State’s Sovereign Immunity under CERCLA Not Waived by Asserting RCRA Counterclaim, Court Rules

The State of New Jersey did not waive its sovereign immunity from suit by private parties under CERCLA when it asserted counterclaims against those same parties under RCRA and New Jersey state law, a federal court ruled last month.

The plaintiff in the case, Litgo New Jersey, sued the New Jersey Department of Environmental Protection (“DEP”), seeking an order compelling DEP to investigate and remediate hazardous waste, as well as a declaratory judgment that DEP was liable for past and present costs for disposal of the waste. In a decision handed down in the case of Litgo New Jersey, Inc. v. Jackson,[1] a federal district court held that the State of New Jersey’s assertion of counterclaims under RCRA[2] and under New Jersey’s Industrial Site Recovery Act (“ISRA”) did not constitute a waiver of the state’s Eleventh Amendment immunity from private claims under CERCLA.[3]

The decision does not break new ground, but it does stand as a reminder of the difficult situation private parties can find themselves in at a Superfund site in which the state government is a significant polluter. The United States Supreme Court created the problem in Seminole Tribe of Florida v. Florida, in which it held that, unless a state has affirmatively waived its immunity, as some states have done under their own state “mini-Superfunds,” or subjected itself to federal court jurisdiction by initiating litigation itself, the states may rely on the Eleventh Amendment to prevent private parties from pursuing them under CERCLA. As Litgo illustrates, in such circumstances, private parties may end up picking up the state’s share.

Factual Background

Litgo New Jersey is the current owner of property in Somerville, New Jersey that has been the site of a number of commercial and industrial operations. Following a chemical fire in 1983, the DEP undertook a cleanup of the site pursuant to New Jersey’s ISRA. In 2006, Litgo and the former owner of the site filed a RCRA citizen suit against the DEP, charging that the state had failed to fully remediate the site, leaving underground contamination in place. The plaintiffs sought a cleanup order and declaratory judgment against both the DEP and its administrator, seeking a declaration of liability for “past and present contributions to the handling, storage, treatment and disposal of waste” at the site.[4]

DEP and its administrator counterclaimed against Litgo and the prior owner, seeking to enforce a prior court order under ISRA. In response, the plaintiffs filed an amended complaint adding claims under CERCLA and ISRA. DEP moved to dismiss, arguing that it had not waived its sovereign immunity under the Eleventh Amendment.[5]

Litgo Re-Affirms Supreme Court’s Rejection of Congress’ Ability to Abrogate States’ Sovereign Immunity under CERCLA

In resolving the motion to dismiss, the District of New Jersey had to determine whether the DEP’s assertion of counterclaims was sufficient to waive the state’s Eleventh Amendment immunity to suit. Litgo argued that New Jersey had waived its Eleventh Amendment immunity by filing its RCRA counterclaims, relying on New Jersey Dep’t of Envt’l Prot. v. Gloucester Envt’l Mgmt. Servs., Inc.[6] In Gloucester, the DEP had filed a series of state-law claims against a waste hauler and some of its customers, who responded by filing third-party complaints against state agencies who were customers of the hauler and seeking contribution. The court rejected a motion to dismiss grounded on Eleventh Amendment immunity, finding that the defendants had not enlarged the relief sought against the state agencies beyond the scope of the DEP’s initial claims against the hauler.[7]

The court rejected Litgo’s attempt to use Gloucester as a grounds to claim waiver. The court reasoned that DEP’s counterclaims under RCRA only sought to require Litgo to remediate the site pursuant to a previously-issued court order. DEP’s claims were asserted only in response to Litgo’s attempt to force DEP to clean up the site, and DEP did not initiate the suit. The court drew a distinction between the situation in Litgo and that presented in Gloucester, where “the State’s submission of its rights to the federal court’s determination [gave] rise to waiver of the immunity of the State for claims directly arising from the State’s own causes of action.”[8] In Litgo, DEP responded to Litgo’s assertion of claims under RCRA with counterclaims, but only to the extent of the plaintiffs’ claims. The court held that DEP’s counterclaims did not expose the state to additional causes of action, and rejected Litgo’s attempt to expand the possible relief beyond the state superfund law by seeking contribution under CERCLA.

The Litgo decision reaffirms a line of authority flowing from the Supreme Court’s decision in Seminole Tribe of Florida v. Florida, 517 U.S. 44 (1996), in which the Supreme Court held that, despite Congressional action expressing an intent to abrogate the state’s sovereign immunity by including the states within the definition of “person” under CERCLA Section 101(20)(D), because Congress did not enact CERCLA pursuant to the Fourteenth Amendment, it lacked the constitutional authority to abrogate the states’ immunity under the Eleventh Amendment.

Sovereign Immunity under the Eleventh Amendment

The Eleventh Amendment provides that: “The Judicial power of the United States shall not be construed to extend to any suit in law or equity, commenced or prosecuted against one of the United States by Citizens of another State, or by Citizens or Subjects of any Foreign State.” While the language of the amendment bars suits brought against a state by its own citizens,[9] the Amendment has long been interpreted as also barring suits against states in federal courts, if those lawsuits are predicated on federal questions. There are three exceptions to this general rule: (1) abrogation of the states’ sovereign immunity by Congress, (2) waiver of the immunity by the state itself, or (3) an action to enjoin a state official from violating federal law (such as § 1983) (under the doctrine of Ex Parte Young).

The Supreme Court has held that abrogation of the States’ constitutional immunity must be done “in unmistakably clear language,” demonstrating an obvious intention to allow the States to be sued in federal court.[10] The Court has likewise required unequivocal action on the part of the state: “[A] state will be deemed to have waived its immunity ‘only where stated by the most express language or by such overwhelming implication by the text as [w]ill leave no room for any other reasonable construction.’”[11] “Although a state’s general waiver of sovereign immunity may subject it to suit in state court, it is not enough to waive the immunity guaranteed by the Eleventh Amendment.”[12] For immunity purposes, suits against a state agency are considered to be suits against a state, and thus barred by the Eleventh Amendment as well.[13] Likewise, “[w]hen suit is commenced against state officials, even if they are named and served as individuals,” the states’ sovereign immunity will apply.[14]

Amendments to CERCLA and Union Gas

Prior to the 1986 amendment and reauthorization of the CERCLA statute, the courts were divided on the issue of whether the Eleventh Amendment precluded private parties from bringing third-party CERCLA claims against the states. The issue was first directly confronted in U.S. v. Union Gas Co.[15]

In Union Gas, the district court initially rejected an attempt to sue the State of Pennsylvania for contribution of cleanup costs, based on an allegation that the state was an owner and operator of a Superfund site, finding that the inclusion of states in the definition of the term “person” did not constitute a sufficiently “clear statement” of Congress’ intent to abrogate the state’s sovereign immunity under the Eleventh Amendment. The Third Circuit initially affirmed this decision, but shortly after that decision, Congress adopted the Superfund Amendments and Reauthorization Act (“SARA”).

The Supreme Court vacated the Third Circuit’s decision and remanded for consideration in light of SARA. On reconsideration, the Third Circuit reversed the district court, finding that, as amended by SARA, CERCLA now contained unmistakably clear language showing a clear intent on the part of Congress to abrogate the state’s Eleventh Amendment immunity. The additions made by SARA were: (1) additional language in §120(D) which made it clear that a state was subject to CERCLA in the same manner and to the same extent as any non-government entity; (2) use of language identical to the language in §107(g) waiving the federal government’s sovereign immunity under CERCLA; and (3) legislative history indicating that Congress made these changes to the statute in order to clarify that CERCLA abrogates the states’ Eleventh Amendment immunity.[16]

The Supreme Court affirmed the Third Circuit’s decision, adopting in large part the reasoning of the Third Circuit.[17] The Court grounded Congress’ authority to abrogate the state’s sovereign immunity on the Commerce Clause.[18] Following entry of the Supreme Court’s opinion in Union Gas, other courts followed this holding, allowing claims against states to go forward, based on the language changes adopted under SARA.[19]

In Seminole Tribe, the Supreme Court’s Rejects Abrogation of Sovereign Immunity, Except under the Fourteenth Amendment

Even prior to the decision in Union Gas, the Supreme Court had held that, in order to abrogate a state’s sovereign immunity, not only did Congressional intent to abrogate the state’s immunity have to be unequivocally expressed, but that Congress also had to have acted pursuant to a valid exercise of power.[20] While Union Gas held that SARA satisfied the first requirement, in Seminole Tribe, the Court determined that the Commerce Clause was not an appropriate source of authority under which Congress could abrogate a state’s Eleventh Amendment immunity.[21] In articulating its reasoning, the Supreme Court reversed itself, expressly overruling its decision in Union Gas.[22]

In Seminole Tribe, the Court held that Congress could abrogate the states’ Eleventh Amendment immunity only when acting under the Fourteenth Amendment.[23] Because CERCLA was enacted pursuant to the Commerce Clause, the Court held that provisions in the statute that purported to make the states liable to private parties were unenforceable.[24]

Following the issuance of the Seminole Tribe decision, district courts presented with CERCLA claims raised against states have dismissed those claims pursuant to the Eleventh Amendment.[25] This same rationale was extended to suits which asserted claims against states or state agencies under RCRA.[26]

Waiver of Sovereign Immunity by States

Because a state may waive its sovereign immunity under the Eleventh Amendment, a number of decisions have considered what sort of state action would constitute a waiver sufficient to subject a state or state agency to federal court jurisdiction. The Supreme Court has required that such a waiver must be explicit: “[A] state will be deemed to have waived its immunity ‘only where stated by the most express language or by such overwhelming implication by the text as [w]ill leave no room for any other reasonable construction.’”[27] “Although a state’s general waiver of sovereign immunity may subject it to suit in state court, it is not enough to waive the immunity guaranteed by the Eleventh Amendment.”[28]

For instance, in the Gloucester decision that was relied upon by the plaintiffs in Litgo, after DEP had initiated the litigation by filing a series of complaints against a waste hauler and its customers, the court rejected the state’s attempt to employ the Eleventh Amendment to dismiss third party complaints seeking contribution from the state. The reason was that the complaints against the state did not enlarge “the relief sought against the allegedly responsible state entities beyond the narrow confines of the State’s … claim itself.”[29]

Contrasting with the result in Gloucester is the Oregon District Court’s decision in Burns v. MBK Partnership, where the plaintiffs argued that the State of Oregon had waived its sovereign immunity by consenting to suits under Oregon’s state superfund statute, ORS § 465.200, et seq., as well as by assuming the role of the federal government in administering and enforcing the federal RCRA program.[30] The Oregon District Court rejected this argument, holding that the waiver of immunity in the state superfund statute was “a general waiver with respect to state court, not federal court.”[31] With respect to enforcement of RCRA, the court held that, when a state seeks to enforce a federal program through litigation in federal court, the state voluntarily waives its Eleventh Amendment immunity and submits itself to the jurisdiction of the federal court, but only to the extent required for determination of the claim presented and any compulsory counterclaims.[32]

Conclusion

Despite the language inserted into CERCLA by the SARA amendments, since the Supreme Court’s decision in Seminole Tribe, Congress has been restricted in abrogating the state’s sovereign immunity, except when acting pursuant to the Fourteenth Amendment. As a result, the states have enjoyed immunity from private claims under CERCLA unless they have expressly waived their immunity or asserted claims under CERCLA or RCRA that resulted in an implicit waiver. The Litgo decision falls within this same line of reasoning – because the state was asserting a compulsory counterclaim under RCRA, the district court refused to read that counterclaim as a waiver of New Jersey’s sovereign immunity, except to the limited extent of that claim itself. For sites where a state or state agency is a potentially responsible party, this line of cases may leave a private party without a federal remedy under CERCLA against the state, at least in the absence of action by EPA or a waiver by the state.

For more information on this case or environmental litigation generally, please contact Steven Jones or any member of Marten Law Group’s Environmental Litigation practice group.