New Case Update: Atlantic Richfield Co. v. Christian

| Apr 30, 2020 | Firm News |

2020 U.S. LEXIS 2405 (2020) (USSC Docket No.17-1498)

On April 20, 2020, the United States Supreme Court issued an opinion in Atlantic Richfield Co. v. Christian, on writ of certiori from the Montana Supreme Court, that involves the interplay between the Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”) and the common law.

The facts were as follows: For nearly a century, the Anaconda Copper Smelter in Butte, Montana contaminated an area of over 300 square miles with arsenic and lead. Over the past 35 years, the Environmental Protection Agency (“EPA”) has worked with the current owner of the now-closed smelter, Atlantic Richfield Company, to implement a cleanup plan for a remediation expected to continue through 2025. A group of 98 landowners sued Atlantic Richfield in Montana state court for common law nuisance, trespass, and strict liability, seeking restoration damages, which Montana law requires to be spent on property rehabilitation. The landowners’ proposed plan exceeded the measures that the EPA found necessary to protect human health and the environment.

The trial court granted summary judgment in favor of the 98 landowners on the issue of whether CERCLA precluded their restoration damages claim, and the trial court allowed the lawsuit to continue. After granting a writ of supervisory control, the Montana Supreme Court affirmed, rejecting Atlantic Richfield’s argument that §113 of CERCLA stripped the Montana courts of jurisdiction over the landowners’ common law damages claim and concluding that the landowners were not potentially responsible parties prohibited from taking remedial action without EPA approval.

The Supreme Court was asked to consider whether CERCLA strips the Montana courts of jurisdiction over the landowners’ claim for restoration damages and, if not, whether the Act requires the landowners to seek EPA approval for their restoration plan.

Atlantic Richfield argued that CERCLA’s §113(h)—which states that “[n]o Federal court shall have jurisdiction under Federal law . . . to review any challenges to removal or remedial action” selected under the Act—implicitly broadens the scope of actions precluded from state court jurisdiction under §113(b), which provides that “the United States district courts shall have exclusive original jurisdiction over all controversies arising under this chapter.”  The Supreme Court disagreed with this interpretation: §113(h) speaks of “Federal court[s],” not state courts. The Supreme Court held that there was no textual basis for Atlantic Richfield’s argument that Congress precluded state courts from hearing a category of cases in §113(b) by stripping federal courts of jurisdiction over those cases in §113(h). The Supreme Court held that Section 113(b) deprived state courts of jurisdiction over cases “arising under” CERCLA—just as it says—while §113(h) deprives federal courts of jurisdiction over certain “challenges” to Superfund remedial actions—just as it says.  Ultimately, the Supreme Court held that CERCLA did not strip the Montana courts of jurisdiction over this lawsuit. The landowners’ common law nuisance, trespass, and strict liability claims arose under Montana law, and not under the Act, and therefore, the landowners were permitted to litigate their claims for restoration damages in state court.

Given this preliminary ruling, the Supreme Court then examined whether the landowners were “potentially responsible parties” under CERLCA for the land’s contamination.  The Supreme Court held that the Montana Supreme Court erred by holding that the landowners were not potentially responsible parties under CERCLA and thus did not need EPA approval to take remedial action.  To determine who was a potentially responsible party under CERCLA, the Court looked to the list of “covered persons” in CERCLA’s §107, the Act’s liability section, which includes any “owner” of “a facility.” “Facility” in turn is defined to include “any site or area where a hazardous substance has been deposited, stored, disposed of, or placed, or otherwise come to be located.”  Because arsenic and lead are hazardous substances that have “come to be located” on the landowners’ properties, the landowners were held to be potentially responsible parties by the Supreme Court.

The landowners argued that they were no longer potentially responsible parties because CERCLA’s six-year limitations period for recovery of remedial costs had run, and thus they could not be held liable in a hypothetical lawsuit. The Supreme Court disagreed, reasoning that even “‘innocent’ . . . landowner[s] whose land has been contaminated by another,” and who are thus shielded from liability by §107(b)(3)’s so-called “innocent landowner” or “third party” defense, “may fall within the broad definitions” of potentially responsible parties.  The Supreme Court further reasoned that under 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, so long as they have not been sued within six years of commencement of the cleanup. Congress did not provide such a fragile remedy for such a serious problem.

Accordingly, because the landowners were potentially responsible parties under CERCLA, they had to seek EPA approval to take any further remedial action.

On the question of common law damages, the Court emphasized that Atlantic Richfield remained potentially liable under Montana 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 was whether Atlantic Richfield was also liable for the landowners’ own remediation beyond that required under the Act. Even then, the Court held that the answer was “yes”—so long as the landowners first obtained EPA approval for the remedial work they sought to carry out.

This opinion is important in at least two respects.  First, it affirms that parties may seek compensatory damages under state common law for remediation efforts that go beyond the strict requirements of the EPA.  Second, the opinion clarifies that if a party wants to conduct additional remedial activities above and beyond the requirements set forth by the EPA for a contaminated property, the remediating party must seek the permission of the EPA.

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