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Effect of high court’s CERCLA ruling uncertain

By: Kimberly Atkins , Dolan Media Newswires//June 19, 2014

Effect of high court’s CERCLA ruling uncertain

By: Kimberly Atkins , Dolan Media Newswires//June 19, 2014//

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WASHINGTON — The U.S. Supreme Court recently held that preemption language in the Comprehensive Environmental Response, Compensation and Liability Act aimed at overriding state statutes of limitation does not extend to statutes of repose.

But attorneys say that while the ruling in CTS Corp. v. Waldburger, No. 13-339, against a community of North Carolina homeowners who discovered pollutants in their groundwater may appear narrow, over time the decision could have a ripple effect on litigation brought under other federal statutes in states with applicable statutes of repose.

The facts in Waldburger are unusual enough that there may be little immediate impact from the decision.

“My guess is that the decision won’t have much implication for many people,” said Robert S. Sanoff, a partner in the Boston office of Foley Hoag LLP.

There are only a handful of states that have broad statues of repose like North Carolina affecting CERCLA claims, said Christopher H. Dolan, a partner in the Minneapolis office of Faegre Baker Daniels LLP.

According to the opinion, only Connecticut, Kansas, North Carolina and Oregon have such statutes, while Alabama has a similar common law rule.

But over time toxic tort suits may be more difficult to bring if there is a push for other states to enact similar laws.

“[Some] states may be incentivized to enact statutes of repose that provide greater protection for companies that generate or store hazardous substances, if only to compete with those states that already have those laws on the books,” said Michael Burger, a professor at Roger Williams University School of Law in Bristol, Rhode Island.

The decision stems from a lawsuit brought by a group of North Carolina homeowners who discovered that their well water was contaminated, and that the source was a solvent used at a CTS Corp. electronics manufacturing plant that closed in 1985.

A U.S. District Court dismissed the complaint based on a North Carolina law governing real property-based claims that states in part: “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.”

But the 4th U.S. Circuit Court of Appeals reversed, holding that the state law was preempted by §309 of CERCLA. That provision prohibits states from enacting statutes of limitation for toxic tort claims.

CTS petitioned the Supreme Court for certiorari, arguing that the statute at issue was not preempted because it was a statute of repose — which cuts off a company’s potential liability at a certain time — and not a statute of limitation, which governs how long plaintiffs have to file suit.

The Supreme Court took up the case, and in a 7-2 ruling reversed the 4th Circuit, holding that the preemptive language in CERCLA applied only to statutes of limitation, not statutes of repose.

Because neither the language of CERCLA nor the legislative history demonstrates a desire to displace state statutes of repose or other state laws outside of statutes of limitation, it demonstrates “Congress’ decision to leave those many areas of state law untouched,” wrote Justice Anthony M. Kennedy for the majority.

States to act?

Some attorneys said the decision could spur state legislatures to pass similar statutes of repose in an effort to create a more business-friendly atmosphere.

“If you are a company, and you are looking [to set up] in North Carolina or South Carolina, and you handle or dispose of hazardous waste, you might say, ‘I’m going to North Carolina because we’re off the hook in 10 years no matter what, whereas in South Carolina we could be sued 30 years down the line,” Burger said.

But Dolan said that, as a practical matter, such a move could be difficult if it is seen by voters as a way for state lawmakers to help companies that contaminate groundwater avoid liability.

“Who would really want to push this legislation?” Dolan said. “It’s probably not the most politically popular move.”

He said the pendulum of political action could swing the other way, with federal lawmakers responding to the decision by amending federal law to clarify that it trumps state laws such as the North Carolina statute at issue.

“You could see a push by Congress to expand §309 to cover statutes of repose,” Dolan said.

The impact of the case could be felt beyond CERCLA litigation. For example, Burger said the ruling could affect a Federal Tort Claims Act lawsuit brought by a development company seeking to build a residential community near the Fort Detrick military installation in Frederick, Maryland. The developer, McLean, Virginia-based Waverley View Investors, claims that chemical, biological and radiological pollution from the military base damaged the groundwater under the adjacent 92-acre site that was slated to be developed into 723 homes.

The Waldburger ruling “may determine the outcome of this and other contamination cases involving the federal government under the FTCA,” Burger said. “There are also other cases involving statutes of repose on the court’s docket, [including] one involving securities litigation [Public Employees’ Retirement System of Mississippi v. IndyMac MBS, Inc., No. 13-640], and [Waldburger] could influence the outcome of those cases.”

Questions about preemption

The decision is the latest of a host of preemption rulings from the Supreme Court in recent years. But the case-by-case approach of the court and resulting disparate set of rulings has some lawyers confused over the state of preemption jurisprudence.

In Waldburger, the justices themselves failed to agree on a preemption rationale.

In a concurrence joined by three other justices, Justice Antonin Scalia declined to support Justice Kennedy’s assertion that express preemption provisions must be construed narrowly — the so-called “presumption against preemption.”

Justice Scalia called such a rule “extraordinary and unprecedented” even when first announced by the court in 1992 in Cipollone v. Liggett Group, Inc., and pointed out that “since then our reliance on it has been sporadic at best.”

Instead, “ordinary principles of statutory construction demonstrate that [the CERCLA provision] preempts only statutes of limitation and not statutes of repose,” he concluded.

Attorneys don’t expect any clarification of the doctrine of preemption any time soon.

“The analysis of the justices in this case was very much based on the legislative history of CERCLA,” Burger said. “I don’t know the amount of influence it will have on [the question of preemption for] the FTCA or other areas of law.”

Questions or comments can be directed to the writer at: [email protected]

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