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Supreme Court: CERCLA Does Not Bar Tort Claims For Cleanup Costs, But PRPs Cannot Use Such Claims To Seek Additional Cleanup Without EPA Approval

by Robert C. Goodman , E. Jacob Lubarsky and Jon-Erik W. Magnus

On April 20, 2020, the U.S. Supreme Court delivered a split decision in the Atlantic Richfield Co. v. Christian, et al. case, ruling that potentially responsible parties (“PRPs”) cannot use state law claims to recover costs of cleanup beyond an EPA-approved remedy, but that the federal Superfund law does not preclude the pursuit of “restoration damages,” under traditional tort theories of liability in state court, even if such damages resemble cleanup costs.[1] On review from the Montana Supreme Court, the Court held that defendant Atlantic Richfield was potentially liable under Montana state common law theories for compensatory damages, including “restoration damages.” But, in this case, Atlantic Richfield would not responsible for additional cleanup costs or restoration damages, beyond the EPA-approved remedy it was already implementing unless Plaintiffs were first successful in seeking EPA approval for additional remedial action.

The case involves the Anaconda Copper Smelter Site, located west of Butte, Montana. The site refined copper ore from the late 1800s until it was closed by Atlantic Richfield in 1980, shortly after the company acquired the smelter. In 1983, the EPA designated over 300 square miles around the smelter a “Superfund” site under federal law. The EPA oversaw the site’s cleanup, including issuance of a 1996 Record of Decision detailing cleanup activities to occur on Plaintiffs’ properties. To date, Atlantic Richfield has spent nearly $500 million cleaning up the site following a negotiated plan with the EPA.

In 2008, approximately 100 landowners within the Superfund site brought suit against Atlantic Richfield in Montana state court asserting claims for trespass, nuisance, and strict liability under state common law. The lawsuit specifically sought “restoration damages.” As observed by the Court, under Montana law, when a damaged property serves as a private residence, a plaintiff may seek “restoration damages” to have the property restored, even if such costs exceed the property’s “diminution in value” – an ordinary measure of property damage. Plaintiffs argued that their “restoration plan” did not seek to interfere with the EPA-approved cleanup but proposed additional cleanup work beyond what is required by the EPA. Plaintiff’s “restoration plan” was estimated to cost an additional $50-58 million.

Writing for the majority, Chief Justice Roberts stated that the Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”) did not preclude the landowners’ right to assert state law claims such as nuisance and trespass even where the state law claims provide a similar remedy to the relief available under CERCLA and, as here, it could be construed as a potential “challenge” to an EPA approved cleanup. The Court reaffirmed that Section 113(b) of CERCLA provides federal district courts with exclusive original jurisdiction for all controversies “arising under” CERCLA but clarified that state law claims do not “arise under” the statute for purposes of jurisdiction, even where the relief available under the state law claim is similar to that under CERCLA. In the opinion, Chief Justice Roberts dismissed an argument by Atlantic Richfield that CERCLA deprived state courts of jurisdiction over any state law claims that might have the effect of “challenging” an EPA approved remedy, stating: “The Act [CERCLA] does not strip the Montana courts of jurisdiction over this lawsuit.” He continued: “It does not displace state court jurisdiction over claims brought under other sources of law.” Thus, the Court confirmed that state law common law claims were available to parties at a Superfund site.

Next, rejecting the Montana Supreme Court’s ruling, the Court held that the landowners were potentially responsible parties under CERCLA and would, therefore, need approval from the EPA before taking any action to restore their properties. Chief Justice Roberts based the Court’s decision on a series of definitions in the CERCLA statute.  The list of classes of potentially responsible persons, Chief Justice Roberts noted, included the “owner” of a “facility,” which is in turn defined to include any area where a “hazardous substance” has “come to be located.” “Because those pollutants have ‘come to be located’ on the landowners’ properties,” the opinion reasoned, “the landowners are potentially responsible parties.” CERCLA Section 122(e)(6) provides that after the EPA or another PRP has initiated a remedial investigation or feasibility study, no other PRP may undertake any remedial action without EPA approval. Thus, the Plaintiffs cannot seek an additional restoration remedy at their properties absent permission from the EPA. In citing to Section 122(e)(6) Chief Justice Roberts highlighted the importance of the “careful development of a single EPA-lead cleanup rather than tens of thousands of competing individual ones.”

Justice Samuel Alito sided with the majority on the question of whether the landowners were potentially responsible parties but disagreed with the decision that state courts have jurisdiction to hear “challenges” to EPA-approved CERCLA plans in the guise of tort claims. Justices Neil Gorsuch and Clarence Thomas agreed that state courts can hear challenges to CERCLA plans, but disagreed with the Court’s finding that the landowners were potentially responsible parties, complaining that the majority’s opinion “strips away ancient common law rights from innocent landowners and forces them to suffer toxic waste in their backyards, playgrounds, and farms.”

Where the decision is problematic for property owners is the Court’s finding that those who own property within a large Superfund site – even where they did not cause or contribute to the underlying contamination – have no ability to obtain relief in the form of cleanup costs or restoration beyond an EPA-approved remedy. A property owner’s recourse, therefore, is participation in the discussions that result in the agreed remedy, as envisioned under Section 122(e)(6), an ironic conclusion in light of the EPA’s concession in this case that the property owners were not included in the EPA’s settlement discussions with Atlantic Richfield.

This case may encourage more litigation involving state law claims at Superfund sites based on the view that this holding enables, or emboldens, large damages claims founded in additional cleanup measures beyond any previously approved remedy – an appealing proposition to the plaintiffs’ bar. And while the ruling may indeed lead to an uptick in litigation it is unlikely to result in plaintiff windfalls or the serial rejiggering of previously approved cleanups. First, as noted above, it is hard to conceptualize a plaintiff (e.g. property owner) that would not also be a PRP under CERCLA. Such a plaintiff would be bound by the limits set forth in Section 122(e)(6). Conceptually, the number of plaintiffs that may be able to bring such claims without EPA approval is limited. Second, EPA-approved cleanups (and many state-approved cleanups) go through a rigorous review and public notice process. Because the process surrounding EPA approved cleanups is so rigorous and time-consuming, absent new developments, such as unanticipated site conditions encountered during work, it is unlikely that the EPA would be swayed to approve additional work after a cleanup is finalized.  As Justice Alito stated in his dissent, the additional cleanup requested by Plaintiffs in this case is unlikely to be approved by the EPA.

Last, “finality” is an important incentive for parties that enter into settlement agreements with the EPA. It is these settlement agreements that lead to work being undertaken at sites. If the EPA were to begin a process of reconsidering what work is necessary, after a cleanup is approved, PRPs may become reluctant to enter into settlement agreements resulting in more litigation and less work being completed. This is certainly true at many sites where PRPs have limited resources.

However, the ruling is also a good reminder for federal and state regulators, and PRPs, including adjacent landowners, to cooperate in the development of cleanups plans at all sites.  This includes the need for proper public notice and community outreach by PRPs to ensure that all stakeholders are at the table, even if “all the stakeholders” means navigating a collection of differing views on a proposed remedy.

Moving forward, the questions remaining unanswered by this ruling are what, if any, damages are plaintiffs now likely to recover?  In cases like this one, where the EPA is unlikely to approve additional cleanup work, damages in the form of cleanup costs are unlikely.  In some states, such as California, damages for diminished property value have a three-year statute of limitations, and are likely to be time-barred, given the long history of most Superfund sites.  And available claims for “continuing” injury are generally limited to the cost of repairing/restoring a property to its former condition and losses suffered within three years of filing suit.  Accordingly, Plaintiffs could be left with a claim “less valuable” and not as significant as one based on cleanup costs. For example, under nuisance theories, damages for loss of use or “annoyance and discomfort” are unlikely to return a judgment as large as one for cleanup costs. In all cases, such damages will be subject to each state’s law and on a case-by-case, fact specific basis.

 

How We May Help

Rogers Joseph O’Donnell provides its clients with guidance on compliance with regulatory and environmental laws that affect their business and has formed a taskforce dedicated to steering businesses during this unprecedented time.  For compliance advice or defense of claims, attorneys Robert C. Goodman, E. Jacob Lubarsky, and Jon-Erik Magnus are available to assist.

 


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[1] A free copy of the slip opinion is available here: https://www.supremecourt.gov/opinions/19pdf/17-1498_8mjp.pdf

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