Environmental Alert
(by Alana Fortna)
As addressed previously in an article published by The Legal Intelligencer, one key case to watch before the U.S. Supreme Court is Atlantic Richfield Company v. Christian, Case No. 17-1498. On Monday, April 20, 2020, the Court issued its Opinion in this case (590 U.S. ___ (2020)), which included two Dissenting Opinions and opened the door for potential private party litigation involving proposed alternative cleanup plans at Superfund sites. While the likelihood of success on such future litigation may be questionable given the position of the United States as an amicus curia in this case, any litigation potential could still be disruptive to Superfund site cleanups, even if it is ultimately unsuccessful.
The Atlantic Richfield case involves one of the oldest Superfund sites in the country—the Anaconda Copper Smelter Site, which covers an area of approximately 300 square miles. Pursuant to the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. § 9601 et seq. (CERCLA), Atlantic Richfield has been performing investigation and remedial activities at the Site under the oversight and approval of the United States Environmental Protection Agency (EPA) for the past 35 years. Landowners in and around the Site sued Atlantic Richfield in Montana state court seeking, among other things, restoration damages under state law to restore their properties to their pre-contamination state. The landowners pursued an alternative cleanup plan that sought remedial action above and beyond the EPA-approved remedy in both scope and cost. The Montana Supreme Court agreed that the landowners could pursue their restoration claim against Atlantic Richfield despite statutory arguments to the contrary. The U.S. Supreme Court granted certiorari to address the following issues: (i) whether CERCLA strips the state court of jurisdiction over the landowners’ state law claim for restoration damages, and (ii) if not, whether CERCLA requires the landowners to seek EPA approval for their proposed remediation plan. In its Majority Opinion, the Court held that CERCLA does not deprive a state court of jurisdiction to hear a state law claim related to an alternative cleanup plan, but the landowners could only pursue their restoration claims if EPA approved their plan. The Court issued Dissenting Opinions with respect to the Majority’s holdings on both issues before the Court.
With respect to the jurisdictional question, the Court in its Majority Opinion based its holding on statutory interpretation of CERCLA Section 113. While the Court agreed that federal district courts have sole jurisdiction over claims brought under CERCLA, the Court denied the assertion that CERCLA displaces state court jurisdiction over claims under state law. The Court reviewed the language of CERCLA Section 113(b) that references controversies “arising under” CERCLA and determined the landowners’ claims did not “arise under” CERCLA even though they clearly implicated the CERCLA remedy for the Site. Atlantic Richfield argued that the Court must also look to CERCLA Section 113(h), which precludes jurisdiction in federal district courts over actions to review or challenge a selected remedial action. The Court denied application of CERCLA Section 113(h) to the claims at issue finding that the two subsections work independently of one another and only overlap as to one circumstance: challenges in federal court that arise under CERCLA. The Court, therefore, affirmed the Montana Supreme Court’s ruling regarding a state court’s ability to hear the restoration claims.
With respect to the second issue on appeal, the Court found that the Montana Supreme Court erred when it held that the landowners were not potentially responsible parties (PRPs) under CERCLA and, thus, did not need EPA approval for a remedial action. CERCLA Section 122(e)(6) provides that once a PRP has initiated a remedial investigation and feasibility study at a facility under CERCLA, no other PRPs may undertake a remedial action at a facility unless authorized by EPA. The landowners disputed their PRP status and argued that the restriction of CERCLA Section 122(e)(6) did not apply to them. The Court rejected the landowners’ argument relying on the plain language of CERCLA and prior precedent holding that the four categories of “covered persons” under CERCLA Section 107(a) are PRPs with respect to response costs incurred at a facility. In so holding, the Court in its Majority Opinion rejected several arguments raised by the landowners and Justice Neil Gorsuch’s Dissenting Opinion. For example, both argued that the landowners are no longer PRPs because the six-year statute of limitation for a cost recovery claim had run. The Court rejected this argument as conflating liability status with payment status, noting that even those who may qualify as “innocent landowners” under CERCLA still qualify as a PRP under CERCLA Section 107(a) as the current property owner. The landowners also argued that the Court’s interpretation would place a permanent hindrance on their land preventing them from engaging in activities as simple as digging in their backyard to place a sandbox for their grandchildren. The Court quickly rejected their plight, noting that CERCLA Section 122(e)(6) speaks only to “remedial actions,” which is a defined term under the statute that has import. Additionally, both the landowners and Justice Gorsuch argued that the landowners are not PRPs because they did not receive a notice of settlement negotiations under CERCLA Section 122(e)(1). However, EPA has a long-standing policy based on its enforcement discretion under CERCLA that it does not seek to recover response costs from landowners who are not responsible for the contamination and do not seek to interfere with the remedial action. The Court found that the absence of a notice letter from EPA does not somehow modify status as a PRP under the plain language of CERCLA. Arguments based on the “savings clause” and the “contiguous property owner” defense under CERCLA were also rejected by the Court.
Given long-standing EPA guidance and the plain language and understanding of CERCLA Sections 107(a) and 122(e), the Opinion is somewhat surprising to those involved in Superfund cleanups and related litigation. While the Opinion is arguably a “win” for Atlantic Richfield, it opens the door to similar lawsuits in states where impacted landowners can find a state law hook to bring a claim challenging a selected remedial action at a site. However, the long-term success of such legal challenges may be limited since the ability to pursue an alternative remedy is wholly dependent on the EPA’s blessing, which many challengers may not obtain. The real practical implications come from the potential disruptions that such a lawsuit may cause from an added transactional cost standpoint and the ability to cause further delays, complications and uncertainty to the remedial process.
Babst Calland’s environmental attorneys are closely monitoring the Atlantic Richfield case and its implications on Superfund sites and litigation. For more information, please contact Alana E. Fortna at 412-773-8702 or afortna@babstcalland.com.