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Supreme Court Update: Time Barring CERCLA Claims on Contaminated Sites
June 17, 2014
If you have purchased property within the last ten years, and there is a chance hazardous wastes are located on site, you may be running out of time to exercise your right to receive compensation from prior owners due to a recent interpretation of the Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”). The Supreme Court recently barred a claim by plaintiffs who sought damages for contamination on their property caused by a prior owner, who had sold them the property 24 years earlier, even though they had no knowledge of the contamination until 22 years after purchasing. This holding will impact sellers and buyers alike, by penalizing purchasers who fail to thoroughly evaluate the environmental condition of their properties, but also providing a reliable “cut-off” date of liability for prior activities by sellers.
In CTS Corp. v. Waldburger (“CTS Corp”)[i], the Supreme Court held that CERCLA does not preempt state statutes of repose, which limit the time in which a plaintiff can bring a claim after a wrongful act was committed. CTS owned an electronics plant for nearly 40 years and used and stored hazardous chemicals on site, including trichloroethylene. In 1985, CTS sold the property along with a promise that the land was “environmentally sound” to several buyers. However, the buyers discovered the hazardous chemicals in 2009, when EPA informed them that hazardous chemicals tied to CTS’ operations had been found in their wells.
Upon learning of the contamination, the buyers and other adjacent property owners filed suit against CTS Corporation seeking compensation for damages caused by the chemicals in a nuisance claim. CERCLA, a federal statute allowing parties to force remediation or obtain reimbursement of cleanup costs, does not allow for damages for nuisance.
Nuisance actions are “tort” claims – claims that one party has injured another through their actions or a breach of duty. Governed by state law, most tort actions are time-restricted by state statutes of limitation as well as a similar mechanism called “statutes of repose.” Statutes of limitation require that a claim must be brought within a certain amount of time after the injury occurs or the plaintiff becomes aware of it. On the other hand, statutes of repose exist for the benefit of the person committing the tort – it provides a “cut off” date from the time of the last wrongful act, after which, the potential defendant is no longer exposed to liability for their past actions, regardless of whether or not the injury is discovered. Both statues define the temporal period during which a claim can be brought, but, as the Supreme Court pointed out, are measured from different times and exist for different policy reasons.
CERCLA preempts state laws that conflict with its terms – including state statutes of limitations that begin to accrue before the plaintiff has knowledge of the contamination. This is in place because environmental contamination on a property is difficult to discover, and often is not noticeable for several years after the contamination occurs. However, when the plaintiffs in CTS Corp filed their claim, the lower court held that it was barred due to the state’s statute of repose, which barred claims after ten years from the last culpable act. The plaintiffs appealed to the Supreme Court, arguing that they deserved an extension because they had no knowledge of the contamination, and that CERCLA should pre-empt the state statute. However, the Supreme Court disagreed, stating that statutes of repose reflect “legislative decisions that as a matter of policy there should be a specific time beyond which a defendant should no longer be subjected to protracted liability.” Further, since CERCLA referenced only the ability to extend time beyond a statute of limitations, they concluded that Congress did not intend to pre-empt statutes of repose.
As a result, the claim for damages against CTS was dismissed.
The practical outcome of this case is that an avenue for recovery is cut off for potential plaintiffs in states that have a statute of repose. In states like Ohio, which have a ten-year statute of repose, this holding may directly impact the rights of businesses that own or recently sold sites in the state with a history of contamination,
The full text of the opinion can be found on the Supreme Court’s website
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[i] CTS Corp. v. Waldburger, No. 13-339 (June 9, 2014).
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