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The Eleventh Amendment to the United States Constitution preserves the doctrine of sovereign immunity, which shields state governments and their agencies from federal litigation that seeks money damages or equitable relief. In general, a state government can only be sued if sovereign immunity is expressly waived by statute. For example, nearly every state and the federal government have enacted a “torts claims act” that abrogates sovereign immunity for certain claims based on the negligence of government employees, and states that accept federal funding are also not immune from federal discrimination suits. Where no waiver exists, the doctrine of sovereign immunity is broad and provides a shield to environmental suits, including claims under the federal Comprehensive, Environmental, Response, Compensation, and Liability Act (“CERCLA”), as the Fifth Circuit recently affirmed in United States Oil Recovery Site Potentially Responsible Parties Group v. Railroad Comm’n of Texas, et al., Dkt. No. 17-20361, __ F. 3d __, (5th Cir., Aug. 1, 2018).
A group of over 100 potentially-responsible parties (“PRPs”) cooperating with EPA to cleanup a Superfund site in Pasedena Texas, filed an action under CERCLA and its state counterpart, the Texas Solid Waste Disposal Act, against nearly 1,200 parties that the PRP group alleged were partially responsible for remediation costs. The defendants included several state agencies and state universities. These state agencies and universities filed a motion to dismiss, arguing they were immune from suit under the doctrine of sovereign immunity embodied in the Eleventh Amendment. The United States District Court for the Southern District of Texas denied the motion to dismiss, without any analysis, and the state agencies and universities appealed to the Fifth Circuit.
The Fifth Circuit affirmed that since CERCLA does not expressly abrogate sovereign immunity, the issue was whether the state agencies and universities qualifies as “arms of the state” entitled to invoke sovereign immunity as a shield to the PRP group’s CERCLA claims. The Fifth Circuit confirmed that there was long-standing precedent that the Texas state agencies and universities named in the suit were “arms of the state” entitled to sovereign immunity. Each of the Texas state agencies was defined as a state agency under Texas law, each was included in the state’s budget and were funded by the state treasury, each lacked local autonomy, each has statewide regulatory power, and each is subject to oversight by state elected officials. The same factors also applied to each of the state universities.
The Fifth Circuit rejected the PRP group’s argument that the state agencies and universities had waived sovereign immunity by engaging in “proprietary functions” that caused contamination, holding that “[w]e have never held that an arm of the state is able to assert sovereign immunity as to some claims but not to others, and decline to do so here.” The Court also rejected the PRP group’s argument that the Texas Commission on Environmental Quality – the state’s environmental agency and counterpart to EPA – had waved sovereign immunity for all the state agency and university defendants because it participated with EPA in the cleanup of the Superfund site. The Fifth Circuit held that “an arm of the state waives state sovereign immunity only if it voluntarily invokes federal jurisdiction, or . . . makes a ‘clear declaration’ that it intends to submit itself to federal court jurisdiction,” which must “be unequivocally expressed.” (emphasis added). Since no clear declaration to waive sovereign immunity had been made, the Fifth Circuit rejected the PRP group’s argument that the Texas Commission on Environmental Quality waived sovereign immunity for all the other state agencies and universities named in the CERCLA suit simply by participating in the cleanup process. Further, since there was no basis for a CERCLA suit against the state entities, the Fifth Circuit held that the claims filed under the state-counterpart statute to CERCLA likewise must be dismissed, since the federal court lacked supplemental jurisdiction over those claims once the federal claims were dismissed.
The Fifth Circuit decision affirms that state agencies are only subject to CERCLA if they clearly and expressly waive sovereign immunity. Private litigants may therefore need to resort to state law actions to recover remediation costs, but may face similar challenges unless the state counterpart to CERCLA expressly waives sovereign immunity for environmental claims by statute.