to Harvey title to the alumina property, which gave Harvey and its successors the right to capture and use but not the right to pollute the ground water beneath that property. Subsequently, the laws of the Virgin Islands, specifically the WRCA and WPCA, placed all ground water within the Territory under the management and control of the Commissioner, the Virgin Islands' natural resources trustee.
Whatever ownership interest Lockheed had or retained in the ground water was not so encompassing as to place that interest outside of the reach of CERCLA and its definition of "natural resources." The ground water in issue here is not a "purely private resource[]" but rather comes within the embrace of CERCLA as a natural resource either "belonging to," or "managed by," or "held in trust by," or "appertaining to," or "otherwise controlled by" the Government of the Virgin Islands.
Accordingly, the motion of Lockheed for summary judgment on Count VI of the first amended complaint will be denied.
Lockheed also argues that its ownership of the ground water beneath the alumina property entitles it to prevail on the claims of the Virgin Islands Government in Counts I through IV of the first amended complaint. These claims allege Lockheed is liable for environmental damage to the alumina property under theories of strict liability for an abnormally dangerous activity, negligence, negligence per se, and nuisance. Lockheed's argument with respect to these four claims is without merit.
Lockheed maintains that its ownership of the ground water beneath the alumina property deprives the Government of standing to pursue the claims in Counts I through IV. In Lockheed's view, the Government cannot show harm to a "substantial segment" of the Virgin Islands population. The Government brings Counts I through IV in its parens patriae capacity. Suits brought in this capacity allow a state to assert a "quasi-sovereign interest" such as protecting the "health and well-being—both physical and economic" of a "sufficiently substantial segment of its population."
In its parens patriae "capacity the State has an interest independent of and behind the titles of its citizens, in all the earth and air within its domain. It has the last word as to whether its mountains shall be stripped of their forests and its inhabitants shall breathe pure air."
The motion of Lockheed for summary judgment as to Counts I through IV of the first amended complaint will be denied.