Constitutionality of State Procedural Reform Provision in Superfund Legislation ( 1986 )

Constitutionality of State Procedural Reform Provision
in Superfund Legislation
A bill reauthorizing the Comprehensive Environmental Response, Compensation, and Liability
A ct o f 1980 contains a section that provides for a uniform federal commencement date for the
running o f state statutes of limitations in toxic tort actions. By operation o f this provision,
some actions previously time-barred under existing state law would be revived.
U nder current case law, the bill would not be struck down as beyond the constitutional power of
Congress. Although the effort to dictate the content o f state law is inconsistent with well-
established provisions o f federalism, it cannot be said that this effort violates the Tenth
A m endm ent as explained by the Supreme Court in Garcia v. San Antonio Metropolitan
Transit Authority, 469 U.S. 528 (1985).
The retroactive aspects o f the bill m ay be challenged as a denial o f property without due process
of law or as a taking of property w ithout ju st compensation. A due process challenge would
present difficult questions due to the existence o f tw o lines o f Supreme Court authority in
apparent tension, and the bill may well be held to violate the Due Process Clause. The revival
o f a tim e-barred action probably would not constitute a taking under the ad hoc regulatory
takings inquiry established by the Supreme Court.
April 1, 1986
M em orandum O p in io n for th e D epu ty A s s is t a n t A ttorney G eneral,
C iv il D iv is io n
In a letter of December 19, 1985, you requested the views of this Office on
the constitutionality of certain provisions in H.R. 2817, prescribing a uniform,
retroactive federal commencement date for the running of statutes of limita­
tions in state tort actions arising from exposure to toxic substances (toxic torts).
Although the invasion of the powers of the states proposed by this bill raises
serious concerns, we cannot say that the bill would be struck down as beyond
the constitutional powers of Congress. We believe, however, that the retroac­
tive aspects of the bill may be held to violate the Due Process Clause in certain
instances, although they would likely survive a challenge under the Takings
Clause. Finally, we think that, even if constitutional, the bill might have the
untoward result of inducing some state courts to invalidate entire state causes
of action for toxic torts.
H.R. 2817, the House bill reauthorizing the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, Pub. L. No. 96-510, 94
Stat. 2767 (codified at scattered sections of titles 26, 33,42 & 49 of the United
States Code) (Superfund), contains a section on “State Procedural Reform,”
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which provides a uniform federal commencement date for the running of state
statutes of limitations in toxic tort actions. The federal commencement date
applies to “any action brought under State law” for injury resulting from
exposure to toxic substances; this federal commencement date presumably
applies to both statutory and common law actions. No new federal cause of
action is created. The bill would make the new commencement date applicable
to actions brought after December 11,1980, thereby retroactively “reviving” at
least some actions that are time-barred under existing state statutes of limita­
tions.
1. Tenth Amendment. The initial question is whether congressional alteration
of state statutes of limitations, other than through creation of a preemptive
federal cause of action, is consistent with the constitutional structure of dual
sovereignty. We find the question troubling. Although Congress may of course
preempt state law in areas of legitimate federal constitutional authority, any
effort by the federal government to dictate the content of state law (as this bill
contemplates) would do gross violence to our federal system. Nevertheless, we
cannot say that this novel provision would be held to violate the Tenth Amend­
ment under the standards for constitutional federalism set forth in Garcia v.
San Antonio Metropolitan Transit Authority , 469 U.S. 528 (1985). The Su­
preme Court in Garcia overruled its earlier decision in National League o f
Cities v. Usery, 426 U.S. 833 (1976), which had determined that the federal
government’s Commerce Clause powers were constrained by the Tenth Amend­
ment “in areas of traditional governmental functions.” Id. at 852. Garcia
rejected the distinction between traditional and nontraditional governmental
functions as untenable, see 469 U.S. at 539-49, and concluded that limitations
on congressional power to regulate the states were to be left primarily to the
political process. See id. at 549-55. To be sure, the Court held open the
possibility that certain extreme cases might invite judicial scrutiny. See id. at
556-57. But H.R. 2817 would have presented a difficult question even under
pre-Garcia law. See FERC v. Mississippi, 456 U.S. 742, 764—71 (1982).
2. Retroactivity and Due Process. The proposal to apply the new statute of
limitations retroactively to revive previously barred actions raises serious
constitutional questions, the chief of which is whether revival of time-barred
actions is an unconstitutional deprivation of the property of defendants without
due process of law.
The principal decision suggesting that revival of actions might violate the
Constitution is William Danzer & Co. v. G ulf & Ship Island R.R. Co., 268 U.S.
633 (1925). Following the First World War, a statute was passed providing that
the period of wartime federal control of railroads was not to be counted in
determining whether actions under the Interstate Commerce Act were brought
within that Act’s statute of limitations. The reparations suit by the plaintiff
shippers in Danzer was brought subsequent to this new statute, but the time
limit on the action under the old statute of limitations had expired before the
post war enactment. If the wartime period was excluded from the computation,
the action would have been timely. The Supreme Court held that it would
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violate the Fifth Amendment to apply the new limitations provision to revive
an action that was already fully barred. Prior decisions had established “that the
lapse of time not only barred the remedy but also destroyed the liability of
defendant to plaintiff. On the expiration of the two-year [limitations] period, it
was as if liability had never existed.” 268 U.S. at 636 (emphasis added)
(citations omitted). In such cases, where the limitations provision “constitute[s]
a part of the definition of a cause of action created by the same or another
provision, and operate[s] as a limitation on liability,” id. at 637, retroactive
application of a change in the statute to revive liability “would . . . deprive
defendant of its property without due process of law in contravention of the
Fifth Amendment.” Id.Danzer distinguished the Court’s earlier opinion in Campbell v. Holt , 115
U.S. 620 (1885), which had rejected the argument that the retroactive removal
of a time-bar to a Texas contract action violated the Fourteenth Amendment.
The Campbell Court, while suggesting that there would be constitutional
problems with revival of an action to recover title to property that had vested
with the passage of time, see 115 U.S. at 623, found no such bar to revival of an
expired contract action, holding: “We certainly do not understand that a right to
defeat a just debt by the statute of limitations is a vested right, so as to be
beyond legislative power in a proper case.” Id. at 628. See also id. at 629 (“[w]e
are unable to see how a man can be said to have property in the bar of the
statute as a defence to his promise to pay”) (emphasis in original). The Danzer
Court found this case inapplicable since it “rests on the conception that the
obligation of the debtor to pay was not destroyed by lapse of time, and that the
statute of limitations related to the remedy only . . . .” 268 U.S. at 637. By
contrast, the Danzer Court concluded, the time limitation in the Interstate
Commerce Act went to the existence of liability, freedom from which was held
to be a vested property right that could not be infringed under the Fifth
Amendment. See id.In Chase Securities Corp. v. Donaldson, 325 U.S. 304 (1945), the Court
upheld the constitutionality of retroactive application of a change in the statute
of limitations for actions under Minnesota’s Blue Sky laws. Danzer was
discussed and distinguished in a footnote:
In the D anzer case it was held that where a statute in creating a
liability also put a period to its existence, a retroactive extension
of the period after its expiration amounted to a taking of prop­
erty without due process of l a w. . . . But the situation here
plainly does not parallel that in the Danzer case . . . . At the time
this action was commenced the Blue Sky Law of Minnesota had
imposed on appellant a duty; it had not explicitly created a
liability. The liability was implied by the state’s common law;
the period of limitation was found only in the general statute of
limitations enacted many years earlier. The state court con­
cluded that the challenged statute did not confer on appellees a
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new right or subject appellant to a new liability. It considered
that the effect of the legislation was merely to reinstate a lapsed
remedy, that appellant had acquired no vested right to immunity
from a remedy for its wrong in selling unregistered securities,
and that reinstatement of the remedy by the state legislature did
not infringe any federal right under the Fourteenth Amendment,
as expounded by this Court in Campbell v. Holt.
Id. at 312 n.8. Thus, the footnote in Chase Securities appears to retain the
“right/remedy” distinction enunciated by Danzer: retroactive application of
new statutes of limitations is unconstitutional when it would revive liability,
rather than merely revive a remedy for liability that was never extinguished,
and in state causes of action one must look to state law to determine which is
the case.1
The Court’s most recent discussion of Danzer is consistent with this analy­
sis. In International Union o f Electrical, Radio & Machine Workers, AFL-CIO,
Local 790 v. Robbins & Myers, Inc., 429 U.S. 229 (1976), the Court upheld the
retroactive application of a new statute of limitations for filing charges with the
Equal Employment Opportunity Commission (EEOC), thus preserving a suit
under Title VII of the Civil Rights Act of 1964 that would otherwise have been
barred for failure to file with the EEOC in timely fashion. After concluding that
the new limitations period applied to the suit in question, the Court rejected the
defendant’s constitutional challenge to its application:
Respondent contends, finally, that Congress was without con­
stitutional power to revive, by enactment, an action which, when
filed, is already barred by the running of a limitations period.
This contention rests on an unwarrantably broad reading of our
opinion in [Danzer], Danzer was given a narrow reading in the
later case of Chase Securities Corp. v. Donaldson, 325 U.S.
304, 312 n.8 (1945). The latter case states the applicable consti­
tutional test in this language:
‘T he Fourteenth Amendment does not make an act
of state legislation void merely because it has some
retrospective operation. What it does forbid is tak­
ing of life, liberty or property without due process of
law . . . . Assuming that statutes of limitation, like
1 “Property interests . . . are not created by the C onstitution. Rather, they are created and their dim ensions
are defined by existing rules or understandings that stem from an independent source such as state law .”
Board o f Regents v. Roth , 408 U.S. 5 6 4 ,5 7 7 (1972). The C ourt in Campbell does not appear to have consulted
state law in this fashion. Rather, it seems to have held generally that lim itations on contract actions go to the
remedy, see 115 U.S. at 629, while the dissent took the contrary position, again as a general m atter. See id. at
630-31 (B radley, J., dissenting). A possible reconciliation is found in the com m ent in Chase Securities that
Campbell “adopted as a working hypothesis, as a m atter o f constitutional law, the view that statutes o f
lim itation go to m atters o f remedy, not to destruction o f fundam ental rights.” 325 U.S. at 314 (em phasis
added). If a defendant proves that state law establishes that statutes o f lim itations protect “fundamental
rights,” this presum ption, we assume, can be overcome.
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other types of legislation, could be so manipulated
that their retroactive effects would offend the Con­
stitution, certainly it cannot be said that lifting the
bar of a statute of limitation so as to restore a rem­
edy lost through mere lapse of time is per se an
offense against the Fourteenth Amendment.” Id. at
315-316.
Applying that test to this litigation, we think that Congress
might constitutionally provide for retroactive application of the
extended limitations period which it enacted.
429 U.S. at 243-44 (omission in original).
A plausible interpretation if this passage is that Congress did not intend the
limitations provisions in Title VII to condition the liability of defendants, and
Robbins & M yers is thus a “remedy” case akin to Campbell and Chase Securi­
ties, rather than a “liability” case like Danzer? In view of its endorsement of
Chase Securities, the Court evidently meant to give Danzer a “narrow reading”
by limiting it to situations in which the statute of limitations is an essential part
of the cause of action.
On this understanding of the law, H.R. 2817 presents serious problems. If,
under the law of a particular state, statutes of limitations are seen as condition­
ing liability with respect to any of the actions affected by the bill, then as to
those actions retroactive application of the new commencement date would be
an unconstitutional deprivation of property without due process. Many states
have such rules. See generally 51 Am. Jur. 2d Limitation o f Actions §44
(1970); 16A Am. Jur. 2d Constitutional Law §§ 665-66 (1979). The conse­
quence of this understanding o f the law is the unfortunate spectacle of a statute
fully constitutional in some states, partly constitutional in others, and wholly
unconstitutional in still others (those that guarantee the vesting of limitation
defenses).
There is, however, good reason to doubt whether this is an accurate state­
ment of the law. The Supreme Court has recently addressed the constitutional
power of Congress to create liability retroactively, holding broadly that the
legislature has considerable leeway to impose liability for conduct that was
legal when performed. In Usery v. Turner Elkhom Mining Co., 428 U.S. 1(1976), the Court considered and rejected a constitutional challenge to a
congressional program for compensating victims of black lung disease. In
particular, the Court upheld the retroactive imposition of liability on mine
owners for black lung disease contracted by mine workers who had left em­
ployment before enactment o f the compensation scheme. (The mine owners did
not object to compensating current employees for disease contracted in the
2 But c f United States Trust Co. o f New York v. New Jersey. 43] U.S. J, 20 n .]7 (1977) (the rem edy/
obligation distinction in Contract C lau se jurisprudence is “ now largely an outdated form alism ," though it
“a p p ro x im a te s] the result o f a more particularized inquiry into the legitim ate expectations o f the contracting
parties” ).
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past.) The Court pronounced it “well established that legislative Acts adjusting
the burdens and benefits of economic life come to the Court with a presumption
of constitutionality, and that the burden is on one complaining of a due process
violation to establish that the legislature has acted in an arbitrary and irrational
way.” 428 U.S. at 15. The Court noted that the statute “has some retrospective
effect,” id. at 16, but countered that “our cases are clear that legislation
readjusting rights and burdens is not unlawful solely because it upsets other­
wise settled expectations. This is true even though the effect of the legislation
is to impose a new duty or liability based on past acts.” Id. (citations omitted).
The Court suggested that retrospective legislation might be subject to more
heightened scrutiny than purely prospective acts and even intimated that it
would not uphold the black lung statute if its rationale was deterrence of
undesirable conduct. Id. at 16-17. But it found “that the imposition of liability
for the effects of disabilities bred in the past is justified as a rational measure to
spread the costs of the employees’ disabilities to those who have profited from
the fruits of their labor — the operators and the coal consumers.” Id. at 18.
The Court recently reaffirmed Turner Elkhom in Pension Benefit Guaranty
Corp. v. R.A. Gray & Co., 467 U.S. 717 (1984), which upheld the retroactive
imposition of liability on employers who withdrew from certain pension plans
within five months prior to enactment of a statute imposing additional costs on
withdrawal from those plans. Relying on Turner Elkhom, the Court empha­
sized that
the strong deference accorded legislation in the field of national
economic policy is no less applicable when that legislation is
applied retroactively. Provided that the retroactive application
of a statute is supported by a legitimate legislative purpose
furthered by rational means, judgments about the wisdom of
such legislation remain within the exclusive province of the
legislative and executive branches . . . .
467 U.S. at 729. The heightened burden that retroactive legislation must face
“is met simply by showing that the retroactive application of the legislation is
itself justified by a rational legislative purpose.” Id. See also United States
Trust Co. o f New York v. New Jersey, 431 U.S. 1, 17 n.13 (1977) (“ [t]he Due
Process Clause of the Fourteenth Amendment generally does not prohibit
retrospective civil legislation, unless the consequences are particularly ‘harsh
and oppressive’” (dictum ) (quoting Welch v. Henry, 305 U.S. 134, 147 (1938)).
If Congress created a new cause of action for toxic torts and imposed
retroactive liability, the statute would surely survive constitutional attack under
Gray and Turner Elkhom. Indeed, the parallels between such hypothetical
legislation and the black lung statute upheld in Turner Elkhom are striking,
even to the likely cost-spreading rationale. But if this is true, it is difficult to see
why Congress should be able to impose retroactive liability directly by creating
a new cause of action, but not indirectly by extending backwards a statute of
limitations (or new commencement date). An argument can thus be made that
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Danzer is no longer good law. Nonetheless, Turner Elkhom and Gray make no
reference to D anzer or the other statute of limitations cases, nor do the latter
cases refer generally to the former, even though Turner Elkhom had been
decided when Robbins & M yers , the most recent of the statute of limitations
cases, was decided.
3. Takings Clause. An additional constitutional question may be raised under
the Takings Clause of the Fifth Amendment. If liability is imposed retroac­
tively on those who deal with toxic wastes in order to spread costs among the
general public, defendants may argue that their property (i.e., their freedom
from liability by virtue of a state statute of limitations) is being taken for a
public purpose without just compensation. However, the bill would likely
survive a Takings Clause challenge under the “ad hoc, factual inquir[y],” Penn
Central Transportation Co. v. New York City, 438 U.S. 104, 124 (1978), used
by the Supreme Court in regulatory takings cases. See, e.g., Connolly v.
Pension Benefit Guaranty Corp., 475 U.S. 211,223-28 (1986); Ruckelshaus v.
Monsanto Co., 467 U.S. 986, 1004-08 (1984); PruneYard Shopping Center v.
Robins, 447 U.S. 74, 82-83 (1980). This inquiry looks to such factors as “the
character of the governmental action, its economic impact, and its interference
with reasonable investment backed expectations.” PruneYard Shopping Cen­
ter, 447 U.S. at 83. Because the government action contemplated by H.R. 2817
does not physically appropriate property for the government’s own use, see
Connolly, 475 U.S. at 224-25, and is likely to have little, if any, impact on
“investment backed expectations,” the revival of time-barred actions probably
does not meet the standards for a regulatory taking.
4. Other Issues. Quite apart from the question whether Congress has the
power to create retroactive liability through extension of state statutes of
limitations, the bill raises a number of other issues. Because H.R. 2817 is not
creating a new cause of action, but is merely engrafting a provision onto
existing state actions, it is necessary to consider the effects this might have
under state law. As was noted above, a number of states guarantee the vesting
of limitations defenses. Accordingly, it is conceivable that some state courts
may hold that state causes of action for toxic torts are not severable from the
statute of limitations under state law and that the effect of the federal law
purporting to alter the state statute of limitations is to invalidate the state cause
of action in toto .3
Present case law would not compel state courts to take jurisdiction over these
actions instead of invalidating the state compensation scheme. The Supreme
Court held in Testa v. Katt, 330 U.S. 386 (1947), that state courts may not
3 T h is raises the interesting question o f w hether such abrogation o f liability w ithout provision o f a
reasonable substitute w ould violate the d u e process rights o f toxic tort victims. W e know of no definitive
precedent on this point, though a recent dictum o f the C ourt suggests that it would not. See Duke Power Co. v.
Carolina Environmental Study Group, 4 3 8 U.S. 59, 88 & n.32 (1978). See also Silver v. Silver, 280 U.S. ! 17,
122 (1929) (dictum). But see New York Central R.R. Co. v. White, 243 U .S. 188,201 (1917) (“it perhaps may
b e doubted w hether the State could abolish all rights o f a ction [for personal injuries betw een em ployers and
em ployees] on the one hand, o r all defen ses on the other, without setting up som ething adequate in their
stead” ) (dictum).
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decline to take jurisdiction over a federal cause of action on the ground that it is
contrary to state policy. Here, however, no federal cause of action is at issue,
and neither H.R. 2817 nor any existing federal statute requires a state to
recognize a state cause of action for toxic torts or precludes a state from
repealing any such existing cause of action.
C harles J. C o oper
Assistant Attorney General
Office o f Legal Counsel
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