Gov. Phil Scott on Monday vetoed a bill that would have allowed Vermonters affected by the release of toxic chemicals to more easily recoup medical monitoring expenses.

Scott said the state has recently passed numerous drinking water protections, but he worried that the bill, S.37, lacked clarity and could negatively affect the business climate in the state.

“Numerous Vermont employers have expressed concerns to me, and to Legislators, that the unknown legal and financial risks, and increased liability, is problematic for continued investment in Vermont,” Scott wrote in his veto letter.

Businesses might have difficulty obtaining insurance if the bill became law, he said. He asked lawmakers to consider changes to the bill next session.

In a joint statement, environmental groups said Scott’s veto “protects corporate polluters rather than Vermonters.”

The bill would have provided Vermonters harmed by toxic releases “just a little bit of fairness,” Jon Groveman, policy and water program director for the Vermont Natural Resources Council, said in a written statement.

“Instead of holding polluters responsible for medical costs and damage to Vermont's environment, he has sided with corporate lobbyists that have misinterpreted the impacts that S.37 will actually have on business in Vermont," Groveman said.

Sens. Dick Sears (D-Bennington) and Brian Campion (D-Bennington) sponsored S.37 in response to the contamination of dozens of private wells in North Bennington. State officials say toxins known as PFOAs released from the former Chemfab plant were to blame.

Scott last month announced a $25 million settlement with the plant’s owner, Saint-Gobain, to extend municipal water service to most affected wells. That’s in addition to $20 million the company has already paid. The state will pick up $5 million in infrastructure costs.

Several business groups objected to liability provisions that would have allowed the state to recoup cleanup costs from companies that “knew or should have known that the material presented a threat of harm to human health or the natural environment."

"Companies that act negligently and put people at significant risk of developing a serious disease should be accountable,” William Driscoll, vice president of Associated Industries of Vermont, said in a release. “But we should have fair and reasonable standards for determining liability like the other states around the country that have addressed this issue."

Driscoll raised the same concern during the legislative session, arguing unsuccessfully that the provision was being added hastily.

Read the governor's letter here: