On April 20, the Supreme Court of the United States reversed the Montana Supreme Court’s decision in Atlantic Richfield Co. v. Christian, limiting restoration damages claims beyond Environmental Protection Agency-approved cleanups at Superfund sites, while affirming the right of private parties to seek other kinds of damages under state law. The majority decision, penned by Chief Justice John Roberts, turns on a plain-text interpretation of the definition of “potentially responsible parties” under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA). Over a dissent by Justice Neil Gorsuch joined by Justice Clarence Thomas, the Court found that the affected landowners are potentially responsible parties and, therefore, restricted from challenging EPA-approved remediation plans.
The Anaconda Smelter near Butte, Montana processed copper ore depositing arsenic, lead, copper, cadmium, and zinc throughout the region for nearly a century until operations ceased in 1980. The smelter and 300 square miles of surrounding land were designated as a Superfund site under the CERCLA in 1984. Atlantic Richfield Co. (ARCO), which purchased the smelter near the end of its life, took on responsibility for the site’s cleanup under the CERCLA.
The remediation plan adopted by the EPA requires excavation and removal of 12 to 18 inches of topsoil from residential yards with high arsenic levels, and treatment of affected private wells used for drinking water. In 2008, 98 owners of property within the site filed claims based on trespass, nuisance, and strict liability, claiming compensation for five categories of damages, including compensatory damages for loss of use, diminution of value, and “annoyance and discomfort.” They also contended that the EPA-approved plan fell short of the full restoration provided for under Montana common law. The plaintiff property owners calculated restoration damages of $50 to $58 million based on the cost of a more intensive remediation plan, including the removal of two feet of topsoil from affected properties and the installation of an 8,000-foot underground permeable barrier to reduce arsenic in the underlying aquifer. Their suit proposed that any restoration damages ultimately awarded by a jury would be held in trust, to be used exclusively for the restoration of affected properties.
Following an initial remand, ARCO’s motions for summary judgment were denied by the trial court. The key question taken up by the Montana Supreme Court and ultimately the U.S. Supreme Court on appeal was whether state law-based restoration damages claims, which have the potential to far exceed the affected properties’ diminution in value, are barred by the CERCLA.
The Montana high court and the U.S. Supreme Court agreed that state courts could hear Superfund-related common law claims, rejecting ARCO’s contention that Congress implicitly granted federal courts exclusive jurisdiction by barring state courts from reviewing “any challenges to removal or remedial action” under the Act, and explicitly granting exclusive jurisdiction to federal courts over “all controversies arising under [the CERCLA].”
The Montana Supreme Court focused on whether the plaintiffs were “challenging” the EPA’s remediation and restoration efforts. The state court decision pointed out that the property owners’ claims were damages claims, first and foremost, and that their restoration plan had been developed as a measure of damages, not as a proposal for action.
[The] restoration damages Property Owners seek are to be placed in a trust account and used to further restore affected properties beyond levels required by the EPA. … To the extent that EPA’s work is ongoing, the Property Owners are not seeking to interfere with that work, nor are they seeking to stop, delay, or change the work EPA is doing.
The Montana court also rejected ARCO’s characterization of the property owners as “potentially responsible parties” under the Act, pointing out that the EPA had never treated them as such for purposes of liability and implying that it would not be fair to do so “solely for the purpose of . . . barr[ing] their claims for restoration.” The Montana court charged ARCO with attempting to “overcomplicate” the matter by “recast[ing] what is, at its essence, a common law claim for damages into a challenge to EPA’s cleanup.”
ARCO’s framing was more compelling to the U.S. Supreme Court, which reversed the Montana holding on the basis that the property owners did, in fact, qualify as “potentially responsible parties.” The majority based this position on a “straightforward reading” of the definition of “potentially responsible party,” which includes owners of “any site or area where a hazardous substance has been deposited, stored, disposed of, or placed, or otherwise come to be located.” Writing for the Court, the Chief Justice emphasized the potential for interference with remediation and the need to protect cleanups from “collateral attack.” He also rejected the suggestion that the property owners be allowed to undertake remediation independently, even after all of the EPA’s remediation work was concluded:
Section 122(e)(6) is one of several tools in the Act that ensure the careful development of a single EPA-led cleanup effort rather than tens of thousands of competing individual ones. [U]nder the landowners’ interpretation, property owners would be free to dig up arsenic-infected soil and build trenches to redirect lead-contaminated groundwater without even notifying EPA.
In the “spirit of cooperative federalism,” the CERCLA provides opportunities for public consultation and participation early on, according to the majority. However, “once a plan is selected, the time for debate ends and the time for action begins.”
Certain language from the decision may, however, open court doors to other claims, including those for remediation costs that have been approved by the EPA:
[ARCO] remains potentially liable under state law for compensatory damages, including loss of use and enjoyment of property, diminution of value, incidental and consequential damages, and annoyance and discomfort. The damages issue before the Court is whether [ARCO] is also liable for the landowners’ own remediation beyond that required under the Act. Even then, the answer is yes—so long as the landowners first obtain EPA approval for the remedial work they seek to carry out.
Further, claims may multiply, particularly at Superfund sites where the discovery of new contaminants or improved understanding of the impacts of known contaminants provide a basis for approving new remediation.
The prospect that the EPA could wield complete control over private property remediation provoked objections in a dissenting opinion from Justices Gorsuch and Thomas. The dissenters proposed an alternative approach to interpreting the meaning of “potentially responsible party” that turned on the “ordinary public meaning” of the term at the time that the CERCLA was adopted, relying on dictionaries rather than statutory definitions:
To be “potentially responsible” for something meant [in 1980], as it does today, that a person could possibly be held accountable for it; the outcome is capable of happening. American Heritage Dictionary 1025 (1981); Webster’s New Collegiate Dictionary 893 (1980). And there is simply no way the landowners here are potentially, possibly, or capable of being held liable by the federal government for anything…. On any reasonable account, the landowners are potentially responsible to the government for exactly nothing. (Emphasis in original).
The dissent also expressed alarm about the potential loss of individual rights under state law, and about the practical implications of prohibiting further action without express government approval: “States and private landowners alike . . . could be barred even from undertaking remedial efforts on their own lands at their own expense, required instead to host toxic wastes involuntarily and indefinitely.” The result of the majority’s interpretation of “potentially responsible party,” according to Justice Gorsuch, was to “transform [the CERCLA] from a law that supplements state environmental restoration into one that prohibits them. Along the way, it strips away ancient common law rights from innocent landowners and forces them to suffer toxic waste in their backyards, playgrounds, and farms.”
Atlantic Richfield v. Christian likely will put a damper on claims for restoration damages. However, while restoration damages can no longer be considered by juries for Superfund sites unless they are based on a plan already approved by the EPA, juries still may award substantial sums for other kinds of damages, including tort claims filed in state court, before, during, or after Superfund site remediation. The U.S. Supreme Court’s ruling expressly affirms plaintiffs’ right to claim loss of use and enjoyment of property, diminution of value, incidental and consequential damages, and annoyance and discomfort. Similarly, defendants will need to take heed and be vigilant that juries are not presented with evidence that implicitly encourages awards for the cost of additional remediation beyond EPA requirements.
Atlantic Richfield v. Christian also highlights a new and potentially growing divide within the Court regarding the appropriate scope of federal power, with possible implications for broader aspects of environmental law, including the relative future significance of federal law and state common law for environmental policy and regulation.