Earlier this week, the United States Supreme Court held in CTS Corp. v. Waldburger1 that Section 9658 of CERCLA2 does not preempt state statutes of repose that set a time frame after which a potential defendant is no longer liable under state law for tortious acts. This decision is of interest to persons who have potential state-law claims or liability for contaminated property or personal injury due to releases of hazardous substances in North Carolina and in the relatively few other states in which an applicable statute of repose may be in effect.
For defendants in those states, Waldburger may provide a complete defense from liability from state-law claims. For plaintiffs, Waldburger may shorten the deadline to bring state-law claims in state or, if available, federal court. If state-law claims are to be combined with CERCLA claims in federal court, plaintiffs may also have to accelerate their federal CERCLA claims. Waldburger does not affect potential liability for federal claims of cost recovery or contribution or cleanup orders issued by the US Environmental Protection Agency under CERCLA itself.
Facts and procedural history
In Waldburger, only state-law nuisance claims were at issue. Petitioner CTS Corporation ("Petitioner" or "CTS") owned property in Asheville, North Carolina on which it manufactured and disposed of electronics and electronic parts until 1985.3 In 1987, CTS sold the property to individuals who, along with adjacent landowners (collectively, the "Respondents"), brought this suit in 2011 in federal district court, alleging damages from contaminants on the land as a result of CTS's operations on the property.4 The respondents claimed that the Environmental Protection Agency informed them in 2009 that their well water was contaminated.5
The suit consisted of a single, state-law nuisance claim against CTS. CTS moved to dismiss the claim, citing North Carolina's ten-year statute of repose for tort actions.6 CTS argued that 1987, the year it sold the property, was the year in which the last culpable act could possibly have occurred, and therefore the state's statute of repose barred all suits after 1997. The District Court granted the motion to dismiss. However, the Fourth Circuit reversed, holding that the federal discovery rule under Section 9658 applies to statutes of repose in addition to statutes of limitation. The Fourth Circuit's rationale was that Section 9658 was ambiguous, and that an interpretation in favor of preemption was preferable because of CERCLA's remedial purpose.7 As discussed below, the Supreme Court reversed the Fourth Circuit, holding that Section 9658 does not preempt state statutes of repose.
Section 9658 of CERCLA adopts a "discovery rule" based on a "federally required commencement date" defined as the date the plaintiff knew (or reasonably should have known) that personal injury or property damages were caused or contributed from the release of a hazardous substance, pollutant, or contaminant.8 Section 9658 also preempts state commencement dates earlier than this "federally required commencement date."9 Section 9658 does not preempt, and expressly preserves, state limitations periods on state-law claims.10 In addition, statutes of limitation on CERCLA claims start running later than the discovery date and, in some cases, may run for longer time periods than state-law tort claims.11 Section 9658 does not affect the statutes of limitation for federal CERCLA claims.12
Statutes of repose, including North Carolina's statute, generally start running at the time of the defendant's last culpable act, which is often before the discovery rule would start the running of the state limitations period. At issue in the dispute in Waldburger were North Carolina's statute of repose, which "prevents subjecting a defendant to a tort suit brought more than 10 years after the last culpable act of the defendant"13; and Section 9658 of CERCLA. The issue before the Supreme Court was whether the "discovery rule" adopted in Section 9658 applies to both statutes of limitation and statutes of repose.
The balance of this Briefing discusses the Supreme Court's decision in more detail and concludes with a summary of some of its potential implications of and possibly limited geographic reach.
Supreme Court holds that Section 9658 does not apply to statutes of repose
In a 7-2 decision14, the Supreme Court reversed the Fourth Circuit, holding that state statutes of repose were not preempted by the CERCLA provision preempting certain state statutes of limitation. Writing for the majority, Justice Kennedy held that North Carolina's statute of repose was not preempted by CERCLA because: (1) the legislative history indicates that Congress was aware of the distinction between statutes of limitation and statutes of repose, and Congress chose to preempt only statutes of limitation; (2) the plain language of the statute indicates that the preemption provision applies only to statutes of limitation; (3) CERCLA's preemption provision provides for equitable tolling, a feature that unambiguously is not present in statutes of repose. Justice Kennedy also states that the doctrine of presumption against preemption militates against finding that Congress intended to preempt statutes of repose, but this portion of the opinion was not joined by four of the seven members of the majority.
Statutes of limitations and statutes of repose are distinct in their operation and purpose, and Congress was aware of that distinction at the time it enacted Section 9658
Justice Kennedy begins by noting the crucial distinctions between the operation and purpose of statutes of limitation and statutes of repose. "In the ordinary course, a statute of limitations creates 'a time limit for suing in a civil case, based on the date when the claim accrued.'"15 "A statute of repose, on the other hand, puts an outer limit on the right to bring an action. That limit is measured not from the date on which the claim accrues but instead from the date of the last culpable act or omission of the defendant."16 "Statutes of repose effect a legislative judgment that a defendant should 'be free from liability after the legislatively determined period of time.'"17 Moreover, statutes of limitation are considered procedural in nature and may be equitably tolled when necessary, whereas statutes of repose terminate a potential plaintiff's substantive right to commence an action, and therefore may not be equitably tolled.18
In 1986, at that time Section 9658 was passed, scholars and courts were beginning to make a clear distinction between statutes of limitation and statutes of repose, which previously had been used imprecisely.19 Indeed, in 1982, a report was released by a study group established pursuant to CERCLA and charged with identifying obstacles to the achievement of Congress's purposes in passing CERCLA (the "Report").20 The Report "acknowledged that statutes of repose were not equivalent to statutes of limitations and that a recommendation to pre-empt the latter did not necessarily include the former."21 "The Report clearly urged the repeal of statutes of repose as well as statutes of limitations. But in doing so, the Report did what the statute does not: It referred to statutes of repose as a distinct category. And when Congress did not make the same distinction, it is proper to conclude that Congress did not exercise the full scope of its preemption power."22
The text of Section 9658 limits its preemptive effect to statutes of limitation
Justice Kennedy also finds support for his interpretation in the text of Section 9658 itself. The period of time preempted by Section 9658 is described in the singular: "the applicable limitations period;" "such period shall commence," and "the statute of limitations established under state law."23 "This would be an awkward way to mandate the preemption of two different time periods with two different purposes."24 Therefore, because Section 9658 uses the term "statute of limitations" and describes the period in the singular, it can only mean that Congress intended to preempt statutes of limitation, but not statutes of repose.
Moreover, the definition of "applicable limitations period," which is described as the time period during which a civil action may be brought, presupposes that a civil action exists.25 Interpreting "applicable limitations period" to include the time period covered by a statute of repose would be inconsistent with a statute of repose, which operates to terminate liability regardless of whether a cause of action exists or has even accrued.26
Section 9658's equitable tolling provision indicates that it is applicable only to statutes of limitation, as equitable tolling provisions are universally absent from statutes of repose
Section 9658 provides for equitable tolling for "minor or incompetent plaintiff[s]."27 However, a "'critical distinction' between statutes of limitations and statutes of repose 'is that a repose period is fixed and its expiration will not be delayed by estoppel or tolling.'"28 "As a consequence, the inclusion of a tolling rule in [Section] 9658 suggests that the statute's reach is limited to statutes of limitation … [because] it would be odd for Congress, if it did seek to pre-empt statutes of repose, to preempt not just the commencement dates of statutes of repose but also state law prohibiting tolling of statutes of repose."29
Statutes of repose not an unacceptable obstacle to CERCLA's purpose
Respondents argued that Section 9658 impliedly preempts statutes of repose because they "creat[e] an unacceptable obstacle to the accomplishment and execution of the full purposes and objectives of Congress … [and that] preemption of statutes of repose advances [Section] 9658's purpose … to help plaintiffs bring tort actions for harm caused by toxic contaminants."30 Justice Kennedy rejected this argument, stating that "CERCLA … does not provide a complete framework … [and] does not provide a general cause of action for all harm caused by toxic contaminants."31 Rather, "Section 9658 leaves untouched States' judgments about the causes of action, the scope of liability, the duration of the period provided by statutes of limitations, burdens of proof, rules of evidence, and other important rules governing civil actions."32 In light of "Congress' decision to leave those many areas of state law untouched," "Respondents have not shown that … statutes of repose pose an unacceptable obstacle to the attainment of CERCLA's purposes."33
Majority is split on application of doctrine of presumption against preemption
The last ground upon which Justice Kennedy rests his argument is the applicability of the presumption against preemption, which recognizes the dual-sovereign relationship between the state and federal governments: "the Court 'assum[es] that the historic police powers of the states were not to be superseded by the Federal Act unless that was the clear and manifest purpose of Congress.'"34
On this point, Justice Scalia, joined by the Chief Justice and Justices Thomas and Alito, breaks with opinion of the Court. In Justice Scalia's view, "[t]he proper rule of construction for express pre-emption provisions is … the one that is customary for statutory provisions in general: Their language should be given its ordinary meaning."35 The concurring Justices believe that ordinary principles of statutory construction provide sufficient justification for finding that Section 9658 does not preempt statutes of repose, without resort to the presumption against pre-emption.36
Dissent would hold that Section 9658 preempts statute of repose
Justice Ginsburg, joined by Justice Breyer, argues that North Carolina's statute of repose is preempted by Section 9658 because: (1) the state statute of repose appears in the same statutory section as the statute of limitations; (2) the "applicable limitations period" referred to by Section 9658 is the date of the last culpable act, not the discovery of the latent injury; and (3) CERCLA's purpose is furthered by preempting statutes of repose.
In the dissent's view, under the North Carolina statute, the "date specified in a statute of limitations as the beginning of the applicable limitations period" is determined by the occurrence of "the last act or omission of the defendant giving rise to the [claim]."37 Because that date is earlier than the federal commencement date provided by Section 9658, the federal commencement date should control.38 Further, the dissent views the Report as the expression of Congress' intent: "As the Study Group Report makes clear, 'the problem' it identified," that "certain State statutes deprive plaintiffs of their day in court," "cannot be solved when statutes of repose remain operative. The Court's interpretation thus thwarts Congress' clearly expressed intent to fix 'the problem' the Study Group described."39
Impact of CTS Corp. v. Waldburger decision
With its holding in CTS Corp. v. Waldburger, the Supreme Court has clarified the applicability of the scope of preemption in CERCLA. Entities operating in states where applicable statutes of repose are in effect may rely on Waldburger as additional assurance that the risk of liability under state law will terminate in accordance with the terms of the statute of repose. In these states, Waldburger may provide a complete defense from liability depending on the date of the defendant's last culpable act, thereby shortening the deadline to bring state-law claims relating to hazardous substances in state or, where available, federal court. Waldburger does not affect potential liability for federal claims of cost recovery or contribution or cleanup orders issued by the US Environmental Protection Agency under CERCLA itself.
It is unclear how many states will be affected by Waldburger, but they may be relatively few. In addition to North Carolina, the dissent mentions Alabama, Connecticut, Kansas, and Oregon as states with statutes of repose.40 Although not all state courts have considered the issue, many states -- arguably including California,41 Colorado,42 New York,43 Ohio,44 Pennsylvania,45 Texas,46 West Virginia,47 and likely others -- do not appear to have statutes of repose applicable to claims of personal injury or property damage as a result of environmental contamination. The time period for filing state-law claims in those states would, therefore, not appear to be affected by the Waldburger decision, absent action by the state legislatures. Such legislative action would likely be controversial in most states.48
1 CTS Corp. v. Waldburger, No. 13-339, 573 U.S. ___ (Jun. 9, 2014).
2 Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C. § 9601, et seq.
6 N.C. Gen. Stat. Ann. § 1-52(16).
7 Waldburger v. CTS Corp., 723 F.3d 434 (4th Cir. 2013).
8 42 U.S.C. § 9658(b)(4)(A). Section 9658 is quoted in relevant part below:
(a) State statutes of limitations for hazardous substance cases
(1) Exception to State statutes
In the case of any action brought under state law for personal injury, or property damages, which are caused or contributed to by exposure to any hazardous substance, or pollutant or contaminant, released into the environment from a facility, if the applicable limitations period for such action (as specified in the State statute of limitations or under common 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.
(2) State law generally applicable
Except as provided in paragraph (1), the statute of limitations established under State law shall apply in all actions brought under State law for personal injury, or property damages, which are caused or contributed to by exposure to any hazardous substance, or pollutant or contaminant, released into the environment from a facility.
* * *
* * *
(2) Applicable limitations period
The term 'applicable limitations period' means the period specified in a statute of limitations during which a civil action referred to in subsection (a)(1) of this section may be brought.
(3) Commencement date
The term 'commencement date' means the date specified in a statute of limitations as the beginning of the applicable limitations period.
(4) Federally required commencement date
(A) In general
Except as provided in subparagraph (B), the term 'federally required commencement date' means the date the plaintiff knew (or reasonably should have known) that the personal injury or property damages referred to in subsection (a)(1) of this section were caused or contributed to by the hazardous substance or pollutant or contaminant concerned.
(B) Special rules
In the case of a minor or incompetent plaintiff, the term 'federally required commencement date' means the later of the date referred to in subparagraph (A) or the following:
(i) In the case of a minor, the date on which the minor reaches the age of majority, as determined by State law, or has a legal representative appointed.
(ii) In the case of an incompetent individual, the date on which such individual becomes competent or has had a legal representative appointed.
9 42 U.S.C. § 9658(a)(1).
10 42 U.S.C. § 9658(b)(4)(B).
11 42 U.S.C. § 9613(g)(1) (for natural resource damage, six years after discovery of the damage and its connection with the release in question, or longer in special cases); id. § 9613(g)(2) (for cost recovery in a removal action, within three years after completion of the removal action, or longer in special cases); id. § 9613(g)(2) (for cost recovery in a remedial action, within six years after initiation of physical, on-site construction of the remediation action, or longer in special cases); id. § 9613(g)(3) (for contribution, within three years of an administrative order in a settlement with EPA, or a judgment in a cost-recovery action, or longer in special cases).
12 42 U.S.C. § 9658(a)(3).
13 Slip Op. 4 (citing N.C. Gen. Stat. Ann. §1-52(16) (Lexis 2013)).
14 Justice Kennedy delivered the opinion of the Court, with which Justices Kagan and Sotomayor joined. The Chief Justice, as well as Justices Scalia, Thomas, and Alito, joined the majority opinion except as to Part II(D), which stated that the presumption against preemption offered an alternative ground to find that the statute of repose was not preempted. Justice Ginsburg wrote a dissenting opinion, with which Justice Breyer joined.
15 Slip Op. 5 (quoting Black's Law Dictionary 1546 (9th ed. 2009).
17 Slip Op. 6-7 (quoting 54 C.J.S. Limitations of Actions §7, p. 24 (2010)).
20 Senate Committee on Environment and Public Works, Superfund Section 301(e) Study Group, Injuries and Damages from Hazardous Wastes – Analysis and Improvement of Legal Remedies, 97th Cong., 2d Sess., (pt. 1) (Comm. Print 1982).
26 As noted by Petitioner, "[i]n Respondents' view, 'the repose period is plainly part of the 'state-law time period' in which claims can be brought under North Carolina law.' … This view cannot withstand scrutiny. North Carolina law has clearly defined two distinct time periods that frequently – indeed, typically – both begin and end at different times: first, a statute of limitations that runs for three years from the discovery of injury; and, second, a statute of repose that runs for ten years from the defendant's last act. … Neither time period is 'part of' the other. In fact, the two periods do not even have to overlap. It would be senseless to say, for instance, that a time period spanning from 1990 to 2000 is 'part of' a time period from 2010 to 2013. Yet Respondents must say just that." Reply Brief of Petitioner at 5-6.
28 Slip Op. 15 (quoting 4 Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure §1056, p. 240 (3d ed. 2002)).
30 Slip Op. 15-16 (internal citations and quotations omitted).
34 Slip Op. 17 (quoting Medtronic, Inc. v. Lohr, 518 U.S. 470, 485 (1996)).
35 Concur, 1 (quoting Cipollone v. Liggett Grp., Inc., 505 U.S. 504, 548 (1992) (Scalia, J., concurring in judgment in part and dissenting in part))
39 Dissent, 4 (citing H.R. Conf. Rep. No. 99-962, p 255 (1986)).
40 Dissent, 4, at note *.
41 The California statute of limitation for injury to property caused by contamination, pollution, and hazardous substances is in the California Code of Civil Procedure, §§338 (statute of limitations for statutory liability, injury to property, pollution violations) and 338.1 (statute of limitations for civil penalties or punitive damages related to hazardous substances). Section 338 has been interpreted to have the meaning of a statute of limitation, not a statute of repose. See McCoy v. Gustafson, 103 Cal. Rptr. 3d 37, 42–43 (Cal. App. 6th Dist. 2009) (requiring actions for injury to property to be filed within three years of the discovery that the property has been contaminated). Based on its use of the discovery language, Section 338.1 appears to be constructed as a statute of limitation, not a statute of repose. See Cal. Code Civ. Proc. § 338.1 (action commences within five years after the discovery by the agency bringing the action of the facts constituting grounds for commencing the action).
42 The Colorado statute of limitation for injury to property caused by contamination is in the Colorado Revised Statutes, Section 13-80-102 (statute of limitation for tort actions, including negligence and trespass). Based on its use of the discovery language, this statute appears to be constructed as a statute of limitation, not a statute of repose. See C.R.S. § 13-80-102 (stating that the civil actions "shall be commenced within two years after the cause of action accrues").
43 The New York statute of limitation for injury to property or personal injury caused by the latent effects of exposure to any substance is three years from the date of discovery of the injury. N.Y. C.P.L.R. 214-c (Consol. 2014). Based on its use of the discovery language, this statute appears to be constructed as a statute of limitation, not a statute of repose.
44 The Ohio statute of limitation for injury to property caused by contamination is four years. Ohio Rev. Cod. Ann. § 2305.09. Based on its use of the accrual language, this statute appears to be constructed as a statute of limitation, not a statute of repose. Ohio Rev. Cod. Ann. § 2305.09 (stating that the "causes shall be brought within four years after the cause thereof accrued").
45 The Pennsylvania statute of limitation for injury to property caused by contamination is two years. 42 Pa. Cons. Stat. § 5524 (statute of limitation for tort actions, including negligence and trespass); see also Ingros v. BFG Electroplating & Mfg. Co., 81 Pa. D. & C.4th 481, 485 (Jefferson Cnty. Ct. 2006). Section 5524 has been interpreted by a Pennsylvania appellate court as a statute of limitation rather than a statute of repose. Miller v. Stroud Twp., 804 A.2d 749, 752 (Pa. Commw. Ct. 2002).
46 The Texas statutes of limitation for injury to property and personal injury are Section 16.003 and 16.051 of the Texas Civil Practice and Remedies Code, both of which are based on the date the cause of action accrues. Based on their use of the accrual language, these sections appear to be constructed as statutes of limitation, not of repose. See Tex. Civ. Prac. & Rem. Code § 16.003 (stating that a person must bring suit for trespass for injury to the estate or to the property of another, conversion of personal property, or personal injury not later than "two years after the day the cause of action accrues"); id. § 16.051 (stating with respect to the residual limitations period that "[e]very action for which there is no express limitations period, except an action for the recovery of real property, must be brought not later than four years after the day the cause of action accrues.").
47 The West Virginia statute of limitation for injury to property caused by contamination is two years. W. Va. Code § 55-2-12 (statute of limitation for personal actions, including damages to property and personal injury). On its face, the statute is constructed as a statute of limitation, and not a statue of repose. W. Va. Code § 55-2-12 (stating that an action shall be brought "[w]ithin two years next after the right to bring the same shall have accrued").
48 Several of the states mentioned above and possibly other states have statutes of repose applicable in specific contexts, such as construction law or medical malpractice. See, e.g., Ca. Civ. Proc. Code § 337.15 (four years from completion of construction in cases arising out of latent defect); C.R.S. § 13-80-104 (six years from substantial completion of improvement to real property for actions against any architect, contractor, builder or builder vendor, engineer or inspector); 40 Pa. Stat. Ann. § 1303.513(a) (seven years from the tort or breach of contract in medical professional liability claims).