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Atlantic Richfield Co. v. Christian – Perpetuating the Cycle of Supreme Court Environmental Law Decisions that Spark Litigation and Confusion

April 24, 2020Client Alert

The U.S. Supreme Court has a history of rendering muddled decisions when interpreting key environmental statutes, and with its decision in Atlantic Richfield Co. v. Christian et al., history repeats itself.

Case Overview

The underlying case has a long procedural and factual background, having ping-ponged up to the Montana Supreme Court twice—and now to the U.S. Supreme Court—each time on the eve of trial. The plaintiffs are landowners within a 300-square-mile Superfund site who have asserted common law claims in state court for damages that would provide for environmental restoration beyond what the U.S. Environmental Protection Agency (EPA) has deemed necessary to achieve an appropriate level of cleanup. Atlantic Richfield unsuccessfully argued in state trial court and the Montana Supreme Court that the provisions of CERCLA bar such a claim.

The issues taken up by the Court have not generated a significant split among the circuits and ostensibly the Court took up the issues based on their perceived importance, which Atlantic Richfield teed up persuasively: when the EPA has spent decades formulating a cleanup plan, it would wreak havoc to allow private parties to undermine that plan by performing competing and inconsistent cleanups. 

The Court’s ruling amounted to a split decision. Indeed, the Court ruled that the landowners must get EPA permission to carry out remedial action at their properties; however, they can still move forward to trial and seek restoration damages, but the damages could not actually be spent on cleanup without EPA approval. From a federalism perspective, this is an interesting result. The EPA is the ultimate arbiter on cleanups within the boundaries of Superfund sites, but landowners’ state claims are preserved. In terms of the practicalities of the decision, the Court left many unanswered questions that will likely generate significant litigation in the years to come.

Ruling 1: State Law Claims Can Challenge Cleanup Plans

The first question addressed by the Court was whether Section 113(h) barred the restoration damages claim. This section of CERCLA strips federal courts of jurisdiction “to review any challenges to removal or remedial action” except in five circumstances, including diversity jurisdiction over state law claims. For the last few decades, the issue has arisen in the lower courts from time to time of whether certain types of state law claims amount to challenges to a remedial action. Almost all courts had accepted the proposition that a state law claim would be invalid if it were deemed to constitute a challenge to a remedial plan. With the stroke of a pen, the Supreme Court wiped out that body of law and flatly held: “The Act permits federal courts and state courts alike to entertain state law claims, including challenges to cleanups.”

In short, state-law claims—whether adjudicated by federal or state courts—can challenge a cleanup plan. One potential consequence of this holding is an increase in environmental restoration damages claims in states that permit such claims, especially where state laws allow for cleanup damages to exceed the value of the property (e.g., California and about half the other states). Another potential consequence may be the creative use of state-law claims to collaterally attack EPA remedial decisions.

This first ruling seemed to be a boon for the state-side of federalism concerns, and also seemed to undercut the EPA’s ability to control its remedial decisions, but what the Court giveth with one hand it taketh with the other.

Ruling 2: Landowners within a Superfund Site Need EPA Approval for Remedial Action

Indeed, on the second major issue addressed in its decision, the Supreme Court ruled that CERCLA prohibits landowners from unilaterally undertaking remedial action on their properties if they are within a designated Superfund site. In so ruling, the Court accepted the longstanding conventional wisdom of the environmental bar that landowners of contaminated sites are considered “potentially responsible parties” or PRPs; thus, they are trapped by the limits of Section 122(e)(6), which prevents PRPs from undertaking remedial action within a Superfund site without U.S. EPA approval. “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.” So, on the other side of the federalism coin, the U.S. EPA was given superseding power.

While the Court’s ruling makes good sense in providing for orderly cleanup processes, the consequences of the ruling could be significant. Although the Court glibly stated that “the Act’s definition of remedial action does not reach so far as to cover planting a garden, installing a lawn sprinkler, or digging a sandbox,” the majority ignored the potential fallout that could come from this holding. 

By way of example, as Justice Gorsuch points out, there may very well be takings claims related to this decision. But, also, what about the impacts on state-led remedial efforts? Although the majority discusses CERCLA’s cooperative federalism structure, there may very well be instances where states desire to, or are asked to, oversee remediations at discrete locations within large Superfund site areas.

Given this decision, states will now likely feel obligated to seek EPA approval for such remediations, which may complicate or bar the remediations. One example: if you own an industrial property in a large Superfund site and want to undertake a voluntary cleanup under a state program, will you be able to? What additional process will now be required?  This could impact the transferability and marketability of properties that sit within Superfund site boundaries, and it could slow down the cleanup process. Another example: what if a state wants to clean up land that it owns within a Superfund site area to a cleanup level more stringent than the EPA selected? At a minimum, the decision will require the federal and state governments to come up with memoranda of understanding concerning this important issue.

To sum up, in keeping with its history of taking up disputes related to environmental statutes, the Court has probably created more confusion and prospects for litigation than clarity. Like the environmental law decisions that have come before it, we will likely be debating and litigating this decision for years.

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