September 01, 2014

Supreme Court rules CERCLA does not preempt state statutes of repose

Justin Pidot and Chelsea Thomas

On June 9, 2014, the U.S. Supreme Court decided CTS Corp. v. Waldburger, 134 S. Ct. 2175 (2014), quelling a state tort suit against Chicago Telephone Supply Company (CTS). CTS had owned an electroplating facility in Asheville, North Carolina, until 1985. Plaintiffs/Respondents alleged that CTS’s facility released trichloroethylene (TCE) and other contaminants into drinking water. Plaintiffs/Respondents rely on wells contaminated by TCE and experience health problems commonly associated with exposure to that toxin. The environmental conditions in the area remain fraught. Just three days before the decision, the U.S. Environmental Protection Agency (EPA) recommended that 13 area residents leave their homes because of unsafe levels of TCE.

In 1986, Congress amended the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA) to add a provision preempting state statutes of limitation for “personal injury, or property damages, which are caused or contributed to by exposure to any . . . pollutant . . . released into the environment from a facility.” 42 U.S.C. § 9658. In its 7–2 decision, the Court held that the express preemption provision of § 9658 does not apply to statutes of repose and, therefore, Respondents’ claims are time-barred under North Carolina law.

Statutes of limitation and statutes of repose

The CTS Corp. opinion hinges on the Court’s perception that there is a difference between statutes of limitation and statutes of repose. Statutes of repose operate in tandem with statutes of limitation to limit which suits may be brought. North Carolina, for example, establishes a three-year statute of limitations for general contract and tort claims. N.C. Gen. Stat. § 1-52 (2011). North Carolina also has a statute of repose, providing that “no cause of action shall accrue more than 10 years from the last act or omission of the defendant giving rise to the cause of action.” N.C. Gen. Stat. § 1-52(16). The statute of repose, unlike the statute of limitations, does not permit equitable exceptions and extinguishes any cause of action 10 years after a defendant’s last culpable act. See Black v. Littlejohn, 325 S.E.2d 469, 474–475 (N.C. 1985).

As of June 9, 2014, only four states have a generally applicable statute of repose: Connecticut, Oregon, Kansas, and North Carolina. In direct response to the CTS Corp. decision, the North Carolina legislature modified its statute of repose to exempt personal injury claims based on contaminated groundwater.

The setting of CTS Corp.

Between 1959 and 1986, CTS used TCE, cyanide, chromium VI, and lead to manufacture electronic components at a plant five miles south of Asheville. In 1999, nearby residents noticed an oily discharge emanating from a spring near the plant. Shortly thereafter, state regulators detected TCE and other contaminants in nearby groundwater wells. At one spring near the plant, TCE concentrations reached 21,000 parts per billion, more than 7,000 times North Carolina’s groundwater standard for the chemical. Water from that spring also contained benzene, xylene, and toluene. State officials have reason to believe that this contamination of groundwater is spreading.

Individuals living near CTS’s former plant relied on contaminated wells for drinking water and have been diagnosed with a range of acute medical conditions, including leukemia, brain tumors, and thyroid tumors. In 2010, a group of individuals who own land near the CTS plant brought a nuisance suit, seeking environmental remediation and damages related to injuries to their health and property values. CTS filed a motion to dismiss, asserting that North Carolina’s statute of repose barred the claims. The district court agreed, finding that CTS’s last culpable act occurred no later than 1987, when it sold the property to Mills Gap Road Associates. At the time of the sale, CTS promised realtors the property had been “rendered in an environmentally clean condition,” leaving no threat to human health after the “existing inventory of materials contained in drums” was removed from the premises. Waldburger v. CTS Corp., 723 F.3d 434, 440 (4th Cir. 2013). A divided panel of the Fourth Circuit reversed, holding that 42 U.S.C. § 9658 preempted North Carolina’s statute of repose.

CTS filed a successful petition for certiorari. The Solicitor General, on behalf of the United States, filed an amicus brief in support of CTS, because the United States faced similar litigation relating to environmental contamination originating at Camp Lejeune in Jacksonville, North Carolina. Industry groups and the defense bar also filed amicus briefs supporting CTS. Environmental organizations, environmental law professors, and North Carolina residents living near Camp Lejeune filed amicus briefs on behalf of the Respondents.

The Supreme Court’s decision

Writing for the majority, Justice Kennedy held that 42 U.S.C. § 9658 does not preempt state statutes of repose. The Court relied on the text of § 9658 that refers only to statutes of limitation. The Court reasoned that statutes of repose are functionally distinct from statutes of limitation because the two doctrines serve separate policy goals. Statutes of limitation “promote justice by encouraging plaintiffs to pursue claims diligently” and “begin to run when a claim accrues.” 134 S. Ct. at 2178–79. Statutes of repose, however, “effect a legislative judgment that a defendant should be free from liability after a legislatively determined amount of time,” “are measured from the date of the defendant’s last culpable act or omission,” and constitute an absolute limit on litigation because statutes of repose are not subject to equitable tolling. Id. (quotation marks omitted).

The Court found additional support for its interpretation of the preemption provision in a report titled “Injuries and Damages from Hazardous Wastes—Analysis and Improvement of Legal Remedies” submitted to Congress shortly before the enactment of § 9658. The report, compiled pursuant to another provision of CERCLA, see 42 U.S.C. § 9651(e)(1), cautioned that state statutes of limitation and repose were preventing individuals from bringing suit to seek damages for harms caused by exposure to hazardous substances where those harms involved diseases with long latency periods. To rectify that problem, the report suggested that states repeal any existing statutes of repose and modify statutes of limitation so that plaintiffs’ claims accrued only when they knew or should have known of their injury. Congress considered that report in enacting § 9658 but nonetheless made mention only of statutes of limitation. Because the report made Congress aware that state law included both statutes of limitation and repose, the Court reasoned that Congress intended only to preempt statutes of limitation.

A portion of Justice Kennedy’s opinion, joined only by Justice Kagan and Justice Sotomayor, also reasoned that a proper reading of § 9658 would presumptively preserve statutes of repose rather than preempting them. As Justice Kennedy explained, “[t]he effect of that presumption is to support, where plausible, ‘a narrow interpretation’ of an express preemption provision, especially ‘when Congress has legislated in a field traditionally occupied by the States.’” Id. at 2189 (citations omitted and quoting Altria Group, Inc. v. Good, 500 U.S. 70, 77 (2008)).

Justice Scalia’s concurrence

Justice Scalia filed a short opinion concurring in part and concurring in the judgment, joined by Chief Justice Roberts, Justice Thomas, and Justice Alito. The opinion rejected any presumption in favor of construing express preemption provisions narrowly and expressed the view that “ordinary principles of statutory construction demonstrate that 42 U.S.C. § 9658 pre-empts only statutes of limitation and not statutes of repose.” Id. at 2189.

Justice Ginsburg’s dissent

In dissent, Justice Ginsburg, joined by Justice Breyer, expressed the view that statutes of repose and statutes of limitation are indistinguishable for purposes of preemption under § 9658. Both types of temporal limits “prevent recovery for injuries with latency periods running for decades. Thus, altering statutes of limitations to include a discovery rule would be of little use in States with repose prescriptions.” Consequently, preserving statutes of repose frustrates Congress’s intent in enacting § 9658. Moreover, Justice Ginsburg opined that preserving statutes of repose “gives contaminators an incentive to conceal the hazards they have created until the repose period has run its full course.” Id. at 2191.

Potential implications

The CTS decision has limited immediate effect, as the decision applies directly to plaintiffs only in the four states that have statutes of repose. The decision does, however, create an opportunity for other states, should they so choose, to insulate commercial and industrial interests from liability by enacting statutes of repose.

The CTS decision could have affected ongoing disputes surrounding Camp Lejeune, another contaminated site in North Carolina. Camp Lejuene generated significant controversy, as Marines and their dependents serving at the Camp were exposed to toxic chemicals in their drinking water for over 30 years. After the Marine Corps learned of the contamination, it took more than four years to shut down drinking water wells and another 24 years and an act of Congress to force it to inform veterans about potential health problems and improve housing assistance and health care for those harmed by the contamination. See H.R. Rep. No. 111-698, at 191–95 (2010). The United States’ decision to file a brief in support of CTS was likely motivated, at least in part, by the likelihood that the North Carolina statute of repose could have immunized the United States from liability for health injuries resulting from groundwater contamination at Camp Lejeune.

The applicability of CTS Corp. to future lawsuits in North Carolina was likely abbreviated by the state legislature’s post-CTS Corp. decision to modify North Carolina’s statute of repose to exempt claims relating to groundwater contamination. Act of June 20, 2014, N.C. Sess. Laws 2014-17 (adopting Senate Bill 574, to be codified at N.C. Gen. Stat. § 1-52) (clarifying that civil actions related to groundwater contamination are not subject to the statute of repose).

It is unclear what, if any, effect S.B. 574 will have on the Respondents in CTS Corp. S.B. 574 applies to actions arising or pending on or after June 19, 2014, and provides “an action is pending . . . if there has been no final disposition with prejudice and mandate issued against the plaintiff by the highest court of competent jurisdiction where the claim was timely filed or appealed.” Id. Under Supreme Court Rule 45, the Court does not issue a mandate when reviewing decisions of the federal courts. On July 2, 2014, the Respondents filed a petition for rehearing, seeking a remand to allow the Fourth Circuit to consider the effect of S.B. 574.

In Burlington Northern & Santa Fe Railway Co. v. United States, the Supreme Court similarly applied textualist interpretation to narrow CERCLA, thereby exempting certain parties from CERCLA liability. 129 S. Ct. 1870 (2009). As the second recent decision in which the Court benefitted the business community by narrowly construing a provision of CERCLA, the CTS Corp. decision may reveal the Court’s sentiments regarding environmental accountability for corporations.

Justin Pidot and Chelsea Thomas

Justin Pidot is an assistant professor at the University of Denver Sturm College of Law. Chelsea Thomas is a dual degree JD/LLM graduate of the University of Denver Sturm College of Law.