In a highly anticipated decision, on April 20, 2020, the U.S. Supreme Court ruled that state courts may award restoration damages to landowners who seek, under state law, a more expensive cleanup than that selected by EPA, but as potentially responsible parties under CERCLA they must first receive EPA’s approval of their alternative cleanup plan before they would be entitled to those damages. Atlantic Richfield Co. v. Christian, et al., No. 17-1498 (U.S. Apr. 20, 2020). Beyond its fact-specific holding, the opinion’s broader implications may have a significant impact on CERCLA cleanups and litigation going forward.
At issue in Christian was the 300-square-mile Anaconda Co. Smelter site, located in Montana. In 2008, a group of 98 landowners with properties within the site sued Atlantic Richfield, the owner of the smelter, in Montana state court for common law nuisance, trespass, and strict liability. Among other remedies, the landowners sought restoration damages, which under Montana law must be spent on restoring the property. The landowners’ proposed restoration plan included more protective measures than those required by EPA, equating to an additional $50 million or more in cleanup costs.
Chief Justice Roberts, writing for the majority, first found that, while CERCLA deprives state courts of jurisdiction over claims brought under CERCLA, it does not deprive state courts of jurisdiction over claims brought under other sources of law, including state law. Section 113(b) provides the United States district courts with “exclusive original jurisdiction over all controversies arising under this chapter,” which means that state courts lack jurisdiction over such actions. The Court found, however, that the landowners’ common law claims for nuisance, trespass, and strict liability, although implicating the EPA-approved remediation plan, arise under state law, not under CERCLA. Atlantic Richfield had argued that Section 113(h) broadens the scope of actions precluded from state court jurisdiction under Section 113(b) to include all claims which might constitute “challenges to removal or remedial action” selected under CERCLA. The Court dispensed of this argument, noting that Section 113(h) only “speaks of ‘Federal court[s],’ not state courts,” and explained: “Often the simplest explanation is the best: Section 113(b) deprives state courts of jurisdiction over cases ‘arising under’ the Act—just as it says—while § 113(h) deprives federal courts of jurisdiction over certain ‘challenges’ to Superfund remedial actions—just as it says.”
This proved to be a somewhat hollow victory for the landowner plaintiffs, however, because the Court immediately went on to hold that the landowners are potentially responsible parties (PRPs) under CERCLA and therefore may not proceed with an alternative cleanup unless approved by EPA. Section 122(e)(6) provides that when EPA or a PRP has initiated a remedial investigation and feasibility study (RI/FS) for a particular facility, “no [PRP] may undertake any remedial action at the facility unless such remedial action has been authorized by [EPA].” Section 107(a) lists the “owner” of a “facility” as a PRP, and the term facility is defined to include “any site or area where a hazardous substance has been deposited, stored, disposed of, or placed, or otherwise come to be located.”
The landowners argued that they were no longer PRPs because the six-year statute of limitations period for recovery of remedial costs had run and that they could therefore not be held liable for cleanup costs. The Court still found that the landowners were technically PRPs under Section 107(a). The Court referred back to its prior decision in United States v. Atlantic Research Corp., 551 U.S. 128 (2007), in which the Court held that “even parties not responsible for contamination may fall within the broad definitions of PRPs in §§ 107(a)(1)–(4),” including owners “who would be shielded from liability by the Act’s so-called ‘innocent landowner’ or ‘third party’ defense” in Section 107(b)(3). The same principle, the Court found, “holds true for parties that face no liability because of the Act’s limitations period.” The Court expressed concern with allowing property owners to undertake remedial action on Superfund sites without coordinating with EPA, so long as they had not been sued within six years of commencement of the cleanup. The Court noted that the landowners’ position would require “EPA to sue each and every one of them just to ensure an orderly cleanup of toxic waste in their neighborhood.”
Effectively, the Court held that property owners who technically fall within the definition of a PRP must obtain EPA approval to engage in remedial actions if an RI/FS has been initiated. This renders EPA the gatekeeper for alternative remedial approaches that landowners might wish to undertake, even if undertaken at the landowners’ sole expense. At the same time, the Court preserved the landowners’ ability to pursue state law claims that do not represent alternative remedial measures, such as state law actions for compensatory damages, including loss of use and enjoyment of property, diminution of value, incidental and consequential damages, and annoyance and discomfort. In the end, a more expensive cleanup can be a measure of restoration damages under state law, but only if that cleanup is first approved by EPA.
Just like the Supreme Court’s 2007 decision involving Atlantic Richfield, United States vs. Atlantic Richfield, 551 U.S. 128 (2007), this opinion is likely to be scrutinized, interpreted and reinterpreted for years to come, with particular focus on two significant holdings.
First is the Court’s ruling that CERCLA does not preclude state courts (or federal courts sitting in diversity) from hearing actions arising under state law even if that claim implicates remedial action. The Court expressly states that CERCLA “permits federal courts and state courts alike to entertain state law claims, including challenges to clean ups.” This is a striking change in Superfund jurisprudence because, while there can be no pre-enforcement challenges to clean-up under federal law under Section 113(h), the Court holds there is no similar restriction on state court claims. This may open up an entirely new category of state law actions challenging EPA-approved cleanups. And while in this case the plaintiff landowners may be stymied in those attempts because the Court also found them to be PRPs, there is nothing in the decision that would preclude non-PRPs such as adjoining landowners or environmental groups from bringing similar claims without having to first seek EPA approval.
Second is the Court’s finding that the landowners, innocent of any wrongdoing, are nevertheless PRPs. The Court interprets CERCLA to find that all “covered persons” are “potentially responsible parties,” even if they have a valid defense to liability. This is key to the Court’s ultimate holding that the landowners must obtain EPA approval for their remedial plans but may have much broader implications for future cases. And where a state court plaintiff can establish that the EPA-selected remedy fails to attain Applicable or Relevant and Appropriate Requirements (ARARs), EPA may be hard-pressed not to approve a plaintiff’s proposed remedy that may be more stringent than the one previously selected.
The Supreme Court infrequently speaks to the details of CERCLA, but when it does so, it nearly always creates a firestorm. Its decision here appears to be no different.