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US Supreme Court Allows State Law Restoration Claims Seeking Expanded Cleanup of Superfund Site

April 22, 2020

The US Supreme Court held that CERCLA does not preempt state law restoration claims by landowners who are potentially responsible parties, but clarifies that the Environmental Protection Agency must approve landowners’ restoration efforts.

In Atlantic Richfield Co. v. Christian, No. 17-1498 (2020), the US Supreme Court held that landowners located near a former Atlantic Richfield copper smelter in Montana can bring state law tort claims against Atlantic Richfield for the restoration of their properties, even though the US Environmental Protection Agency (EPA) previously approved a cleanup plan for the landowners’ properties under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA).

Atlantic Richfield argued to the Court that the landowners’ claims were preempted by Section 113 of CERCLA. The Court held that the provisions of Section 113 do not preclude the landowners from pursuing their restoration claims in state court because their claims arise under state law, not CERCLA. The Court further held that provisions of Section 113 depriving federal courts of jurisdiction to review an EPA remedial action do not apply because the landowners sued Atlantic Richfield in state court, not federal court.

However, the Supreme Court agreed with Atlantic Richfield that the landowners, whose properties are located within the boundaries of the Anaconda Smelter Company Superfund Site (Site), are potentially responsible parties under CERCLA, and therefore, any restoration the landowners might pursue is subject to approval by EPA.

Background

Since its inception in 1884, historical operations at the Anaconda Copper Smelter contaminated nearby soil, groundwater, and surface water. In 1977, Atlantic Richfield Company purchased the Anaconda Smelter. Shortly thereafter, EPA began working with Atlantic Richfield to implement a CERCLA cleanup plan of the Site and the nearby area at a cost of approximately $470 million.

Despite the cleanup plan, nearby landowners sued Atlantic Richfield in 2008 in Montana state court for the contamination, raising state law tort claims, including a claim to recover costs for restoration actions beyond the scope of EPA’s approved remedy. Atlantic Richfield moved for summary judgment, arguing that CERCLA preempted the landowners’ state law claims for restoration damages. It also argued that the landowners had to seek EPA approval under CERCLA before undertaking any restoration actions.

The trial court rejected both of Atlantic Richfield’s arguments, and on appeal the Supreme Court of Montana affirmed the trial court’s decision. Atlantic Richfield then appealed to the US Supreme Court.

The Opinion

The Supreme Court held that CERCLA does not strip Montana courts of jurisdiction over landowners’ state law claims for restoration damages. The Court held that Section 113(b)’s reservation of exclusive original jurisdiction to federal courts over controversies arising under CERCLA does not apply to the landowners’ restoration claims because those claims arise under state law, not CERCLA. Further, the Court held that Section 113(h)’s provision that “[n]o Federal court shall have jurisdiction under Federal law . . . to review challenges to a removal or remedial action” does not apply to the landowners’ restoration claims because the landowners brought their claims in state court, not federal court.

But in a partial win for Atlantic Richfield, the Court also held that the landowners are potentially responsible parties (PRPs) under CERCLA and must obtain EPA approval to undertake any restoration for which they might seek recovery from Atlantic Richfield. The Court reasoned that CERCLA Section 112(e)(6), titled “Inconsistent Response Action,” provides that once EPA or another party has initiated a remedial investigation and feasibility study for the Site, “no potentially responsible party may undertake any remedial action at the [Site] unless such remedial action has been authorized by [EPA].”

CERCLA defines PRPs to include any “owner” of “any site or area where a hazardous substance has been deposited, stored, disposed of, or placed, or otherwise come to be located.” Because hazardous substances had come to be located on the landowners’ properties, the Court found that the landowners are PRPs. Because the landowners’ properties are located within the boundaries of the Site, which is subject to an EPA-approved remedial action, Section 112(e)(6) requires the landowners to obtain EPA approval for any restoration activities they seek to undertake. Importantly, the Court concluded that the landowners’ status as PRPs triggered the requirement for EPA approval, even if the landowners were not liable parties under CERCLA because of an expiration of the statute of limitations, the innocent landowner defense, the third-party defense, or another applicable defense to liability.

In sum, the Court held that the landowners can undertake additional restoration efforts, for which they might seek recovery from Atlantic Richfield, only if the landowners obtain EPA approval for the restoration activities they propose, which would be in addition to the remedial action EPA previously found to be protective of human health and the environment. The landowners are not permitted to undertake (and seek recovery from Atlantic Richfield for) any restoration action EPA does not approve.

Implications

The Supreme Court’s holding that CERCLA does not preempt state law restoration claims has the potential to create uncertainty at Superfund sites around the country. It may also affect how CERCLA cases are resolved. One of the forces driving PRPs to settle with EPA and agree to clean up Superfund sites is the contribution protection afforded by CERCLA Section 113. PRPs have understood that once they settle with EPA, Section 113 protects them from future claims for the recovery of response costs. The possibility that a settling party may be subject to future state law restoration claims threatens the finality that settling parties seek.

The impact of the Supreme Court’s recognition of the viability of state law restoration claims at Superfund sites may be blunted to some degree by the Court’s additional holding that PRPs must obtain EPA approval for restoration actions. If EPA declines to approve restoration actions beyond the chosen remedial action at a Superfund site, PRPs would be precluded from undertaking any additional restoration activities for which they could seek recovery from a settling PRP. It does not appear that similar constraints will apply to landowners who are not PRPs because, e.g., they qualify as a “contiguous property owner” under Section 107(q)(1)(A).

The ultimate effects of the Supreme Court’s decision will be further fleshed out through subsequent decisions by EPA, actions of PRPs at Superfund sites, and lower court rulings. The impacts may even vary by EPA region to the extent different regions take different approaches to implementing the decision. The ongoing proceedings at the Anaconda Smelter Site may provide early insight into how the decision works in practice, including the extent to which landowners’ desired remedial actions are approved by EPA.

One issue that is likely to further develop is when restoration actions are considered “inconsistent response actions” under Section 122(e)(6) of CERCLA. “Inconsistent” could be interpreted broadly to preclude any response action that is any way “different” from  EPA’s approved remedy, or narrowly to preclude only those response actions that are “inharmonious” or otherwise fundamentally at odds with EPA’s approved remedy.

Another important development will be the degree to which EPA defers to local community interests in selecting the EPA-approved remedial action. The potential ability to pursue a restoration claim that reaches beyond EPA’s chosen remedy—if EPA approves—provides local residents additional leverage to pursue a more robust cleanup. Local residents may therefore be able to exert additional influence on EPA’s remedy selection, even without pursuing their own restoration damages under state law.

Contacts

If you have any questions or would like more information on the issues discussed in this LawFlash, please contact any of the following Morgan Lewis lawyers:

Los Angeles
Jim Dragna
Rick Rothman
Denise Fellers

Princeton
John McGahren
Stephanie Feingold

Philadelphia
Glen Stuart

Washington, DC
Duke McCall
Doug Hastings