Initial Thoughts On Atlantic Richfield Company v. Christian

Factual Background

The Atlantic Richfield case addresses the former Anaconda Company Smelter in Montana (the “Anaconda Site”). The Anaconda Smelter operated for more than a century and was purchased by the Atlantic Richfield Company (“ARCO”) in the late 1970s. The Anaconda Site was one of the first major Superfund sites designated by EPA, and since 1983, ARCO has been working with EPA to conduct investigation and cleanup activities addressing various environmental problems caused by the former mining and smelting operations there. Over time, the Anaconda Site has grown to cover more than 300 square miles, including more than 800 residential and commercial properties. For these residential properties, EPA selected, and ARCO has begun implementing, a cleanup plan calling for the following measures: excavation of one foot of any residential soils exceeding permissible arsenic levels of 250 parts per million; reduction of arsenic concentrations through capping, tilling, or other institutional controls; and education efforts to inform all residents of potential contamination risks along with methods to mitigate such exposure.⁵ This cleanup is expected to be completed in 2025.

Owners of residential properties subject to this plan commenced a class-action lawsuit against ARCO in 2008, alleging a variety of claims for monetary damages. The Atlantic Richfield case dealt with one aspect of those claims. Notwithstanding EPA’s determination that its selected remedy was protective of human health and the environment, the landowners claimed that Montana law entitled them to a more extensive remedy, with ARCO obligated to fund restoration efforts to remove additional contamination from their properties. The Montana courts agreed, holding that the landowners’ claims could proceed and that if the landowners prevailed, then the funds could be held in trust to implement further cleanup actions after the EPA remedy was complete.⁶ ARCO appealed to the U.S. Supreme Court, arguing that CERCLA barred the landowners’ claims and that the landowners were forbidden from performing additional remedial actions at their properties without EPA approval.⁷

The Atlantic Richfield Decision

In an opinion by Chief Justice John Roberts, the Court began by unanimously agreeing that it had jurisdiction to review the Montana Supreme Court’s decision. The Court then turned to the issue of whether the Montana courts could entertain the landowners’ claim for restoration damages, given ARCO’s argument that Section 113 bars state courts from hearing challenges to an ongoing CERCLA cleanup plan.

The Court held that Section 113 did not strip Montana courts of jurisdiction over the plaintiff landowners’ case. According to the Court, Section 113(b), which provides United States district courts with exclusive jurisdiction over all claims arising under CERCLA, applies only to federal law claims. ARCO conceded that because the plaintiffs’ nuisance, trespass, and strict liability claims for damages all arose under Montana state common law rather than CERCLA and would not otherwise involve any required contamination clean-up, this provision did not strip state courts of jurisdiction over those claims. Similarly, Section 113(h), which bars federal courts from reviewing any challenges to an ongoing removal or remediation plan, only speaks of “‘Federal court[s],’ not state courts” and “does not displace state court jurisdiction over claims brought under other [non-CERCLA] sources of law.”⁸ Importantly, the jurisdictional bar in Section 113(h) — which applies to all causes of action that a federal court might exercise jurisdiction over, unless excluded within a narrow set of CERCLA exclusions — is broader than the exclusive jurisdiction provision in Section 113(b) (which applies only to CERCLA itself). In other words, CERCLA Section 113(h) can bar various federal claims, brought in federal court, even where that claim does not arise out of CERCLA. But the Court rejected ARCO’s claim that these sections worked in combination also to eliminate all state court jurisdiction to any state court claim that might, as part of the claim, also work to challenge a CERCLA remedy. The Court summarized ARCO’s argument as arising out of a five-step argument that relied on inferences that lacked a textual basis.

After holding that the Montana courts had correctly exercised jurisdiction over the plaintiffs’ claims, the Court then determined that the Montana Supreme Court was wrong when it determined that the plaintiff landowners were not “potentially responsible parties” under CERCLA and thus not required to comply with Section 122(e)(6) of the Act. That section bars a PRP from undertaking any remedial action at a federal Superfund site without first receiving EPA approval. Instead, the Court determined that because the plaintiffs were included within the broad category of “covered persons” under Section 107 — they own a facility where hazardous substances have come to be located — the plaintiffs were potentially responsible parties subject to Section 122(e)(6). This was so even though the United States might no longer have a viable cause of action against such parties due to the operation of CERCLA’s statute of limitations. The Court dealt with the question of whether the plaintiffs qualified for the “contiguous landowner” defense to CERCLA liability in a relatively brief discussion, finding that the existence of the Anaconda smokestack was sufficient to conclude that the plaintiffs had knowledge of the potential for releases of hazardous substances onto their properties, disqualifying them from this defense.⁹ (It seems likely that the question of such knowledge will be contested in future cases considering similar issues, where it may be significant to the outcome.) The Court supported its textual analysis by describing the chaos that could arise from other interpretations of CERCLA. Chief Justice Roberts writes that the requirement for a PRP to receive EPA approval under Section 122(e)(6) of the Act 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.”¹⁰ Otherwise, “property owners would be free to dig up arsenic-infected soil and build trenches to redirect lead-contaminated groundwater without even notifying EPA.”¹¹

In his dissenting opinion, Justice Alito argued that the Court need not have decided the state jurisdiction question as it was “neither necessary nor prudent”¹² for the Court to do so. Alito recognized that there is “much at stake”¹³ when a CERCLA Superfund site is involved and asserted that the answer to the state jurisdiction question depended on the interpretations of “devilishly difficult statutory provisions”¹⁴ — CERCLA Sections 113(b) and 113(h). Alito also acknowledged the Government’s fears that allowing such state law claims may result in state courts and juries, “eager to serve local interests, [that] may disregard the EPA’s expert judgment regarding the best plan for a CERCLA site and may mandate relief that exacerbates environmental problems.”¹⁵ Alito also criticized the Court’s interpretations of Sections 113(b) and (h) for rendering words in the statute redundant — a consideration that has in other cases substantially influenced the Court’s interpretation of CERCLA.¹⁶

In the dissenting opinion written by Justice Gorsuch and joined by Justice Thomas, Gorsuch argued that “covered persons” and “potentially responsible parties” are two distinct concepts under the Act, and that the majority’s holding “strips away ancient common law rights from innocent landowners and forces them to suffer toxic waste in their backyards, playgrounds, and farms.”¹⁷ While the majority opinion states that “the Act’s definition of remedial action does not reach so far as to cover planting a garden” or “digging a sandbox,”¹⁸ it’s not clear that this fully answers Justice Gorsuch’s objection, as restrictions on gardening and excavation are sometimes part of a CERCLA remedy ordered by EPA, even if not present in this particular remedy.

Implications of Atlantic Richfield

While much of the initial commentary on Atlantic Richfield has focused on whether, and to what extent, the decision can be characterized as a “victory” or “defeat” for “polluters” or “industry” (depending on one’s point of view),¹⁹ the real importance of the decision is that it appears likely to introduce significant uncertainty into a number of important aspects of Superfund practice, just as Justice Alito’s concurring opinion foreshadows. To that extent, while the federal power versus property rights issues that seem to be driving the debate between Chief Justice Roberts and Justice Gorsuch are interesting, the practical impacts on both CERCLA cleanups and private tort litigation may prove to be more significant.

The bottom-line result in this case seems reasonable and somewhat common-sense (although the plaintiffs’ bar would surely disagree): when EPA asserts jurisdiction over a National Priorities List (NPL) site, it determines what the remedy should be, and potentially-conflicting remedial actions cannot be undertaken without its approval, at least until the remedy is complete, and notwithstanding state legal requirements that could require more work at some point.²⁰ But this requirement is, by statute, limited to NPL sites,²¹ a fact the Court was careful to point out. So while the Court’s ruling likely continues to afford substantial protection to EPA-selected remedies at such sites, it potentially will have a significant impact upon the many other cleanup sites not subject to an active NPL listing.

The Court’s resolution of the scope and application of Sections 113(b) and 113(h) of CERCLA represents a major change in the case law, potentially creating the same kind of consequences that arose from the Court’s opinions in Aviall and Atlantic Research,²² which unsettled CERCLA jurisprudence and resulted in complex and unpredictable litigation regarding a number of issues that once seemed largely settled. (It’s hard to blame the Court for this — all these decisions took a principled textualist approach to the confusing and somewhat inconsistent statutory language.) Before Atlantic Richfield, the lower courts had largely read these provisions in tandem to bar basically any challenge to a CERCLA remedy while it was being implemented,²³ although there were always a few courts that recognized that this result was apparently contrary to the statutory text itself.²⁴ Because this result was hard to defend as a textual matter, it was likely on borrowed time once the court had adopted a more strictly textualist approach to CERCLA in cases like Aviall. But what will the new regime look like? According to the Court’s Atlantic Richfield opinion, CERCLA allows challenges to CERCLA cleanups to proceed in state courts: “The Act permits federal courts and state courts alike to entertain state law claims, including challenges to cleanups.”²⁵ To some extent, Atlantic Richfield may have opened the door to meaningful judicial challenges to EPA-selected remedies at Superfund sites, and it may be worth evaluating potential causes of action that might allow such a challenge to proceed, particularly where parties anticipate a sympathetic judicial forum. While the most straightforward path for such challenges is likely private tort litigation against CERCLA responsible parties, as with the facts of Atlantic Richfield, it is not clear that this will be the whole story, and responsible parties may themselves want to revisit their assumptions about the impracticality of challenging CERCLA remedies in light of this new decision, either using state laws or CERCLA citizen suits. While it is not clear whether such challenges from the PRP side will be practical, the uncertainty created by Atlantic Richfield provides reason to explore the issues.

Similarly, and with all due respect to Justice Gorsuch, the majority’s holding that private residence owners with hazardous substances on their property fall within the definition of “potentially responsible parties” under CERCLA seems obviously correct, at least from the perspective of those who have represented clients that have been on the receiving end of CERCLA’s extremely broad liability scheme. Justice Gorsuch’s treatment of such landowners as entirely “innocent” seems to rather miss the point of a statutory scheme that imposes strict liability without regard to fault or causation, and where the residential homes themselves can be a meaningful source of hazardous substances, such as lead paint residue, or where the hazardous substances relate to legacy contamination, such as historic fill placed by long-gone parties with no connection to anyone. While perhaps not germane to the facts of Atlantic Richfield, many parties have been held liable under CERCLA for environmental conditions to which they did not materially contribute.

The narrow issue of whether such landowners are subject to CERCLA Section 122(e)(6) is only applicable to existing NPL sites, but the implications of the Court’s holding them to be PRPs are potentially more expansive. Such landowners could be subject to CERCLA contribution claims, for example, and if a landowner demands a “gold-plated” remedy under state law, can another responsible party use a CERCLA claim to recover some or all of the cost of implementing that remedy from the landowner who demanded it? This issue may play out very differently at EPA-lead sites — where presumably EPA will now have to decide whether or not to bless the construction of remedial measures it rejected as part of the CERCLA remedy, with significant potential implications for contribution claims — and State- or private-lead sites (for which CERCLA and the National Oil and Hazardous Substances Pollution Contingency Plan allow recovery of response costs whether or not EPA is involved).²⁶ One wonders whether EPA will be tempted to select remedies involving more extensive excavation and removal to avoid this potential headache, a decision responsible parties may be inclined to challenge as arbitrary and capricious given the extensive precedent for capping remedies as protective of human health and the environment. And because whether or not a landowner is subject to CERCLA liability may turn on a host of individual factors related to CERCLA’s contiguous landowner defense, such as whether or not the landowner had reason to know about the presence of hazardous substances,²⁷ what are the implication for issues such as class certification in cases similar to those asserted by the Atlantic Richfield plaintiffs’ class? Indeed, Justice Gorsuch’s heavy reliance on the statute of limitations on the question of whether or not a residential landowner is a responsible party under CERCLA may raise more questions than it answers, as the statute of limitations under CERCLA can itself be complicated and hard to apply in particular circumstances.

Perhaps most significantly, the Atlantic Richfield decision demonstrates what has been revealed as an inherent contradiction in the statutory structure itself: CERCLA, as written, in some sense attempts to have it both ways. It tries to insulate EPA decisions from judicial review during the implementation of a CERCLA cleanup,²⁸ but also preserves state law remedies that apply to CERCLA sites.²⁹ At a high level of generality, this sounds fine: EPA gets first crack at the cleanup, and when EPA is done, state law can do more. But this makes little sense in the context of remedies that span decades, often seem to never be done, are subject to ongoing reviews for continued protectiveness, and where doing “more” can mean dismantling what EPA has done, not just expanding a cleanup to new areas, and where EPA’s view might be that this additional action increases rather than decreases risk.

¹Atl. Richfield Co. v. Christian, No. 17-1498, 2020 WL 1906542 (U.S. Apr. 20, 2020) (“Slip Opinion”).

² 42 U.S.C. § 9613.

³ Though Atlantic Richfield argued on appeal that CERCLA preempts and prohibits common-law torts like the plaintiffs’, the Court abstained from addressing the preemption argument and limited its analysis to the issue of whether a common-law claim for restoration damages is an impermissible challenge to an EPA cleanup plan, as prohibited in Section 113(h) of the Act.

⁴ 42 U.S.C. § 9622(e)(6).

⁵ EPA Superfund Record of Decision: Anaconda Co. Smelter (Sept. 30, 1996), available athttps://semspub.epa.gov/work/08/1164438.pdf.

⁶Atl. Richfield Co. v. Mont. Second Judicial Dist. Court, 390 Mont. 76, 84, 408 P. 3d 515, 521 (2017), aff’d in part, vacated in part, remanded sub nom. Atl. Richfield Co. v. Christian, No. 17-1498, 2020 WL 1906542 (U.S. Apr. 20, 2020).

⁷ Petition for Writ of Certiorari at 2, Atl. Richfield Co. v. Christian, 2018 WL 2176311.

⁸ Writing for the majority, Chief Justice Roberts asserts that “[o]ften the simplest explanation is the best: 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”. Slip opinion at *7.

⁹ Slip Opinion at *21.

¹⁰Id. at *2.

¹¹Id.

¹²Id. at *13.

¹³Id. at *14.

¹⁴Id.

¹⁵Id.

¹⁶Cooper Indus., Inc. v. Aviall Servs., Inc., 543 U.S. 157, 166 (2004) (noting that the Court is loath to adopt a statutory interpretation that “would render part of the statute entirely superfluous”).

¹⁷ Slip Opinion at *22.

¹⁸Id. at *10.

¹⁹See generally Pamela King, Supreme Court ruling isn’t ‘outright victory’ for polluters, Greenwire, Energy & Env’t News, Apr. 20, 2020, https://www.eenews.net/greenwire/2020/04/20/stories/1062925979; Juan Carlos Rodriguez, Justices Say Superfund Deal Doesn’t Block State Law Claims, Law 360, Apr. 20, 2020, https://www.law360.com/appellate/articles/1265333. But see Adam Liptak, Supreme Court Rules Against Landowners in Montana Superfund Fight, N.Y. Times, Apr. 20, 2020, https://www.nytimes.com/2020/04/20/us/supreme-court-montana-superfund.html.

²⁰ “The obvious meaning of this statute is that when a remedy has been selected, no challenge to the cleanup may occur prior to completion of the remedy.” Schalk v. Reilly, 900 F.2d 1091, 1095 (7th Cir. 1990); State of Alabama v. EPA, 871 F.2d 1548, 1557 (11th Cir. 1989).

²¹See Slip Opinion at *17.

²²Atl. Research Corp. v. United States, 459 F. 3d 827 (8th Cir. 2007), aff’d, 551 U.S. 128, 127 S. Ct. 2331, 168 L. Ed. 2d 28 (2007).

²³Fort Ord Toxics Projects, Inc. v. California E.P.A., 189 F.3d 828, 832 (9th Cir. 1999) (noting that in “passing § 113(h), Congress did not intend to preclude dilatory litigation in federal courts but allow such litigation in state courts” and that “Congress’ purpose could be thwarted just as easily by allowing state courts to issue injunctions halting CERCLA cleanups.”).

²⁴See Samples v. Conoco, Inc., 165 F. Supp. 2d 1303, 1315 (N.D. Fla. 2001).

²⁵ Slip Opinion at *8.

²⁶ 40 C.F.R. § 300.700(c)(3)(i).

²⁷ Slip Opinion at *12.

²⁸ “[O]nce a [cleanup] plan is selected, the time for debate ends and the time for action begins.” Id. at *4.

²⁹Id. at *6.