U.S. Supreme Court Rules CERCLA Doesn’t Preempt State Statutes of Repose

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By John Henry Stam  

June 9 --The U.S. Supreme Court ruled June 9 that the Superfund law does not preempt state statutes of repose for hazardous substance related tort claims as it does statutes of limitations.

Statutes of repose end liability for a defendant after a specific period of time after its last culpable act and serve a different legislative purpose than statutes of limitations, which are used to encourage plaintiffs to diligently file claims after they are discovered, the Supreme Court said in its ruling.

Professor John Korzen, director of the Appellate Advocacy Clinic at Wake Forest University School of Law, who represented the landowners in the underlying case, told Bloomberg BNA June 9 that four states have a generally applicable statute of repose (three years for Connecticut and 10 years for Oregon, Kansas and North Carolina) and hazardous substance tort liability in those states will be directly affected by the decision.

North Carolina Case

The Supreme Court's 7-2 ruling reverses a decision by the U.S. Court of Appeals for the Fourth Circuit that held a North Carolina statute of repose was preempted by the Comprehensive Environmental Response, Compensation, and Liability Act in a nuisance lawsuit brought against CTS Corp. for well water contaminated by hazardous substances (Waldburger v. CTS Corp., 723 F.3d 434, 76 ERC 1929, 2013 BL 184776 (4th Cir. 2013) .

The dispute concerns whether CTS is liable for property damage discovered near a manufacturing facility it owned in Asheville, N.C. CTS left the site in 1987, and the landowners didn't discover the contamination until informed by the Environmental Protection Agency in 2009 after the state's 10-year statute of repose had elapsed. The landowners filed suit in 2011 within the three-year statute of limitations.

Section 9658 of CERCLA preempts state statutes of limitations for tort actions for personal injury or property damage arising from the release of a hazardous substance, pollutant, or contaminant into the environment if they commence before the federal limitations period, the Supreme Court said. The federal limitations period commences when a party discovers or reasonably should have discovered the contamination.

Congressional Intent to Exclude

The statutory text of Section 9658, however, indicates a congressional intent not to include statutes of repose in the preemption of generally applicable state law, the Supreme Court held.

The Supreme Court reasoned that the preemption is a specific limited exception to the general applicability of state law and that a number of contextual indicators support a finding that the preemption does not apply to statutes of repose. Congress was aware of the distinction between statutes of limitations and repose and only referenced statutes of limitation. Section 9658 only references the applicable limitation period in the singular instead of in the plural for the two types of limitation periods.

Further, the Supreme Court said the applicable limitations period as referenced in Section 9658 presupposes an existing cause of action while statutes of repose are unrelated to the accrual of a cause of action and extinguish any cause of actions after certain dates. Statutes of repose are not subject to equitable tolling as statutes of limitations are and Section 9658 includes provisions for the equitable tolling of claims for minor or incompetent plaintiffs. The Supreme Court therefore found there was no express preemption of statutes of repose in Section 9658.

The Supreme Court also found that in light of Congress' recognition in CERCLA of allowing state laws to govern causes of action, scope of liability, burdens of proof, and other facets of torts related to hazardous substance contamination, statutes of repose did not represent an unacceptable obstacle to accomplishing the remedial goals of CERCLA that would be a basis for implied preemption.

Circuit Split Resolved

The Supreme Court's ruling resolves a split among the circuits on the issue. The Fifth Circuit had ruled in 2005 that statutes of repose are not preempted (Burlington N. & Santa Fe Ry. v. Poole Chem. Co., 419 F.3d 355, 60 ERC 1993 (5th Cir. 2005)) while the Fourth Circuit's 2013 decision joined a decision by the Ninth Circuit in 2008 that found statutes of repose are preempted by CERCLA (McDonald v. Sun Oil Co., 548 F.3d 774, 67 ERC 1970, 2008 BL 257558 (9th Cir. 2008)).

Justice Anthony M. Kennedy wrote the majority opinion. Justice Antonin Scalia wrote an opinion concurring in part and in the judgment but disagreeing with a portion of the opinion that stated preemption provisions should be narrowly construed. He argued that normal statutory construction should be applied to express preemption provisions and was joined in his concurrence by Chief Justice John G. Roberts Jr. and Justices Clarence Thomas and Samuel A. Alito Jr.

Dissent Argues Incentive to Cover Up

Justice Ruth Bader Ginsburg wrote a dissenting opinion in which Justice Stephen G. Breyer joined. Ginsburg argued that the federally required commencement date for the cause of action when the contamination is or should reasonably be discovered displaces conflicting state statutes of repose under Section 9658. Ginsburg argued that repose periods are in essence limitation periods without applicable discovery rules. Legislative history establishes that Section 9658 was adopted to address latent injuries from contamination that would not appear for decades, Ginsburg said.

Instead of providing for uniform application of the federal commencement date for actions, Ginsburg said the majority's ruling allows those responsible for environmental contamination to avoid liability for the latent harm they cause if they are in the minority of states with statutes of repose. The majority's decision provides an incentive for polluters to conceal the hazards they create until state repose periods run instead of encouraging prompt identification and remediation before harms from toxic exposure occur, Ginsburg argued.

Timothy Bishop of Mayer, Brown LLP in Chicago said in a statement June 9 that the Supreme Court's ruling “provides certainty for businesses and landowners who otherwise might face suit indefinitely.” He said, “As a policy matter this is the correct decision. When state legislatures adopt statutes of repose it is with the intent of providing complete protection from litigation.” He noted that the Supreme Court will address statutes of repose again this fall in a federal securities law case and said he believes the CTS decision bodes well for the parties seeking repose in that case (Public Emps.' Ret. Sys. of Miss. v. IndyMac MBS, Inc., U.S., No. 13-640, cert granted 3/10/14).

Other Impacts

Korzen said the CTS decision is the first time the Supreme Court has addressed what statutes of repose actually are and will likely affect how other areas of law interact with statutes of repose. He said many states have specific statutes of repose for categories such as medical malpractice and architects and engineers. He said that 19 states have statutes of repose for products liability. He noted there was a products liability case involving an underground storage tank that involved CERCLA preemption issues. He also said that Alabama has a generally applicable 20-year common law rule of repose that has been reviewed for CERCLA preemption in a case but there is some state case law stating that a discovery rule might apply in Alabama.

On June 6 the EPA announced that it found elevated levels of trichloroethylene (TCE) at three residences adjacent to the CTS Superfund site. The EPA said it met with the families who agreed to temporarily relocate until actions are completed to reduce TCE concentrations in indoor air in the residences to below the chemical/site-specific removal management level and additional sampling data verifies the results.

In a brief as an amicus curiae in support of the petitioner, the U.S. said it had a particular interest in the interaction of CERCLA with the North Carolina statute because of pending litigation against the U.S. under the Federal Tort Claims Act involving allegations of contaminated drinking water at the Camp Lejeune Marine Corps Base in North Carolina.

The case is currently pending in the Eleventh Circuit and involves whether North Carolina's statute of repose bars the claims (Bryant v. United States, 11th Cir., No. 12-15424, oral arguments1/17/14).

The plaintiffs are represented by Korzen in the Bryant case as well.

The opinion by the U.S. Supreme Court in CTS Corp. v. Waldburger is available at http://www.supremecourt.gov/opinions/13pdf/13-339_886a.pdf.


To contact the reporter on this story: John Henry Stam in Washington at jstam@bna.com

To contact the editor responsible for this story: Larry Pearl at lpearl@bna.com

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