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Supreme Court Decides That State Law Statutes of Repose Are Not Preempted By CERCLA

In a 7-2 decision, the Supreme Court has determined that a provision of CERCLA, 42 U.S.C. § 9658, does not pre-empt state statutes of repose limiting actions for personal injury or property damage resulting from the release of hazardous substances.  CTS Corp. v. Waldburger, 2014 U.S. LEXIS 3992 (2014).  As a result, a group of homeowners whose property has been contaminated by the nearby CTS Corp. Superfund site are unable to pursue their claims against CTS Corp.

In Waldburger, remediation was not the goal of the litigation.  EPA listed the site on the National Priorities List in 2011 (http://www.epa.gov/region4/superfund/sites/npl/northcarolina/millsgapnc.html), and as a result of that listing, CTS Corp is under an Administrative Order and Settlement Agreement On Consent (AOC) to conduct a Remedial Investigation/Feasibility Study.   In other words, the remediation process is underway.  Instead, the Waldburger plaintiffs were primarily seeking monetary damages caused by the contamination of their real property as the result of contaminant migration from the CTS Corp site.

However, the CTS Corp site, an electronics manufacturing facility, closed in 1985 and the property was sold in 1987.  Therefore, the 2011 suit came decades after CTS Corp last had anything to do with the property.  While the North Carolina statute of limitations included “discovery rule” language for the accrual of a cause of action (providing that the limitations period did not commence until the plaintiff knew or should have known of his or her injury), it also included “repose” language, that provided that in no event would a cause of action accrue more than 10 years from the last act or omission of the defendant (a statute of limitations period places a time limit on bringing an action from the time the action “accrues,” which is generally when all elements of the cause of action have occurred and the plaintiff has learned that those elements exists, or should have learned that they exist, while a statute of repose is a time limit, generally starting at the time of the defendant’s last action, that applies regardless of when the plaintiff suffers harm or learns that harm was caused by a defendant’s conduct).

The District Court held that the repose language barred the suit, but the 4th Circuit panel disagreed, holding that § 9658, which preempts state law statutes of limitations to the extent that they provide a limitations period that accrues earlier than they would under federal law, preempted the North Carolina statute.  Specifically, § 9658(1) says that if state law “provides a commencement date which is earlier than the federally required commencement date, such period shall commence at the federally required commencement date in lieu of the date specified in such State statute.”  The 4th Circuit held that the language of the North Carolina statute provided a commencement date earlier than the federally required date, and thus was preempted by the CERCLA provision.

The majority of the Supreme Court disagreed with the 4th Circuit panel’s analysis, instead characterizing the language of the North Carolina statute as a “statute of repose.”  The majority opinion construed the CERCLA provision as preempting only statutes of limitations, not statutes of repose. 

This ruling reverses 9th Circuit law on the subject, as the 9th Circuit had taken the same approach as the 4th Circuit had in Waldburger when it considered Oregon’s 10 year statute of repose on negligence actions in McDonald v. Sun Oil Company, 548 F.3d 774 (9th Cir. 2008).  However, the decision will have no impact on practice in California at this time, as California has no general statute of repose that applies to personal injury or property damage claims.  California Code of Civil Procedure § 337.15 is a 10 year statute of repose, but it applies only to injuries resulting from latent defects in the construction or survey of real property. 

The decision is one that is worth keeping an eye on.  Certainly it will have a significant impact in those jurisdictions that have general statutes of repose that limit personal injury or property damage claims.  I have represented clients in toxic tort cases in which the alleged negligence (often secondary to the conduct that actually caused the release, such as the alleged negligent failure to maintain sewer lines, thereby allowing solvents disposed of via the sewer to leak into the soil near plaintiffs’ properties) occurred decades ago.  Even if those claims do not present significant liability exposure (because of, for example, a weak liability theory), the cost of defense can be hundreds of thousands of dollars.  The ability to end such cases early because of a statute of repose would be likely significantly curtail the filing of such cases in the first place.

That said, those who expect lobbyists to descend on state legislatures in droves, seeking the enactment of statutes of repose, are likely overreacting.  The scope of statutes of repose is far greater than toxic tort claims, so the reason that jurisdictions such as California do not have such statutes of repose is likely not because CERCLA would have preempted them with respect to toxic tort cases.  That preemption is probably not what is preventing such statutes from being enacted, and therefore the toxic tort landscape in jurisdictions such as California is not likely to change quickly. 

 

[This article is opinion only.  It is not intended as legal advice and should not be taken as such.]

 

9th Circuit Rejects Yet Another Constitutional Challenge to CERCLA

It seems as if challenges to the constitutionality of CERCLA started about 10 minutes after the statute was signed into law, and despite consistent rejection, variations of the argument continue to be used as a last ditch defense to a liability scheme that provides very few defensive arguments.  On July 26, 2013, the 9th Circuit sent another defendant trying to escape CERCLA liability back to the drawing board.  Voggenthaler v. Maryland Square LLC, --- F.3d ---, 2013 WL 3839330 (9th Cir. 2013). 

In Voggenthaler, the current owner of commercial property contaminated by PCE as a result of the longtime operation of a dry cleaner on the property argued that the application of CERCLA violated the commerce clause.  The owner argued that the disposal of PCE affected only the site and the nearby Las Vegas neighborhood, all of which were entirely within the State of Nevada, and therefore, interstate commerce was not implicated. 

The Commerce Clause provides Congress with the power to “regulate Commerce with foreign Nations, and among the several Staes, and with the Indian Tribes.”  U.S. Const. Art. I, § 8, cl. 3.  The Supreme Court has held that  under the commerce clause Congress has the authority to regulate on three separate grounds: 1) the use of the channels of interstate or foreign commerce; 2) the instrumentalities of interstate commerce … or persons or things in commerce; and 3) those activities affecting commerce.”  Perez v. United States, 402 U.S. 146, 150 (1971). 

The 9th Circuit had little trouble concluding that the District Court properly rejected the owner’s challenge.  The Court first noted that in Sporhase v. Nebraska, ex rel. Douglas, 458 U.S. 941, 953-954, the Supreme Court held that groundwater is an article of interstate commerce.  Therefore, Congress had the power to regulate activity that impacted groundwater.   The 9th Circuit also followed the 11th Circuit’s and the 2nd Circuits decisions in United States v. Olin Corporation, 107 F.3d 1506 (11th Cir. 1997) and Freir v. Westinghouse Electric Corporation, 303 F.3d 176 (2nd Cir. 2002), in which the Courts held that the economic burden of cleaning up contamination constitutes a sufficient impact on interstate commerce to support Congress’s authority to enact CERCLA. 

So the 9th Circuit has addressed the issue of CERCLA’s constitutionality vis a vis the Commerce Clause and in doing so, has upheld CERCLA as constitutional once again.  That result is hardly surprising.  What is more surprising is that litigants continue to rely on Constitutional challenges to CERCLA, as Courts routinely reject them in a fashion that gives little hope of the argument finding a toehold. 

This continued reliance on constitutional challenges probably results from two different factors.  The first, as I mentioned above, is that CERCLA leaves many with few arguments with which to attempt to defend liability.  If it costs a few thousand dollars to file a motion based on a constitutional challenge and that motion has the slimmest chance to avoid liability for millions of dollars in response costs, many probably consider the challenge worth making (though given the consistent rejection of such challenges, one wonders if the possible loss of credibility with the trial court warrants the effort, especially when the defendant has other defensive arguments).  Second, Courts seem to have a way of changing their mind about CERCLA, or having it changed for them.  For more than a decade it was well established that a party that was liable under CERCLA could not sue under Section 107 but was limited to a contribution claim under Section 113.  The Supreme Court turned that settled rule on its head with Cooper Industries, Inc. v. Aviall Services, Inc., 543 U.S. 157 (2004).  Litigants and their counsel may believe that the day will come when the constitutional challenge to CERCLA gains traction.

All hope is not lost of the property owner in Voggenthaler, however.  While the 9th Circuit rejected its argument that it had established the elements of CERCLA’s “bona fide prospective purchaser” exception to CERCLA liability (42 U.S.C. § 9607(r)(1), it did vacate the trial court’s grant of summary judgment against the owner in order to give it the opportunity to provide further evidence to establish it met the elements of the bona fide prospective purchaser exception.   Given the facts of the case (the opinion suggests that the property owner demolished the building without taking any precautions relating to the PCE contamination, and, at least according to the plaintiffs, made the problem worse), that defense may be a rough road, and thus the time and effort put into the Commerce clause challenge. 




© Tripp Goldsberry 2013