Agency of Natural Resources v. Riendeau

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                                 No. 89-570


 State of Vermont Agency of                   Supreme Court
 Natural Resources
                                              On Appeal from
      v.                                      Windsor Superior Court

 Gerard, Richard, Paul and                    September Term, 1991
 Gaston Riendeau


 Ellen H. Maloney, J.

 Jeffrey L. Amestoy, Attorney General, and Mark J. DiStefano, Assistant
   Attorney General, Montpelier, for plaintiff-appellee

 Melvin D. Fink of Fink & Birmingham, Ludlow, and George E. Brooks,
   Montpelier, for defendants-appellants


 PRESENT:  Allen, C.J., Gibson, Dooley and Morse, JJ., and Martin, Super. J.,
           Specially Assigned


      DOOLEY, J.   The Vermont Agency of Natural Resources brought this
 action against Gaston Riendeau and his sons Gerard, Richard and Paul,
 alleging that defendants had discharged "waste, substance or material" into
 East Branch Brook in violation of 10 V.S.A. { 1259(a).  The alleged dis-
 charges occurred in connection with a logging operation defendants conducted
 on land they owned in the towns of Ludlow, Mount Holly and Weston.  Finding
 that defendants had violated 10 V.S.A. { 1259(a), the trial court, under 10
 V.S.A. { 1274(a), issued an injunction and ordered defendants to pay a
 $10,000 civil penalty and punitive damages of $5,000.  Defendants appeal the
 monetary elements of the remedy.  We affirm the civil penalty and reverse
 the punitive damages.
      Defendants began logging on the site in question in June 1987.  In
 August and November of 1987, an Agency investigator received complaints
 about mud and silt in East Branch Brook and found, on investigation, that
 the material was entering the brook because of defendants' logging
 operations.  The Agency brought this action on November 6, 1987, seeking
 first a temporary restraining order and preliminary injunction.  On that
 date, the court issued a consent order prohibiting any discharge of mud,
 silt, wastewater, petroleum products and brush into East Branch Brook.
      After further proceedings, including an Agency motion for contempt, the
 matter came to trial in June and August of 1989.  In findings issued in
 October 1989, the trial court found that on at least five occasions defend-
 ants caused substances to be "deposited or emitted" into East Branch Brook
 as a result of their logging operations.  The substances involved were mud
 and silt, tree butts, tree stumps, and slash (branches, bark or pieces of
 wood).  The court found that defendants did not have a discharge permit.
      The court also found that defendants had violated various Acceptable
 Management Practices (AMPs) as defined in a rule issued by the Vermont
 Department of Forests, Parks and Recreation in June 1987, entitled
 Acceptable Management Practices for Maintaining Water Quality on Logging
 Jobs in Vermont.  The AMPs define remedial measures needed to protect waters
 from the effects of logging operations.  The introduction states:
           The AMPs have the force of law and violations can be
         costly, so it is important to understand the conditions
         under which they can be enforced.  These conditions are
         as follows:
           1.  A violation occurs only if there is a discharge.
         If no discharge occurs, the logger or landowner cannot
         be fined or prosecuted for not having the AMP's in
         place.
           2.  If there is a discharge and the AMP's are properly
         in place, there is no violation.
           3.  If there is a discharge and the AMP's have not
         been followed, there is a violation.

 The court found that defendants violated AMPs prohibiting dragging logs
 across the stream, use of hay bale erosion controls, use of culverts and
 installation of water bars and drainage devices.  It also found some
 mitigating factors and that defendants spent approximately $30,000 to
 implement improvement practices.
      Based on its findings, the court concluded that defendants had, without
 a permit, discharged "waste, substance or material" into state waters on at
 least five occasions in violation of 10 V.S.A. { 1259(a).  The court
 declined to hold defendant in contempt for violating the preliminary
 injunction.  It did, however, impose civil penalties of $2,000 for each of
 the discharge violations (totaling $10,000), and punitive damages against
 defendants for having "knowingly and willfully discharged substances into
 waters of the state."
      On appeal, defendants argue:  (1) the court had no authority to order
 payment of civil penalties under 10 V.S.A. { 1274(a) because the Agency
 failed to adopt rules determining which violations of law are significant;
 (2) civil penalties could not be imposed without a finding of harm to the
 environment; (3) civil penalties could not be ordered based on a violation
 of the AMPs; and (4) punitive damages could not be awarded without a finding
 of malice.  We consider the issues in order.
      Defendants' first argument is based on 10 V.S.A. { 1274(b), a sub-
 section added in 1986, which states:
         (b) The Secretary [of Natural Resources], by rule, shall
         define those violations which are significant, based
         upon the magnitude, duration, consequences and causes of
         the violation.  When a significant violation occurs,
         the secretary may initiate proceedings to compel com-
         pliance by and seek penalties from the violator.  A
         court, upon finding that such a violation has occurred,
         shall order compliance and retain jurisdiction to assure
         that compliance schedules are met.  The court also shall
         impose penalties.  Action under this section shall not
         restrict the secretary's authority to proceed under
         section 1267 of this title.

 The statute to which the subsection was added, now { 1274(a), authorizes
 judicial remedies, including the levying of civil penalties, for discharges
 of waste in violation of the chapter.  It is undisputed that the Secretary
 has never followed the command of { 1274(b) and promulgated rules defining
 significant violations.  Defendants argue that this failure has stripped the
 court of the authority to impose civil penalties.  The Legislature, they
 argue, by enacting { 1274(b), intended that civil penalties be imposed only
 for significant violations and that the Secretary's failure to define such
 violations makes it impossible to discern the legislative intent.
      For three main reasons, we disagree with defendants' construction of
 the applicable statutes.  First, our basic rules of statutory construction
 suggest that courts retain the power to impose civil penalties under {
 1274(a) despite the enactment of { 1274(b).  In construing a statute we must
 be guided by the plain meaning of the text.  See In re Graziani, 155 Vt.
 ___, ___, 591 A.2d 91, 94 (1991).  Section 1274(a)(6), under which the
 court proceeded, grants specific authority to "exercise all the plenary
 powers available to it in addition to the power to: . . . (6) Levy civil
 penalties . . . ."  This grant of power was not amended when the
 Legislature added { 1274(b).  It is inconsistent with the text to suggest
 that the addition of { 1274(b) impliedly revoked the powers granted by {
 1274(a).
      When provisions of statutes are in apparent conflict, we favor the
 interpretation that harmonizes the conflicting provisions.  Weissenstein v.
 Burlington Bd. of School Comm'rs, 149 Vt. 288, 292, 543 A.2d 691, 693
 (1988).  There is a presumption against implied repeal of one statute by
 another.  State v. Foley, 140 Vt. 643, 646, 443 A.2d 452, 453 (1982).  The
 construction urged by defendants puts the subsections of { 1274 in conflict,
 without reconciliation, and requires that we find that the addition of sub-
 section (b) repealed, at least in part, the authority contained in sub-
 section (a).  On the other hand, the subsections can be harmonized.
 Subsection (a) is phrased in terms of the court's discretionary power to
 grant specific relief on finding a violation of the water pollution control
 laws.  Subsection (b) is a command, requiring the court to impose civil
 penalties on finding a substantial violation as defined by a rule of the
 Secretary.  The requirement to grant specific remedies in certain circum-
 stances under { 1274(b) does not preclude the court's continuing to grant
 specific relief in other circumstances under { 1274(a).  As this interpreta-
 tion reconciles these seemingly conflicting subsections, we adopt it.
      Second, defendants' construction leads to an unreasonable result.  See
 Drumheller v. Shelburne Zoning Bd., 155 Vt. ___, ___, 586 A.2d 1150, 1152
 (1990) (adopt construction that avoids unreasonable or unjust results).
 Section 1274(b) deals with both injunctions and penalties.  Under defend-
 ants' construction, the Secretary's failure to adopt rules would mean that
 the court could not issue an injunction to prevent a violation of the water
 pollution laws.  Moreover, the Secretary's failure to promulgate definitions
 would stop all water pollution enforcement and leave our waters exposed to
 degradation.  We do not find that the Legislature intended such extreme
 consequences from the Secretary's failure to act.
      Third, we are guided by legislative history when it is available.  See
 In re Judicial Review of D.P., 152 Vt. 184, 188, 566 A.2d 399, 401 (1989).
 Section 1274(b) was part of a bill, proposed by the administration, re-
 writing water quality laws proposed by the administration.  In testimony
 before the House Natural Resources & Energy Committee, then Commissioner of
 Water Resources, Jonathan Lash, speaking for the administration, indicated
 that the intent of { 1274(b), then being considered for adoption, was to
 require court action "which is a help in the situation . . . where the
 courts are sort of reluctant."  Hearing before the House Natural Resources &
 Energy Committee on S.42, April 25, 1986, transcript at p. 14-15.  Thus, the
 statute's legislative history also supports the reconciliation of the sub-
 sections of { 1274 described above.
      For the above reasons, we hold that the enactment of { 1274(b), and the
 failure of the Secretary of Natural Resources to promulgate rules under that
 subsection, do not eliminate the discretionary power of the court to impose
 civil penalties under 10 V.S.A. { 1274(a)(6).
      Defendants' second argument is that the court erred by imposing civil
 penalties without considering the harm to the environment.  The court
 ordered defendants to pay $2000 for each of the five violations of 10 V.S.A.
 { 1259(a).  No reason was given for the imposition of civil penalties or for
 the amount imposed.  Defendants argue that it is unfair to impose substan-
 tial civil penalties without a finding of environmental harm and, in any
 event, that such a finding is required by 10 V.S.A. { 8221(b)(6).
      The statute on which defendants rely was enacted in 1989, effective no
 earlier than July 1, 1989, as part of an addition of a new environmental law
 enforcement scheme.  See generally 1989, No. 98.  It authorizes the
 Secretary to bring an action in superior court to enforce certain environ-
 mental laws.  10 V.S.A. { 8221(a).  In such an action, the court can "levy a
 civil penalty ... of not more that $50,000 ... for each violation."  10
 V.S.A. { 8221(b)(6).  In fixing the amount of the penalty, the court "shall
 apply the criteria set forth in subsection 8010(b) of this title."  Id.
 The criteria set forth in { 8010(b) include "the degree of actual or
 potential impact on public health, safety, welfare and the environment
 resulting from the violation."  It is the failure of the court to consider
 this factor that forms the basis of defendants' claim on appeal.
      The Agency of Natural Resources responds with numerous reasons why
 there is no error, including the failure of defendants to raise the statute
 below and its inapplicability to a case filed well before it was enacted.(FN1)
 See 1 V.S.A. {{ 213, 214.  We agree that the statute is inapplicable to this
 case.  The specific list of factors to be considered in assessing civil
 penalties is applicable only to actions brought under { 8221(a).  There is
 no indication that the list applies to { 1274(a) actions or that { 8221 was
 intended to be the exclusive statutory route for judicial environmental
 enforcement actions.  Indeed, the failure of the Legislature to repeal {
 1274 and the higher penalties available under { 8221(b)(6) belie such an
 interpretation.
      Nor do we believe that in the absence of statutory factors, the court
 must base imposition of civil penalties on the degree of environmental
 harm.  The primary purpose of civil penalties is not punishment.  See One
 Lot Emerald Cut Stones v. United States, 409 U.S. 234, 237 (1972).  Rather,
 these penalties serve a remedial purpose by making non-compliance at least
 as costly as compliance.  They also reimburse the government for enforcement
 expenses and other costs generated by the violation.  See id.; Selmi,
 Enforcing Environmental Laws: A Look at the State Civil Penalty Statutes, 19
 Loyola L.A.L. Rev. 1279, 1296-97 (1986).  Consistent with these goals, the
 court could impose a civil penalty even if it found little or no environ-
 mental damage.
      Defendants seek to avoid this result by arguing that the violation is a
 mere technicality because they would have received a permit had they applied
 for it.  There is nothing in the record to support this argument, and the
 substance of the AMPs suggests that the Agency would not have made lawful
 the placement of waste materials into East Branch Brook.  The place to make
 this argument, with supporting evidence, was the trial court and not here.
      Defendants' third argument is that the court impermissibly ordered
 civil penalties based on violations of the AMPs.  As set forth above, the
 AMPs create specific methods of complying with the law even though there is
 an unpermitted discharge. (FN2) Violation of the AMPs is not itself a violation
 of law.  Thus, if defendants' claim that the court imposed penalties for
 violations of the AMPs was accurate, we would have to reverse.
      We do not, however, find that defendants' claim is true.  The court
 first concluded, based on its analysis of the language of 10 V.S.A. {
 1259(a), that defendants had discharged waste substances into the state's
 waters.  Only then did it examine defendants' compliance with the AMPs on
 the basis that compliance with the AMPs "will allow the logger to avoid
 citation for discharges."  Therefore, the court imposed penalties only
 because it found "that a violation of 10 V.S.A. Section 1251(a) (FN3) occurred
 and . . . Defendants failed to comply with the A.M.P.'s . . . ."  The court
 did not penalize defendants for violation of the AMPs alone.
      Defendants' fourth claim is that the court awarded punitive damages
 without a finding of malice.  The court did not explain in detail why it
 awarded punitive damages, in the amount of $5,000, against defendants.  It
 stated that it did so "for having knowingly and willfully discharged sub-
 stances into waters of the state."
      The statutory authority for imposition of punitive damages is contained
 in 10 V.S.A. { 1274(a)(5).  The statute does not specify the grounds
 necessary for imposition of punitive damages.  Punitive damages are normally
 imposed in this state as punishment and as a deterrent.  Coty v. Ramsey
 Assoc., Inc., 149 Vt. 451, 467, 546 A.2d 196, 207 (1988).  In Bruntaeger v.
 Zeller, 147 Vt. 247, 253, 515 A.2d 123, 127 (1986), we held that an award of
 exemplary damages can be made under the Vermont Consumer Fraud Law only on a
 showing of "malice, ill will, or wanton conduct."  That holding was based on
 common law principles because the Consumer Fraud Law, like the statute
 before us in this case, did not specify the proper grounds for awarding
 punitive damages.  We see no reason to depart from the reasoning of
 Bruntaeger and hold that punitive damages under { 1274(a)(5) can be awarded
 only where malice, ill will or wanton conduct is shown.
      In this case, the trial court found that defendants' conduct was
 knowing and willful.  Some of our cases suggest that willfulness alone can
 support an award of punitive damages.  See, e.g., Bruntaeger, 147 Vt. at
 253, 515 A.2d  at 127 (punitive damages can be awarded if defendant's conduct
 is malicious, willful, or demonstrative of a reckless and wanton disregard
 of plaintiff's rights).  More recently, we held that failure to honor a
 contractual obligation to a consumer, although characterized by the trial
 court as a willful violation of the Consumer Fraud Act, would not support an
 award of punitive damages where the default was motivated by "an unwilling-
 ness to make the necessary expenditures."  Meadowbrook Condominium Ass'n v.
 South Burlington Realty Corp., 152 Vt. 16, 28, 565 A.2d 238, ___ (1989).
      In civil cases, we have generally used the term "willful" as a synonym
 for "intentional," "in contradistinction to 'accidental' or 'unavoidable'."
 Wendell v. Union Mutual Fire Insurance Co., 123 Vt. 294, 297, 187 A.2d 331,
 332 (1963); see also In re Cote, 93 Vt. 10, 14, 106 A. 519, 521 (1918) (in
 civil cases, willful means intentional; in criminal cases, the term has a
 "different and darker shade of meaning").  Because punitive damages are
 awarded "on account of the bad spirit and wrong intention" of the defendant,
 Glidden v. Skinner, 142 Vt. 644, 648, 458 A.2d 1142, 1144 (1983), with the
 goal of punishing morally culpable conduct, Coty, 149 Vt. at 467, 546 A.2d 
 at 207, we believe that there must be some showing of bad motive to make
 knowing and intentional conduct malicious.  Thus, we conclude that the court
 must find more than willful and knowing conduct to support an award of
 punitive damages.
      As an alternative ground for upholding the punitive damage award, the
 Agency argues that the court could have imposed an additional civil penalty
 under 3 V.S.A. { 2822(c) (repealed 1989), because defendants violated the
 preliminary injunction issued by the court.  The short answer to this
 argument is that the trial court declined to impose additional damages for
 violation of the injunction in part because the Agency failed to provide
 "specific evidence of Defendant's ability to comply."   We will not uphold
 damages imposed for specified violations on one theory because the court
 could have imposed similar damages for a different violation on another
 theory.
      While the evidence in this case may support a finding that defendants
 were so indifferent to their legal obligations and the environmental
 consequences of their acts that they acted with malice, the trial court
 failed to so find.  We therefore reverse the punitive damages assessment and
 remand for additional findings on the issue of malice.
      The order of the Windsor Superior Court imposing civil penalties is
 affirmed.  The order imposing punitive damages is reversed and remanded.

                                         FOR THE COURT:




                                         Associate Justice





FN1.    10 V.S.A. { 8221 became effective on July 1, 1989, after the trial
 in this case had started.  See 1989 No. 98, { 6.  The section that contains
 the factors to be used in assessing penalties, 10 V.S.A. { 8010, did not
 become effective until the Secretary of Natural Resources adopted certain
 rules, 10 V.S.A. { 8016, and a new environmental law judge authorized by the
 statute was appointed.  See id.  There is nothing in the record showing when
 these events occurred.

FN2.    The Agency took the position at argument that the AMPs were pro-
 mulgated pursuant to 10 V.S.A. { 1259(f).  That subsection provides that
 subsections (c), (d) and (e) of { 1259 do not apply to "accepted agricul-
 tural or silvicultural practices, as such are defined by the commissioners
 of agriculture, food and markets and forests, parks and recreation . . . ."
 If the Agency's position is accurate, it is difficult to see how compliance
 with the AMPs has any effect in this case.  The Agency has not alleged a
 violation of subsections (c), (d) or (e) of { 1259.  Its case is based on {
 1259(a).  Compliance with the AMPs does not immunize one from liability for
 { 1259(a) violations.
     The case was tried on the theory that compliance with the AMPs would
 shield defendants from liability under 10 V.S.A. { 1259(a).  If this theory
 is inaccurate, there is no prejudice to defendants since the Agency is not
 claiming that defendants violated { 1259(a) despite compliance with the
 AMPs.

FN3.    This is clearly a typographical error, and the cite was intended to
 be to { 1259(a). There is no 10 V.S.A. { 1251(a).