Superfund Section 301(e) Study Group Report as `Legislative History': Implications for Supreme Court Deliberations in CTS v. Waldburger

The United States Supreme Court heard arguments April 23 in CTS Corp. v. Peter Waldburger, No. 13-399, which deals with the scope of a provision added to CERCLA in the Superfund Amendments and Reauthorization Act of 1986 (“SARA”). The question is whether 42 U.S.C. § 9658 should be interpreted to apply to state statutes of repose in addition to state statutes of limitations. The provision at issue supposedly arose out of a recommendation of a study commission, the Superfund Section 301(e) Study Group created in the 1980 version of CERCLA.

The text of the provision is equivocal. Section 9658 refers only to “statutes of limitations,” and the provision of SARA which became Section 9658 is called, “State Procedural Reform,” suggesting that the provision is only intended to affect state procedural law, not substantive provisions such as statutes of repose.

If one goes beyond the text to look at the supposed background of the provision, it is clear that the Superfund Section 301(e) Group created in the 1980 version of CERCLA did not recommend that Congress preempt features of state statutes of limitations, much less statutes of repose. Its concerns over federal preemption and the retroactive application of federal statutes prevented the Group from recommending a federal “discovery rule” to be applied in state tort law. Principles of federalism and the avoidance of retroactive federal legislation suggest that Section 9658 should be construed to affect statutes of limitations that affect only a remedy, not a right, and not to affect substantive limitations on liability within state law such as statutes of repose.

Superfund Section 301(e)

One of the “compromises” that made passage of CERCLA possible in 1980 was deletion of a federal toxic tort cause of action from the statute. The “compromise” was that the Act commissioned a “study group” to research the need for legislation in the area, in Section 301(e) of the legislation. This “compromise” was the brainchild of several U.S. senators—led by Pete Dominici of New Mexico. The Study Group consisted of three lawyers each from four different legal organizations—American Bar Association, American Law Institute, Association of Trial Lawyers of America, and National Association of Attorneys General. One of the ALI representatives, Professor Frank Grad at Columbia, was elected as the “reporter” for the group, following the practice of the American Law Institute.

The scope of the study described in CERCLA Section 301(e) was very broad, “to determine the adequacy of existing common law and statutory remedies in providing legal redress for harm to man and the environment caused by the release of hazardous substances into the environment.” (42 U.S.C. §9651(e)(1)). Most pertinent to this article, the statutory mandate included an evaluation of “barriers to recovery posed by existing statutes of limitations.” (42 U.S.C §9651(e)(3)(F)). As to its recommendations, Congress expressly required that the Group consider whether any recommended revisions “should take the form of Federal statutes or the development of a model code which is recommended for adoption by the States.” (42 U.S.C. §9651(e)(4)(B)).

As Weyman Lundquist, one of the ABA representatives on the Group subsequently testified under oath in a congressional hearing, “It is clear from the composition of the Study Group that Congress did not intend a group that would reach an easy consensus.” (H.R. Hrng. 98-75, Hazardous Waste Contamination of Water Resources (Compensation of Victims Exposed to Hazardous Wastes), Hearings before the Subcommittee on Investigations and Oversight of the Committee on Public Works and Transportation (98^th Cong., 1^st Sess. (July 20, 21, 26, 27; Nov. 7, 9, 1983), at 792, 795)) [hereinafter Public Works Hearing]. He elaborated in that testimony, “It should be noted that some of the committee members—both “plaintiffs’ lawyers and defense lawyers—have a vested self-interest in their espoused views. As the discussions of the Group progressed, it became evident that certain other Group members, particularly academicians, sometimes also had a vested interest in views they had expressed over a number of years.” (Id. at 795-796).

The Superfund Section 301(e) Report

The Superfund Section 301(e) Report can be a little hard to find, since it is not conventional “legislative history” such as committee reports or floor debates in the Congressional Record. (Comm. Print, Serial 97-12, Injuries and Damages from Hazardous Wastes—Analysis and Improvement of Legal Remedies, A Report to Congress in Compliance with Section 301(e) of the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (P.L. 96-510) by the “Superfund Section 301(e) Study Group” (Senate Comm. on Environment and Public Works, Sept. 1982)) [hereinafter Report].

Its Part 2 contained many background reports prepared by the Columbia law students, as well as Comments to the Appendices, where disagreements remained after negotiations among staff of the various members. Its Part 1 contained the consensus report and separate views of various Group members who dissented from key recommendations made in the Report. Interestingly, the Report unanimously recommended against creation of a Federal statutory judicial tort or nuisance remedy. (Report, Part 1, pp. 290-91, 307). Its recommendations for federal action were limited to recommendation of a federal program administered by the states to provide no-fault compensation for personal injury resulting from hazardous waste. (See Zazzali & Grad, Hazardous Wastes: New Rights and Remedies? 13 Seton Hall L. Rev. 448, 464 (1983)).

The Superfund Study Group worried a lot about federal preemption of state tort law. In part, this focus came about because of an inquiry to the group from Senators Randolph and Stafford, who specifically asked the Group to comment on recent Supreme Court decisions that had found no implied private right of action under federal law (i.e., no federal common law) in light of comprehensive federal regulatory statutes such as the Clean Water Act. (Letter from Senator Jennings Randolph and Senator Robert T. Stafford to Zazzali, dated April 29, 1982, in “Comments to the Appendices to Superfund Section 301(e) Report, referring to City of Milwaukee v. Illinois, 451 U.S. 304 (1981) and Middlesex County Sewerage Authority v. National Sea Clammers Association, 453 U.S. 1 (1981)). The Study Group clearly rejected these Senators’ call for the Group to endorse the judicial manufacture of federal common law rights of action through construction of CERCLA’s “savings clause.” (See Report, at 85-90 and Appendix F (Study Group conclusions) and at 323, 342-343 (comments of George Clemon Freeman, Jr., member of the Study Group)).

Among its recommendations to the states, however, was that states adopt a discovery rule, such that a plaintiff’s cause of action would not accrue until the plaintiff discovered or reasonably should have discovered the injury and its cause. (Lundquist Testimony, Public Works Hearing at 802; Report, at 241). The Study Group’s recommendation expressly stated, “The Recommendation is intended also to cover the repeal of the statutes of repose which, in a number of states have the same effect as some statutes of limitations in barring plaintiff’s claim before he knows he has one.” (Report, at 256). The background documents in Part 2 of the Report describing current law show that its authors understood that a state could have a discovery rule regarding its statute of limitations, and still have the same fairness issue from the perspective of plaintiffs because of its separate statute of repose. For the state of North Carolina, for example, the Report characterized the state as having a discovery rule (Report, Part 2, at B-6), but as also having a statute of repose (Report, Part 2, at B-9).

It is important to understand the context in which the Study Group made its “discovery rule” recommendation. The principal innovation of the Study Group was creation of an administrative compensation regime in which persons exposed to hazardous wastes would be able to claim compensation for injuries and damages presumed to result from such exposure. The federal administrative fund paying compensation would have a right of subrogation against tortfeasors, but only for injuries or damages “arising out of exposure to hazardous substances or wastes disposed of, transported or spilled after the adoption of this proposal. …” (Report, Part 1, at 246).

Thus, the Report stated, “[t]he Study Group recommends that the ‘discovery rule’ apply to all claims and that claims not be time-barred by reason of the passage of time from exposure or injury to the discovery of the illness or injury on which the claim is based, and regardless of whether the responsible party knew, or should have known of the hazardous condition, or of the hazardous nature of the wastes.” (Report, Part 1, at 246). The Group recommended by majority vote “that the compensation fund should pay all proven claims arising out of exposure to hazardous substances disposed of, transported, or spilled prior to the adoption of this proposal. …” (Report, Part 1, at 245).

In his subsequent testimony before Congress, George Freeman, a member of the Study Group, emphasized this feature of the Study Group’s Report, stating, “If Congress decides to enact new legislation creating a federal administrative remedy or a federal cause of action for persons who have been injured or whose property has been damaged by hazardous wastes, it should scrupulously avoid imposing liability retroactively. As I pointed out earlier, one of the most important decisions in our Superfund Study deliberations was our unanimous recommendation against any form of retroactivity in federal legislation.” (Public Works Hearing, at 848-849).

Federally-Required Commencement Date

After the Superfund Section 301(e) Study Group issued its Report in 1982, Congress adopted amendments to the Superfund statute in 1986. Congress largely ignored the Report’s recommendations but did adopt the provision addressing the “discovery rule” in statutes of limitations. The Superfund Amendments and Reauthorization Act of 1986 contain the follow provision:

Sec. 203. STATE PROCEDURAL REFORM

(a) In General—Title III of CERCLA is amended by adding the following new section at the end thereof:

Sec. 309. Actions Under State Law for Damages from Exposure to Hazardous Substances

“(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. (H.R. Conf, Rep. 99-962, Superfund Amendments and Reauthorization Act of 1986, 99^th Cong., 2d Sess. 87-88 (1986)).

It is generally understood that Section 9658 was in response to the Study Group Report. Indeed, the House Conference Report for SARA states, “The study done pursuant to Section 301(e) of CERCLA by a distinguished panel of lawyers noted that certain State statutes deprive plaintiffs of their day in court. The study noted that the problem centers around when the statute of limitations begins to run rather than the number of years it runs.” (Id., at 261, reprinted in 1986 U.S.C.C.A.N. 3276, 3354). The question clearly before the Supreme Court is whether the provision preempts not only statutes of limitations but also statutes of repose which prohibit tort litigation after a given number of years after the defendant last acted or owned the contaminated property at issue.

From a textual point of view, what has divided the circuits in interpreting Section 9658 is that the provision, unlike the recommendation in the Superfund Section 301(e) Study, makes no reference to “statutes of repose.” The first question is whether the plain meaning of “the period specified” in a “statute of limitations” (which could include a period specified in “the State statute of limitations or under common law”) would include the period set by a state statute of repose, thereby mandating preemption of state statutes of repose. Stated more simply, the first question is whether the term “statute of limitations” in Section 9658 can encompass both statutes of limitations and statutes of repose.

At Oral Argument, several justices suggested that the term statute of limitations might cover both. Scalia exclaimed, “I used to consider them when I was in law school and even as late as 1986, I—I would have considered that a statute of limitations. Now, you think Congress is smarter. They—they know the law better.” (Oral Argument, at 13).

Justice Kagan evoked laughter with the comment, “That’s a very sophisticated Congress you’re asking us to imagine.” (Oral Argument, at 15).

Scalia evoked further laughter with a comment about exchanges on the floor of Congress, “And everybody was listening to that: The chamber was full and—.” (Oral Argument, at 16).

Justice Kennedy also got a laugh later in the argument, “And the study commission did recognize the distinction between limitations and repose. I agree with Justice Scalia. I didn’t have Justice Ginsburg as a law professor, but I—this was new for me.” (Oral Argument, at 29).

There are also what Adam Bain in a recent law review article refers to as “contextual clues” in 9658 about whether Congress thought that a state like North Carolina, which had both a discovery rule statute of limitations and a statute of repose, was intended to have its repose provision preempted. First, 9658 only refers to a singular “limitations period,” perhaps implying that it does not cover multiple limitations periods in a state. Justice Scalia stated at oral argument, “I think you got a real problem with the singular versus plural phrasing of number (1).” (Oral Argument, at 37).

Second, Section 9658 “points to a commencement date focused on the accrual of a right to plaintiff rather than to a commencement date tied to the conduct of the defendant. The statute’s reference to displacement of ‘the date’ specified in ‘the limitations period’ would further support as interpretation focused exclusively on the date of accrual, and therefore preempting only state statutes of limitations and not statutes of repose.” (Adam Bain, Determining the Preemptive Effect of Federal Law on State Statutes of Repose, 149 U. Balt. L. Rev. 119, 160 (2014)). After an exhaustive survey of text-based canons of statutory construction, Mr. Bain concludes in a 2014 law review article, “Because the plain meaning of Section 9658(a)(1)—considered in conjunction with text-based canons of construction—does not clearly support applying the preemptive effect of Section 9658(a)(1) to statutes of repose, the next step in the analysis is to consider the substantive canons of construction and determine whether they give rise to any inference regarding preemption.” (Id at 161). Candidate substantive canons of construction may include CERCLA’s remedial purpose, the presumption against preemption of traditional state law prerogatives, and the presumption against retroactivity.

Section 9658 and the Constitution

The United States argued in its amicus brief in the Supreme Court, CERCLA’s remedial purpose does not support a broad preemption of state tort law. That amicus brief states, “[I]t does not follow that helping private plaintiffs to collect tort damages years after the contamination has ended—and after the point at which the state legislature determined as a substantive matter that liability under state law should cease—fits into that same federal remedial focus of the Act. (Cf. 131 Cong. Rec. 35,646 (1985) (statement of Rep. Kindness) (opposing creating of federal cause of action under CERCLA for tort damages relating to hazardous substances because such a cause of action ‘ha[d] to do with adjustment of private rights and liabilities and remedies,” and was thus “at odds” with purpose of CERCLA “to clean up hazardous waste sites in order to protect the public interest”); 131 Cong. Rep. 35,689 (statement of Rep. Glickman) (explaining that CERCLA’s “real purpose … is the cleanup of hazardous waste sites,” and that a new federal tort remedy would improperly turn CERCLA “into a private compensation program”); 131 Cong. Rec. 35,640 (statement of Rep. Fish) (“The purpose of the Superfund law is to provide a Federal response to the urgent need to clean up existing hazardous waste sites. … This House has consistently rejected expanding the Superfund statute to deal with legal rights aimed at compensation for damages.”)).

State supreme courts confronting Section 9658 have opined that the “rebirth of federalism in United States v. Lopez may call into question the constitutionality of § 9658.” (Becton v. Rhone Poulenc, Inc., 706 So. 2d 1134, 1142 (Ala. 1997)). State courts have construed the provision narrowly, drawing on a presumption against preemption “that the historic police powers of the States [are] not to be superseded by [federal legislation] unless that was the clear and manifest purpose of Congress.” (Lee v. CSX Transp. Inc., 958 So.2d 578, 583-84 (Fla. Dist. Ct. App. 2007)). Professor Robin Kundis Craig recently opined, “States’ continued resistance to CERCLA’s FRCD (“Federally required commencement date”) suggests that the FRCD creates, at the very least, a perception of federal overreaching into and commandeering of state law. … The imposition of the FRCD on state tort law, without preempting state tort law in its entirety, would seem to fit neatly within the Printz Court’s lists of actions that are inconsistent with constitutional federalism.” (Robin Kundis Craig, Federalism Challenges to CERCLA: An Overview, 41 Sw. L. Rev. 617, 638-641 (2011)).

Interestingly, though, the parties in CTS v. Waldburger do not make reference to the fundamental Constitution-based reason that the Section 301(e) Study Group did not recommend federal preemptive legislation such as Section 9658—retroactivity. As George Freeman, a member of the Study Group, testified in 1982, “Retroactive application of a more stringent liability standard can render an objectionable legal standard unconscionable. In addition, retroactive application of a vicarious, strict liability raises serious constitutional due process questions analogous to the explicit prohibition of ex post facto laws in the criminal area. Indeed, the concepts of fairness and substantial justice which underlie these constitutional concepts also serve as the philosophical underpinning for the general rule of construction that a statute is to be given only prospective application.” (Public Works Hearing, at 843-845).

The purpose of a statute of repose is to “demarcate the bounds of substantive tort liability under state law.” (Petitioner’s Brief, CTS v. Waldburger, at 37). As I argued in a law review article in 1992, there is no evidence that Congress intended to preempt state law to override state constitutional prohibitions on retroactive legislation. (Alfred R. Light, New Federalism, Old Due Process, and Retroactive Revival: Constitutional Problems with CERCLA’s Amendment of State Law, 40 U. Kans. L. Rev. 365, 405-410 (1992)). Section 9658, styled “State Procedural Reform,” can be read to preempt only statutes of limitations that are procedural, that is statutes of limitations in which the state seeks only to extinguish a remedy, not the right. (See Pub. L. 99-499, §203, 100 Stat. 1613, 1695 (1986)). Statutes of repose, which states intend to be substantive limitations on liability under state law, should not be construed as preempted. (Cf. Amicus Brief of the United States, at 27 (contrasting North Carolina’s characterization of statutes of limitations as procedural with statutes of repose, which act as a substantive condition precedent)). “Unlike a limitation provision which merely makes a claim unenforceable, a condition precedent establishes a time period in which suit must be brought in order for the cause of action to be recognized.” (Boudreau v. Baughman, 368 S.E.2d 849, 857 (N.C. 1988)).

Many state constitutions categorically and expressly forbid retroactive legislation. The United States Supreme Court has stated a presumption against retroactive application comes into play where “retroactive application ‘would infringe upon or deprive a person of a right that had matured or become unconditional.’ ” (Bennett v. New Jersey, 470 U.S. 632, 639 (1985) (quoting Bradley v. School Bd., 416 U.S. 696, 720 (1974)). The “venerable rule of statutory interpretation [is] that statutes affecting substantive rights and liabilities are presumed to have only prospective effect.” (Id.). The passing of a limitations or repose period can create a vested right in the defendant that cannot be removed by subsequent legislative action expanding the limitations or repose period. Thus, legislative attempts to revive barred claims often are invalid under state constitutional provisions prohibiting retroactive legislation. In the absence of these provisions, state supreme courts often have found the revival of barred claims to violate state constitutional due process.

What about the U.S. Constitution? In Campbell v. Holt, 115 U.S. 620 (1885), the United States Supreme Court held that state legislative revival of a previously barred claim does not always violate the Due Process Clause of the Fourteenth Amendment. In Chase Securities Corp. v. Donaldson, 325 U.S. 304, 311-312 (1945), the Court followed Campbell in affirming the Minnesota Supreme Court’s decision permitting its Legislature to review a barred claim. In Chase, the Court distinguished two earlier decisions, William Danzer & Co. v. Gulf & Ship Island Railway Co., 268 U.S. 633 (1925), and Davis v Mills, 194 U.S. 451 (1904), on the grounds that the state court in Chase had “so construed the relationship between its limitations acts and the state law creating the asserted liability as to make these cases inapplicable.” (Donaldson, 325 U.S. at 312 n.8).

In Danzer, the statute creating a “liability also put a period to its existence.” (Danzer, 268 U.S. at 637). A retroactive extension thus “amounts to a taking of property without due process of law.” (Id.) In Davis, “the period of limitation [was] prescribed by a different statute,” than that creating the liability, but the Court reached the same result as in Danzer because the statute stating the limitations period “was directed to the newly created liability so specifically as to warrant saying that it qualified the right.’ ” (Id. (quoting Davis v. Mills, 194 U.S. 451, 454 (1903)).

In contrast, the state court in Chase had concluded that the challenged statute did not confer “a new right or … a new liability,” and that “appellant had acquired no vested right to immunity from a remedy for its wrong.” (Id.). Refusing to disturb those state court interpretations of the state statute at issue, the Court permitted revival. The Court reaffirmed this analytical approach in regard to the Fifth Amendment and congressional legislation in 1976. (International Union of Elec., Radio & Mach. Workers Local 790 v. Robbins and Myers, Inc., 429 U.S. 229, 243-44 (1976)). As I concluded in my 1992 law review article, “the federal Constitution poses no due process bar to revival where statutes of limitations are held to apply to the remedy only.” (Light, at 395).

In other words, in order to avoid Federalism and Due Process issues associated with retroactive application, Section 9658 might be construed consistent with SARA’s title for Section 9658 (“State Procedural Reform”) to affect statutes of limitations that are procedural (affect the remedy) but not those that are substantive (affect the liability). (Light, at 406-407).

At oral argument, Justice Kagan hit upon this distinction, saying, “You know, to understand this distinction and then to say look, the statute of repose is really an interference with substantive liability in a way that the statute of limitations is not and that might raise constitutional avoidance issues—that’s—that’s pretty sophisticated stuff.” (Oral Argument Transcript, at 15).

Later, in the oral argument, Justice Ginsburg returned to the distinction, asking, “are they going back to what—at least I learned in law school, there was a statute of limitations and then there was a so-called built-in statute of limitations. Statutes of limitations generally covered all claims, but a built-in statute of limitations was considered to limit not simply the remedy, but the right.” (Oral Argument Transcript, at 25). As Counsel for the Petitioner argued, “So this is a distinction that the law has generally recognized and it wouldn’t be at all surprising that in the context of a federalism compromise, which is what 9658 really was, that Congress would have chosen to mirror the same distinction.” (Oral Argument Transcript, at 26).

A `Small Surgical Change’

Based on all the laughter at the oral argument, CTS v. Waldburger is a funny case. As Justice Scalia put it after listening to textual argument after textual argument, “Anyway, this is—this is—it is angels on the head of a pin, isn’t it? [Laughter].” (Oral Argument Transcript, at 38). The easiest way to resolve the case is simply to say that it does not cover statutes of repose because there is no express reference to statutes of repose in the statute. When all is said and done, I think this is what the Supreme Court will do. Let Congress, if it wishes to expand the scope of its preemption, change the definition. The implication of such a ruling would be that one must go to state legislatures and state judges to change substantive state toxic tort law.

A ruling that Congress did intend to preempt state statutes of repose, including state constitutional provisions protecting against the revival of barred claims, would be more significant. Plaintiffs would be able to bring suit against former owners of property for contamination 40, 50 and 60 years after the property was sold. The retroactive federal law of Superfund cleanup would be extended to damages actions, with the states having to administer the system because of the inability or unwillingness of the Congress to enact the federal toxic tort cause of action that it deleted from the “compromise” legislation in 1980. If the Supreme Court does this, the Supreme Court should at least state that the Superfund Section 301(e) Study Group did not recommend such preemption. The Study Group Report is not “legislative history” supporting such an interpretation of Section 9658.