November 17, 2020

To Supplement, Not Supplant State Law: The Dissenters’ Tribute to Federalism in Atlantic Richfield Co. v. Christian

Matthew E. Cohn

Introduction

Justice Anthony Kennedy once offered the following enlightened view of American federalism:

Federalism was our Nation's own discovery. The Framers split the atom of sovereignty. It was the genius of their idea that our citizens would have two political capacities, one state and one federal, each protected from incursion by the other. The resulting Constitution created a legal system unprecedented in form and design, establishing two orders of government, each with its own direct relationship, its own privity, its own set of mutual rights and obligations to the people who sustain it and are governed by it. It is appropriate to recall these origins, which instruct us as to the nature of the two different governments created and confirmed by the Constitution.

Looking through the lens of this eloquent description of the relationship between state and federal government, the dissenting opinion in Atlantic Richfield Co. v. Christian, authored by Justice Neil Gorsuch and joined by Justice Clarence Thomas, deserves examination.

The Atlantic Richfield majority’s deep dive into the nuances of the Comprehensive Response, Compensation, and Liability Act (CERCLA) will certainly be useful to Superfund and environmental law practitioners for years to come. However, the impact of the majority’s rigorous statutory analysis will likely be narrow, limited to a specific type of issue in a certain type of environmental dispute.

On the other hand, the Atlantic Richfield dissent’s tribute to federalism has the potential to endure and be looked to for inspiration in a variety of contexts, both within the realm of environmental law and beyond. The dissenters’ opinion could guide and influence those seeking to understand foundational constitutional principles that underpin the relationship between the states and the federal government. This is because the dissent is not so much about the merits of the dispute itself, but rather about who is empowered with the authority to decide the merits. The dissenters thoroughly evaluate the role of a state court confronted with a dispute whose subject matter is also within the purview of a specialized federal government agency.

The Facts

First, a little background on the environmental dispute at issue in this case. Ninety-eight homeowners brought an action in Montana state court seeking to require Atlantic Richfield to create a fund for the restoration of their contaminated properties. The soils on their properties were contaminated by a smelter that had operated from the late 1800s through 1980. Referred to as the Anaconda Smelter Superfund Site, the U.S. Environmental Protection Agency (EPA) identified an immense 300 square mile area of contaminated land where metal particles emitted into the air by the smelter had reportedly settled on the ground. The homeowners’ properties were all located within the 300 square mile area. Atlantic Richfield, as successor to the original smelter company, was alleged by EPA to be liable under CERCLA and required to perform remediation.

The scope of the remediation project was developed after many years of investigation and study. Atlantic Richfield and EPA ultimately agreed on numerical standards for the levels of contamination that could remain in soil, and those standards were memorialized in a Record of Decision (ROD). The ROD allowed soils contaminated with arsenic at concentrations of up to 250 parts per million (ppm) to stay on the homeowners’ properties. The homeowners, dissatisfied with the ROD, sued for separate relief in state court. The homeowners wanted their properties restored so that arsenic concentrations were no greater than the regional background level of 15 ppm, irrespective of the ROD. The Supreme Court was asked to decide whether the homeowners could obtain a state court order requiring Atlantic Richfield to establish a fund for the performance of more demanding restoration work, despite the more limited federal cleanup plan approved by EPA pursuant to CERCLA and the ROD.

The Majority Opinion

The majority engaged in a nuanced analysis of CERCLA’s definitions and language in an effort to discern congressional intent regarding the permissibility of a private state court action in the face of a federal CERCLA remedy. In doing so, the majority concluded that the homeowners were, in a strict statutory sense, “potentially responsible parties” (under CERCLA, current owners of contaminated property can be held liable even if they did not cause or contribute to the contamination). Accordingly, the majority held that if the state court ordered the funding of a supplemental cleanup on their properties, then EPA approval of any additional cleanup would be required. The majority came to this conclusion after considering certain settlement provisions described in section 122 of CERCLA, a section added to the statute six years after it was originally enacted. The majority explained:

Section 122(e)(6), titled “Inconsistent response action,” provides that “[w]hen either the President, or a potentially responsible party . . . has initiated a remedial investigation and feasibility study for a particular facility under this chapter, no potentially responsible party may undertake any remedial action at the facility unless such remedial action has been authorized by the President.

Thus, according to the majority, the homeowners are required to obtain EPA’s authorization before the performance of any remediation on their properties. The majority concluded that any restoration of their properties beyond the remedy in EPA’s ROD, even pursuant to a state court order, would require EPA’s approval.

Accordingly, the majority remanded the case back to the Montana Supreme Court with a finding that if Atlantic Richfield was ordered to create a fund for restoration, then the restoration of individual properties within the boundaries of the Superfund site could only be implemented with EPA’s approval. According to the majority, this would “ameliorate any conflict between the landowners’ restoration plan and EPA’s Superfund cleanup, just as Congress envisioned.”

The Dissenters’ View of CERCLA § 122

The dissenters rejected the majority’s view that the homeowners are “potentially responsible parties” and looked more broadly at the role of state courts and our federalist system of government in the context of CERCLA. According to the dissenters, “[n]othing in § 122 affects the rights of strangers to the federal government’s settlement process.” Not being settling parties, the dissenters viewed the homeowners as strangers to the Anaconda Smelter Superfund Site settlement. They noted that while EPA was capable of holding the homeowners liable, it never actually did so. First, CERCLA requires the government to formally notify the homeowners that they are potentially responsible parties, as required under section 122(e)(1). Second, CERCLA requires the government action be brought within six years of commencement of remediation. With EPA providing no formal notice to the homeowners, and more than six years passing since the start of remediation, the dissenters concluded that homeowners were not “potentially responsible parties,” forcefully stating: “On any reasonable account, the landowners are potentially responsible to the government for exactly nothing.”

In turn, because section 122(e)(6) only prohibits “potentially responsible parties” from performing remediation unless authorized by EPA, the dissenters found that EPA approval was not required for the homeowners’ proposed restoration work. The dissenters explained that the purpose of the language in section 122(e)(6) is to control the settlement process so that no settling party could incur costs that it would then seek to foist upon others. Thus, the focus of the section 122 amendment to CERCLA was incentivizing settlements by ensuring that settling parties ceased bringing claims against other settling parties, or as the dissenters wrote, to “bar[] a potential responsible party from taking unauthorized remediation measures” that could undermine a settlement. Thus, according to the dissenters, CERCLA does not have the effect of denying or curtailing any pre-existing rights of ordinary citizens that existed prior to CERCLA.

The Fundamental Purpose of CERCLA According to the Majority

The majority arguably strays from prior Supreme Court precedent in describing the fundamental purpose of CERCLA, apparently putting a premium on effectuating finality through an EPA decision above all else. The majority wrote:

Interpreting “potentially responsible parties” to include owners of polluted property reflects the Act’s objective to develop, as its name suggests, a “Comprehensive Environmental Response” to hazardous waste pollution. 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.

In this peculiar passage of the majority’s opinion, which cites no authority, the majority seems to conclude that CERCLA’s aim is efficiency and conflict avoidance, an objective that it believes can be realized by having a single, unified, EPA-led remedy selection and implementation process. Thus, in situations where contamination from source areas has impacted surrounding private lands, the majority suggests that Congress preferred to have EPA make the one and only remedy decision that would be comprehensive, so as to avoid the potential chaos of aggrieved private parties seeking separate cleanup relief in non-EPA forums.

The majority’s way of thinking about CERCLA is novel. Never before has the Supreme Court found that an EPA-led remedy selection preempted ancillary remedies available under state law. Rather the Court has previously characterized CERCLA’s purposes much differently:

[T]he two . . . main purposes of CERCLA are prompt cleanup of hazardous waste sites and imposition of all cleanup costs on the responsible party.
[CERCLA] was designed to promote the timely cleanup of hazardous waste sites and to ensure that the costs of such cleanup efforts were borne by those responsible for the contamination.

EPA currently describes the goals of CERCLA in similar terms.

Thus, not until Atlantic Richfield has the Supreme Court identified CERCLA’s objective as the development of a singular, orderly, unified, comprehensive, EPA-led remedy designed to be the final decision on how contamination should be addressed, even on private property owned by non-liable parties.

The Dissenters’ Basis for Concluding that Congress Sought to Protect State Law Claims

Seeing things differently, the dissenters argued that Congress explicitly sought to protect and preserve the right of aggrieved private parties to seek separate cleanup relief in state court. Most compelling to the dissenters was the language in CERCLA itself:

Nothing in this [Act] shall be construed or interpreted as preempting any State from imposing any additional liability or requirements with respect to the release of hazardous substances within such State.
Nothing in this [Act] shall affect or modify in any way the obligations or liabilities of any person under Federal or State law, including common law, with respect to releases of hazardous substances or other pollutants or contaminants.

Rejecting the idea that there should only be a “single EPA-led cleanup effort,” the dissenters were dismissive of the majority view:

[T]hings would be so much more orderly if the federal government ran everything. . . .
Maybe paternalistic central planning cannot tolerate parallel state law efforts to restore state lands. But maybe, too, good government and environmental protection would be better served if state law remedies proceeded alongside federal efforts. State and federal law enforcement usually work in just this way, complementing rather than displacing one another.

Thus, where the majority saw CERCLA’s purpose as bringing about order through a unified remedy selection and implementation process under EPA’s direction, the dissenters saw the statute as explicitly tolerating and sanctioning the intended, organized, and structural “chaos” of our federalist system. That is why they concluded: “Everything in CERCLA suggests that it seeks to supplement, not supplant, traditional state law remedies and promote, not prohibit, efforts to restore contaminated land.”

The Dissenters’ Defense of Property Rights and the Constitution

The dissenters also showed a clear sympathy and appreciation for the homeowners’ property rights. While EPA had a broad mandate under CERCLA to impose the remedy it saw fit upon Atlantic Richfield in order to improve public health and the quality of the environment, the homeowners had a more personal desire to defend their properties and ensure the safety of their families. If EPA’s broader regional remedy did not address the homeowners’ more personal, private property concerns, then according to the dissenters, the homeowners had available to them what has always been available to private property owners––common law remedies in state court. To the dissenters, a commitment to private property rights, and the role of states in protecting those rights, were paramount:

The federal government enjoys no general power to regulate private lands. . . .
[T]he regulation of real property and the protection of natural resources is a traditional and central responsibility of state governments. And States have long allowed landowners to seek redress for the pollution of their lands through ancient common law causes of action like nuisance and trespass.

The dissenters’ perspective that the homeowners had a right to defend their private property in state court was apparently derived in part from a willingness to study the facts and entertain the possibility that EPA’s 250 ppm arsenic standard may not be satisfactory to every homeowner. The dissenters wrote:

By way of reference, even 100 ppm is sometimes considered too toxic for local landfills, and the federal government itself has elsewhere set a threshold of 25 ppm. Some States set residential cleanup levels as low as 0.04 ppm.

From the dissenters’ point of view, at least when it came to the impact on private property, the decision on this type of factual issue was not EPA’s alone to make. Rather, the dissenters believed that the homeowners should have their day in court to litigate the contested issue of how much contamination could safely be left behind on their properties.

The dissenters’ unwillingness to give EPA the final say on matters related to private property was fully on display when they contextualized the majority’s decision with an extreme scenario of a homeowner self-funding the cleanup of its own property:

On Atlantic Richfield’s telling, CERCLA even prevents private landowners from voluntarily remediating their own properties at their own expense. No one may do anything in 300 square miles of Montana, the company insists, without first securing the federal government’s permission.

Moreover, in the dissenters’ view, denying the homeowners the right to pursue their claims in state court, and giving EPA the authority to actually limit the cleanup of private land, ran directly afoul of the Constitution:

If CERCLA really did allow the federal government to order innocent landowners to house another party’s pollutants involuntarily, it would invite weighty takings arguments under the Fifth Amendment. And if the statute really did grant the federal government the power to regulate virtually every shovelful of dirt homeowners may dig on their own properties, it would sorely test the reaches of Congress’s power under the Commerce Clause.

The dissenters’ overall sympathy toward the homeowners’ desire to defend their property rights in state court is grounded in their apparent greater trust of individual citizens over the federal government, at least in this instance:

[L]et’s be honest, the implication here is that property owners cannot be trusted to clean up their lands without causing trouble. . . .
But this project is well on its way to the half-century mark and still only a “preliminary” deadline lies on the horizon. No one before us will even hazard a guess when the work will finish and a “delisting” might come.

The Long Road Ahead for the Homeowners

Based on the majority’s decision, the homeowners have a potentially lengthy litigation path in front of them. First, they will have to go through the state court system, with the certainty of appeals, to determine whether the establishment of a restoration fund will be ordered, and if so, how much will be deposited into the fund and how the funds will be distributed. Then, if restoration funding is mandated by the state court, EPA will get to decide if any restoration work that homeowners wish to perform will conflict with the remedy being implemented under the ROD. EPA’s decision, be it for or against additional restoration work, will presumably then be challenged for the typical reasons EPA decisions get challenged (i.e., whether or not the decision was arbitrary and capricious, or an abuse of discretion, pursuant to the Administrative Procedure Act).

No matter how hard the majority sought to create order and finality through the endorsement of a single, EPA-led remedy, the dispute among the homeowners, Atlantic Richfield, and EPA is likely to create chaotic litigation for years to come.

Conclusion

While it is obviously the majority decision in Atlantic Richfield Co. v. Christian that will be controlling authority and matter most to litigating parties, it is the dissenting opinion that brings into focus some of the more thorny and strategic issues commonly faced by defendants subject to government enforcement actions, both environmental and otherwise. As with the Anaconda Smelter Superfund Site, the subject matter of government enforcement is often of interest to other non-party, private citizens. A settlement of an enforcement action between a defendant and the government may not provide sufficient, or any, relief to private citizens. The private citizens may be entitled to something more, or something different, from what the government is seeking or willing to accept.

Consequently, it is not unusual or inappropriate for private citizens to turn to state courts for specific relief, regardless of enforcement of a federal statute by a specialized federal agency. The logic described by the dissenters of how federal regulatory statutes supplement, but do not supplant, state law remedies is repeatedly found in federal case law in a variety of contexts other than environmental law, including labor law, trade law, and consumer protection law. This common refrain of federal regulatory statutes supplementing, not supplanting, private state law actions is, at its essence, rooted in federalism. Simply put, state courts have an important and indispensable role to play, regardless of the actions and decisions of federal agencies enforcing federal law.

It is generally accepted that federal enforcement has been trending downward in recent years. It should therefore not be surprising that we may see in the future more private parties, believing federal agencies are not authorized or not doing enough to protect their interests, turn to state courts for common law relief. Against this backdrop, the dissenters’ embrace of federalism is compelling and has the potential to be impactful. The dissenters’ defense of a state court private action in the face of a federal agency enforcement action rings a lot of bells for those who believe in and value a limited federal government. The well-reasoned dissenting opinion may very well influence courts that are both keenly aware of their role of being guardians of the basic rights of citizens and distrustful of an all too powerful federal government.

    Matthew E. Cohn

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    Matthew E. Cohn is an environmental attorney at Greensfelder, Hemker & Gale, P.C. in Chicago.  Matthew’s practice focuses on all aspects of environmental law, pairing his legal experience with a professional background in environmental science. His work includes litigation, environmental due diligence, and counseling on regulatory compliance. Issues Matthew litigates include CERCLA cost recovery and contribution cases, RCRA citizen suits, toxic tort cases, insurance coverage disputes, and permitting and enforcement actions for violations of air, water and waste laws. He also counsels businesses on Clean Air Act and Clean Water Act regulations and has managed due diligence projects including site assessments under the EPA’s All Appropriate Inquiries Rule and the investigation and remediation of contaminated properties. Before becoming an attorney, Matthew spent several years as a hydrogeologist for a global environmental engineering and consulting firm. That experience included planning and implementing environmental investigations, assessing risks, and identifying cost-effective remedies.