- The U.S. Supreme Court has ruled that state courts may hear state common law claims seeking to compel remediation beyond what the U.S. Environmental Protection Agency (EPA) has required under the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended (CERCLA).
- By interpreting CERCLA to require prior EPA approval of any remedial action that any potentially responsible party may perform beyond what EPA has required, the Supreme Court's decision in Atlantic Richfield Company v. Christian could cause CERCLA to supplant, rather than supplement, relief available under state law claims and foster litigation over whether an unconstitutional taking has occurred.
- The decision leaves no doubt that CERCLA settlements reached with EPA now may be a prelude to, rather than protection from, state law claims. After Atlantic Richfield, settlements may become more difficult to reach and less conclusive once they are reached.
In Atlantic Richfield Company v. Christian,1 a decision issued on April 20, 2020, the U.S. Supreme Court decided that state courts may hear state common law claims seeking to compel remediation beyond what the U.S. Environmental Protection Agency (EPA) has required under the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended (CERCLA or the Act).2 The Court also held that a potentially responsible party (PRP) under CERCLA could not perform any such additional remediation unless EPA had first approved that remediation under CERCLA § 122(e)(6).3
Atlantic Richfield concerned a Superfund site that EPA had placed on the National Priorities List (NPL), but the impact of the decision may extend beyond Superfund sites to any site where potential CERCLA liability exists. More importantly, although Atlantic Richfield allows state common law claims seeking to compel further remediation, by interpreting CERCLA to require prior EPA approval of any remedial action that any PRP may perform beyond w hat EPA has required, the decision could, as Justice Neil Gorsuch argued in dissent, cause CERCLA to supplant, rather than supplement, relief available under state law claims and foster litigation over whether an unconstitutional taking has occurred.
In 1983, in the first NPL promulgated after CERCLA's enactment on Dec. 11, 1980, EPA designated an approximately 300-square-mile area in Montana where a smelter had operated for more than a century as the Anaconda Co. Smelter Superfund Site (Anaconda). Atlantic Richfield Company (ARCO), "the current owner of the smelter,"4 has worked with EPA for the past 35 years to remediate Anaconda, which remains contaminated with arsenic and lead.5 "EPA projects that remedial work will continue through 2025.6 In 2008, 98 residential landowners within Anaconda asserted claims of trespass, nuisance and strict liability under Montana common law in a Montana state court, seeking restoration of their properties under a plan EPA had not reviewed and to a degree EPA had not required ARCO to attain.7
Where EPA had set 250 parts per million (ppm) of arsenic as the maximum soil contamination level and required ARCO to excavate arsenic-contaminated soil in residential yards to a depth of 1 foot, the landowners sought a maximum of 15 ppm for arsenic in their soil and excavation to a depth of 2 feet.8 After the Montana Supreme Court reviewed the landowners' case and allowed it to go to trial, ARCO appealed to the U.S. Supreme Court, which took the case to consider whether CERCLA strips the Montana courts of jurisdiction over the landowners' claim for restoration damages and to decide, if the Act did not do so, whether CERCLA "requires the landowners to seek EPA approval for their restoration plan."9
The Supreme Court's Decision
The Supreme Court began by holding, in a majority opinion written by Chief Justice John Roberts, that it had jurisdiction to review the decision of the Montana Supreme Court, which had held that CERCLA §113 did not bar Montana courts from hearing the landowners' claims.10 After unanimously concluding it had jurisdiction, the Court found that CERCLA did not strip Montana courts of jurisdiction over the landowners' claims.11 Interpreting CERCLA §113(b), the Court held that the "'exclusive original jurisdiction'" CERCLA § 113(b) grants federal district courts "over all controversies arising under" CERCLA means that any suit heard pursuant to CERCLA § 113(b) must arise under a cause of action created by CERCLA.12 CERCLA stripped state courts of jurisdiction to hear CERCLA claims, but the Act "does not displace state court jurisdiction over claims brought under other sources of law."13 The landowners' common law claims could be heard by a Montana court because those claims "arise under Montana law and not under the Act."14
The Court then examined – and rejected – ARCO's argument that CERCLA § 113(h) stripped state courts of jurisdiction to hear state law claims challenging a cleanup. Finding "no textual basis for" ARCO's argument about the interplay between CERCLA §§ 113(b) and 113(h), the Court remarked that "the simplest explanation is the best" and held that "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."15 Rather than bar state law claims, the Court held, "Section 113(h) permits federal courts in diversity cases to entertain state law claims regardless of whether they are challenges to cleanup plans."16 In short, the § 113(h) bar against reviewing challenges to cleanups did not itself limit the jurisdiction of state courts.
Although the Montana Supreme Court had jurisdiction, it "erred by holding that the landowners were not potentially responsible parties under the Act and therefore did not need EPA approval to take remedial action."17 As owners of land on which substance hazardous under CERCLA – arsenic and lead – had " 'been deposited, stored, disposed of, placed, or otherwise come to be located' "18.the landowners were PRPs under CERCLA.
As PRPs owning part of a NPL site, for the remedial action they sought the landowners needed to get EPA's prior approval under CERCLA § 122(e)(6), a provision the Court characterized as "one of the Act's crucial tools for ensuring an orderly cleanup of toxic waste" and "a single EPA-led cleanup effort rather than tens of thousands of competing individual ones."19 "In the absence of EPA approval of the current restoration plan," the landowners could not proceed, and the Court found it had "no occasion to entertain" ARCO's claim that CERCLA "otherwise preempts the plan."20
Dissenting, Justice Samuel Alito wrote that, although he agreed that the Supreme Court could review and reverse the Montana Supreme Court's decision, and that CERCLA § 122(e)(6) requires the landowners to obtain the prior approval of EPA for the remedial actions they sought, it was "neither necessary nor prudent" for the Supreme Court to hold that state courts had the jurisdiction to hear challenges to "EPA-approved CERCLA plans."21 For Justice Alito, Sections 113(b) and 113(h) of CERCLA are "devilishly difficult statutory provisions" – and "CERCLA § 113 "is like a puzzle with pieces that are exceedingly difficult, if not impossible, to fit together."22Justice Alito did not find any of the Court's "three reasons for resolving the question of state-court jurisdiction" to be compelling.23
In a more sweeping dissent, Justice Gorsuch, joined by Justice Clarence Thomas, argued that subjecting landowners to any requirement that they obtain EPA permission to clean up contamination in their own residential yards could force them to house pollutants deposited on their properties and ignored the fact that "[e]verything in CERCLA suggests that it seeks to supplement, not supplant, traditional state law remedies" of the sort from which landowners obtain relief without EPA's prior approval.24 "If," Justice Gorsuch argued, "CERCLA really did allow the federal government to order innocent landowners to house another party's pollutants involuntarily, it would invite weighty takings arguments under the Fifth Amendment."25
Atlantic Richfield leaves no doubt that CERCLA settlements reached with EPA now may be a prelude to, rather than protection from, state law claims. The majority says that "[s]ettlements are the heart of the Superfund statute."26 That may be so, but after Atlantic Richfield, settlements may become more difficult to reach and less conclusive once they are reached.
Before Atlantic Richfield, courts had interpreted CERCLA § 113(b) broadly, finding its grant to district courts of "exclusive original jurisdiction over all controversies arising under" the Act to be "more expansive than … those claims created by CERCLA," and to extend to "any 'challenges' to a CERCLA cleanup."27 After Atlantic Richfield, § 113(b) reaches only claims created by CERCLA.28 Cases involving private settlors with EPA could once declare a claim to be "disguised" as a breach of contract claim and unmask it to find a contribution claim barred by the protection given settlors by CERCLA 113(f)(2).29 Claims between PRPs that would apportion costs between themselves were seen as contribution claims regardless of how they were pled.30 Now courts may not act so confidently, and a state law claim and EPA approval together could expand the universe of costs and undercut the finality that CERCLA settlements appeared to promise.
The Supreme Court says that "§ 122(e)(6) applies only to sites on the Superfund list."31 This assertion alone may not limit Atlantic Richfield to sites listed on the NPL. The Court's statement is unsupported by any textual analysis of CERCLA or citation to precedent and does not appear to be crucial to the Court's holding. A private litigant – or EPA – could therefore disagree with the Court's view of § 122(e)(6) and seek to apply § 122(e)(6) to a site never proposed for or placed on the NPL.
Whether the Court's decision addresses non-NPL sites raises the question of the intersection with state voluntary cleanup and brownfields programs and the broad discretion that EPA is expected to give to "eligible response sites" as defined under § 101(41) of CERCLA. Eligible response sites, broadly speaking, are brownfields sites being addressed under a state's voluntary cleanup program. EPA is not authorized to take enforcement or cost recovery action against persons who have conducted response actions in compliance with a state program at eligible response sites. This is known as the § 128(b) enforcement bar.
Figuring out whether a site constitutes an "eligible response site" can be a complicated process. EPA issued guidance in 2003 to the Regions to explain how they should determine which sites should not be considered to be eligible response sites. See "Regional Determinations Regarding Which Sites Are Not 'Eligible Response Sites' Under CERCLA Section 101(41)(C)(i), as Added by the Small Business Liability Relief and Brownfields Revitalization Act," OSWER Directive 9230.0-107 (March 6, 2003).
In a separate memorandum concerning CERCLA liability and local governments, EPA confirmed that "[i]t is important to note that while CERCLA § 128(b) may prohibit EPA from taking an enforcement action; it does not preclude third party litigation." See "CERCLA Liability and Local Government Acquisitions and Other Activities," p. 6 (March 2011). This language seems to support the Court's conclusion in Atlantic Richfield that claims under state common law can proceed. But do they require EPA oversight and approval? How will the § 128(b) enforcement bar be reconciled with other language in CERCLA and the Atlantic Richfield decision?
As Superfund sites have grown in size and complexity, involving more and more property owners, most of whom are not designated as PRPs, it may become more and more difficult to obtain finality on cleanup decisions, especially those involving restrictions on land. Should these hundreds of property owners insist upon becoming more directly involved in the Superfund cleanup process? Should they insist on notice of whether the government considers them to be a PRP? Should they obtain a de minimis settlement? What will their involvement do to the overall settlement process?
We also know that these cleanups often rely on land use restrictions. Restrictions on land use at any sites that have undergone or are undergoing remediation may become more difficult to maintain. However high the hurdle of gaining § 122(e)(6) approval from EPA may appear initially, the passage of time may lower it as land use and cleanup standards change. In 1983, when EPA put Anaconda on the first NPL, few if any observers would then have foreseen that the Supreme Court would eventually consider – and meaningfully disagree about32 – whether CERCLA could require a residential homeowner within Anaconda to get EPA's approval before digging a sandbox for their grandchildren. Atlantic Richfield may increase, not resolve, disputes over the reach of CERCLA, particularly at very large Superfund sites involving hundreds of landowners.
As disputes over CERCLA's reach may grow, so could disputes about the wisdom of adhering to cleanup standards and restrictions established decades ago. The landowners' briefs stress, as Justice Gorsuch notes, that while EPA allows residential yards within Anaconda to have up to 250 ppm arsenic in their soil, local landfills may be barred from accepting more than 100 ppm arsenic – and that certain states have "set residential cleanup levels as low as 0.04 ppm."33 Discrepancies such as these may not be unique to Anaconda. Atlantic Richfield offers a reason to seek additional remedial action as a result.
Who will evaluate any proposed additional remedial action? Atlantic Richfield seems to assume that under CERCLA § 122(e)(6), EPA will do so. But if EPA has entered into a Memorandum of Agreement (MOA) with a state and agreed not to exercise its CERCLA jurisdiction if remediation under a state's voluntary cleanup program or brownfields law is underway or completed, could – and would – such a state, rather than EPA, alone evaluate any proposed remedial action?34 The question is not just procedural. If a landowner adjacent to a source of contamination demands more remediation on its land than the state requires from the owner of the source of contamination, the state's refusal to require additional remedial action might not be easily equated with action by EPA under CERCLA § 122. It's not clear that MOAs delegate such powers, or that they could do so and that EPA could cite a pre-Atlantic Richfield MOA to justify refusing to address the question.
Finally, the Court in Atlantic Richfield discussed at length why the contiguous property owner defense was not available to the landowners in that case, but it left unanswered what would happened to similarly situated landowners who believed that they had qualified for bona fide prospective purchaser (BFPP) status. Such landowners, by definition, could purchase land with knowledge of contamination, as long as they had conducted all appropriate inquiries, exercised reasonable care and maintained certain ongoing obligations as discussed in EPA's 2019 updated Common Elements guide.35 Would a landowner qualifying for the BFPP defense be at greater liberty to bring common law claims under state law and to conduct additional remediation without EPA oversight? The Atlantic Richfield decision leaves that question unanswered.
In many ways, the Atlantic Richfield ruling seems to be a Solomon-like decision: letting landowners bring their common law claims in state court but also requiring EPA approval of any further cleanup decisions. However, the decision left many important questions unanswered. What will be the impact on CERCLA settlements? Will they have less finality and be more difficult to achieve? Is this opinion truly limited to NPL caliber sites? What should be the role of the hundreds of property owners who have not been officially "named" as PRPs at large Superfund sites? Should they become more actively involved? How will this impact overall settlement negotiations? Will there be more takings claims in the future? And how does this decision impact those landowners who believe they qualify for BFPP status? Only time will tell whether the concerns currently being expressed by the unsettled areas under the Atlantic Richfield opinion will amount to the tip of the iceberg or a tempest in a teapot when it comes to future CERCLA litigation and common law claims brought in state courts.
2020 WL 1906542, Sup. Ct. (2020)
2 42 U.S.C. § 9601 et seq.
3 42 U.S.C. § 9622(e)(6).
4 2020 WL 1906542, *3 at 10.
12 Id., *7 at 13, citing 42 U.S.C. § 9613(b).
18 Id., *9 at 15, citing 42 U.S.C. § 9601(9)(B).
19 Id., *9 at 15 and *11 at 16.
27 Lehman Brothers, Inc. v. City of Lodi, 333 F.Supp.2d 895, 901 (E.D. Ca. 2004), citing 42 U.S.C. § 9613(b) and Fort Ord Toxics Project, Inc. v. California Envt'l Protection Agency, 189 F.3d 828, 832 (9th Cir. 1999).
28 2020 WL 1906542,, *7 at 13.
29 Asarco v. Union Pac. R.R. Co., 762 F.3d 744, 749 (8th Cir. 2014).
30 U.S. v. Colorado & Eastern R.R. Co., 50 F.3d 1530, 1539 (10th Cir. 1995).
32 Id., *10 at 16 and *21 at 24.
34 At least half of the states have entered into MOAs with EPA in which EPA has recognized their voluntary cleanup programs. Eligible response programs are eligible for the enforcement bar under Section 128.