Supreme Court recognizes state court jurisdiction relating to Superfund remediation but conditions some additional landowner remedies on approval by EPA

On April 20, the Supreme Court decided important questions regarding control over Superfund cleanups in a case involving the Anaconda Copper Smelter in Butte, Montana.  In Atlantic Richfield Co. v. Christian, 590 U.S. ___ (2020), the Court addressed landowner claims arising under Montana state law seeking restoration damages for properties that were allegedly contaminated by arsenic and lead from the Anaconda smelter.  The landowners sought to compel a cleanup to more stringent standards than those imposed by the Environmental Protection Agency’s (EPA) Record of Decision (ROD) regarding the Anaconda Superfund Site, and to undertake additional remedial actions, including a barrier to intercept groundwater, that were not required by the ROD.  Atlantic Richfield (current owner of the Anaconda smelters) contended the landowner’s restoration claims conflicted with requirements of the Comprehensive Environment Response and Compensation Act, 42 U.S.C. §§ 9601, et seq. (CERCLA or Superfund).  Both the trial court and the Montana Supreme Court rejected that defense.  The United States Supreme Court granted certiorari and, in its April 20 decision, the Court affirmed in part, vacated in part, and remanded the case for further proceedings.

Two critical questions

The Court decided two critical questions.  First, it held that state courts have jurisdiction to decide cases involving remediation of Superfund sites, so long as those cases do not arise under CERCLA.  Second, the Court held that if the landowners were potentially responsible parties (even though some only owned a single home on the 300-square-mile CERCLA site), then they were required to seek EPA approval for any additional remediation of their properties. 

Chief Justice John Roberts authored the opinion of the Court, and all justices joined on at least part of the opinion.  Only Justice Samuel B. Alito dissented on the state court jurisdictional issue, because he believed the issue was not ripe.  Only Justices Neil Gorsuch and Clarence Thomas dissented on the requirement that EPA approve the additional restoration to the extent that the landowners were potentially responsible parties, opining that the savings clauses meant CERCLA does not preempt liability or obligations under state law, and instead supplements state law remedies.

State court jurisdiction

The Court’s holding that state courts can decide questions about remediation at CERCLA sites seems to contradict Section 113(b) of CERCLA, which confers exclusive original jurisdiction in US district courts on all controversies arising under CERCLA without regard to diversity of citizenship.  In arriving at its decision, the Court interpreted “arising under” narrowly so that an action asserting a legal basis other than CERCLA to challenge a remediation is not restricted to federal court.  Moreover, the Court arguably found even more expansive authority in state court to challenge CERCLA remedies, holding that the CERCLA Section 113(h) prohibition on interim review of EPA removal or remedial actions applied only to the federal courts and not to state courts.  The Court noted that EPA is obligated to consider and comply with all applicable and relevant requirements imposed under other laws, including state law.  It also noted Atlantic Richfield’s concession of the generally uncontroversial point that CERCLA does not preempt state courts from entertaining state law damages claims apart from restoration claims, such as those for diminution in value or loss of use and enjoyment.   The import of the Court’s ruling, however, is that challenges to a CERCLA remedy can be brought earlier in state court than in federal court, so long as they are grounded on state law.

Landowners and EPA approval

The second key issue decided by the Court is whether the landowners who contend that they are victims of the pollution must obtain EPA approval for remedial actions that go beyond what is required by EPA.  The Court found the issue turns on whether the landowners are potentially responsible parties and that factual questions must be decided to determine whether they are protected by innocent landowner exceptions to liability for current owners of property within the CERCLA site (which in this case is 300 square miles, potentially making the burden of such fact determinations quite heavy). 

The Court was skeptical that landowners in this case could satisfy all of those requirements, given the widespread knowledge of emissions from the smelter.  Assuming they had owner liability, the contesting landowners would need to obtain EPA approval for additional environmental restoration of their property and Atlantic Richfield could oppose such approvals before EPA.  Therefore, even on a large CERCLA site where most properties are not the source of contamination, landowners are constrained in remediating their properties outside of EPA’s prescriptions.

Implications

The implications of this ruling for property owners and responsible parties are profound, but will require more explication by both state and federal regulators and the courts in the years to come.  Finality of settlement of CERCLA liability has just become more complex in many cases, particularly where sites include numerous potentially impacted properties away from the source of the contamination.   The importance of state involvement in such settlements is now greater, and more issues under state law will require attention.  Finally, “victim” property owners may find themselves constrained to a much greater degree in the remediation and redevelopment of properties. 

These issues will play out over many years and will require vigilance to protect rights that parties previously took for granted.

The authors of this alert would be pleased to confer with you on questions related to this decision and its implications for your business.