Opinion ID: 1943801
Heading Depth: 1
Heading Rank: 2

Heading: ANR Proceeding

Text: Defendants contend that the ANR administrative proceeding is not a suit and therefore is not covered by the policy. The court agreed that the policy did not contemplate paying for sums arising out of an administrative proceeding as opposed to a more traditional legal judgment. As noted above, defendants have a duty to defend any suit against the insured seeking damages. The policies do not, however, define suit. At issue, then, is whether the ANR proceeding is a suit for the purposes of the policy. In construing an insurance policy, disputed terms should be read according to their plain, ordinary and popular meaning. American Protection Ins. Co. v. McMahan, 151 Vt. 520, 522, 562 A.2d 462, 464 (1989). Because a policy is prepared by the insurer, all ambiguities must be resolved in favor of the insured. Peerless Ins. Co. v. Wells, 154 Vt. 491, 494, 580 A.2d 485, 487 (1990). Further, the burden is on the insurer to show that a third party's claim against the insured is entirely excluded from coverage. Village of Morrisville Water & Light Dep't v. United States Fid. & Guar. Co., 775 F.Supp. 718, 725 (D.Vt.1991). In 1995, ANR directed DOC to undertake investigative work at the prison site intended to define the degree and extent of contamination, determine the risk posed to the public, and evaluate methods of any corrective action. This action took the form of letters from the Commissioner of the Department of Environmental Conservation to the Commissioner of DOC. Based on the result of this investigation, ANR also required responsible parties to undertake a clean-up of the site, including excavation of the most contaminated soils. In response to these proceedings, DOC hired private firms to facilitate and execute the remediation plan. Although these steps are not a suit in the traditional sense, they are sufficiently adversarial in nature to constitute a suit in a broader interpretation. Our interpretation is consistent with other courts that have addressed similar issues, particularly in actions brought by the Environmental Protection Agency (EPA). See Governmental Interinsurance Exch. v. City of Angola, 8 F.Supp.2d 1120, 1130 (N.D.Ind. 1998) (The vast majority of courts around the United States ... have found that all kinds of coercive administrative actions are `suits' covered by general liability insurance policies.) (internal quotations and citations omitted); Vermont Gas Sys. v. United States Fid. & Guar. Co., 805 F.Supp. 227, 232 (D.Vt.1992) (EPA special notice letter triggers duty to defend); Village of Morrisville, 775 F.Supp. at 733 (EPA notification that town was a potentially responsible party for contamination is suit under CGL policy). We see no reason to treat compliance with a state environmental regime differently from a federal one. Instead, we look to whether the official action is sufficiently coercive and adversarial in nature. Village of Morrisville, 775 F.Supp. at 733. The record indicates that the clean-up undertaken by DOC of the site was in response to the coercive adversarial nature of ANR's requests. These proceedings should therefore be treated as a suit by the CGL policy. The letters sent by ANR to DOC were motivated not by any discretionary desire to intervene, but rather mandated by the legislative scheme for managing hazardous waste. The legislature has vested authority to enforce the hazardous waste statutes in the secretary of ANR. See, e.g., 10 V.S.A. § 8003(a)(12) (secretary of ANR may enforce Vermont statutes relating to solid waste, hazardous waste and hazardous materials); id. § 6604(a) (the secretary shall publish and adopt ... a solid waste management plan); id. § 6604a(a) ([t]he secretary ... shall develop a plan for the receipt, treatment and disposal . . . of soils contaminated); id. § 6610a(a) (detailing powers of secretary to enforce waste management statutes). The legislature has also broadly defined the scope of hazardous waste liability. Section 6615 provides in part: [A]ny person who at the time of release or threatened release of any hazardous material owned or operated any facility at which such hazardous materials were disposed of ... shall be liable for abating such release or threatened release, and costs of investigation, removal and remedial actions incurred by the state which are necessary to protect the public health or the environment. Id. § 6615(a)(2), (4)(A), (B). The legislature was explicit that this liability was intended to be enforced against state agencies. Id. § 6602(6) (defining person as including the state of Vermont or any agency, department or subdivision of the state). Because ANR is the agency entrusted with enforcing the hazardous waste statutes and the statutes specifically apply to state agencies, including DOC, the statutory scheme must have contemplated an action by ANR against another department like DOC. Therefore, DOC's liability for any cost of investigation or clean-up as required by statute would be damages covered by the policy. Defendants argued and the trial court held that any damages resulting from the ANR proceedings against DOC would not be covered by the policy because both entities are agencies in the executive branch whose commissioners serve at the pleasure of the governor. Under these circumstances, the court held, any judgment by one agency against another would be the result of an action that was essentially controlled by the same person. The court feared that aspects of the case such as the zealousness of the defense or the prosecution, the forms of relief requested, and any decision to appeal could be tainted by the unified interest of the executive. Therefore, the court denied insurance coverage for the proceeding. The trial court based its conclusion on one case for the proposition that the same person cannot be both plaintiff and defendant at the same time in the same action. Globe & Rutgers Fire Ins. Co. v. Hines, 273 F. 774, 777 (2d Cir.1921). We find this authority unpersuasive and contrary to the modern trend. Allowing one agency to proceed against another is neither unprecedented nor unusual. The United States Supreme Court addressed the issue of whether the government could sue itself in United States v. Interstate Commerce Comm'n, 337 U.S. 426, 69 S.Ct. 1410, 93 L.Ed. 1451 (1949). In that case, in which the United States was suing the ICC to abate wharfage charges, the Court held that courts must look behind names that symbolize the parties to determine whether a justiciable case or controversy is presented. Id. at 430, 69 S.Ct. 1410; see also United States v. Nixon, 418 U.S. 683, 697, 94 S.Ct. 3090, 41 L.Ed.2d 1039 (1974) (dispute between special prosecutor and president presents traditionally justiciable issue). More recently, the Court has held that the EEOC has the authority to require federal agencies to pay compensatory damages in employment discrimination cases. West v. Gibson, 527 U.S. 212, 217, 119 S.Ct. 1906, 144 L.Ed.2d 196 (1999). Similar to our analysis here, the Court read the statutory language at issue (Title VII) as an explicit grant of authority to the agency to levy damage awards upon other federal agencies. Id.; see also Tennessee Valley Authority v. United States, 13 Cl.Ct. 692, 697 (1987) (The mere assertion of a claim of intrabranch dispute, without more, has never operated to defeat . . . jurisdiction.) (internal quotations and citations omitted). The intrabranch dispute between ANR and DOC does not violate any notion of separation of powers or transform the proceeding into a collusive first-party claim. Rather, ANR is proceeding against DOC in a traditionally justiciable controversy just as the agency would have against a private party. There is no evidence that the governor has any intent to interfere in these proceedings to alter the behavior of either agency. The steps taken by the secretary of ANR against DOC were not taken at the direction of the governor, but instead imposed by a statutory duty. Likewise, DOC's response is not controlled by the governor but instead by a legislative scheme that renders state agencies beholden for violations of the hazardous waste statutes. We therefore hold that the trial court incorrectly concluded that there could be no coverage under the policy for the ANR proceedings.