On April 20, 2020, the U.S. Supreme Court determined in Atlantic Richfield Co. v. Gregory A. Christian that the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) does not divest state courts of jurisdiction over claims arising under state law, even where the state law claim is based on a proposed remedy that exceeds the remedy the U.S. Environmental Protection Agency (EPA) selected under CERCLA. The Court further held, however, that innocent landowners who are nonetheless potentially responsible parties (PRPs) are barred by CERCLA section 122(e)(6) from implementing any remedial action, including a more stringent remedy, absent EPA authorization.
The Anaconda Smelter processed copper ore in Montana for almost 100 years, resulting in heavy metals contamination to soil and groundwater. In 1983, EPA designated approximately 300 square miles of residential and other land surrounding the smelter as a federal Superfund site. Since 1998, the Atlantic Richfield Co. (ARCO) has implemented EPA’s selected remedy, which includes excavating soils in residential yards.
In 2008, residential landowners sued ARCO in a Montana state court, asserting state common law claims and seeking compensatory damages, including “expenses for and cost of investigation and restoration of real property.” Plaintiffs’ “restoration damages” claim was based on a remedy exceeding that which EPA selected. ARCO and plaintiffs filed cross-motions for summary judgment on whether CERCLA preempts plaintiffs’ “restoration damages” claims. The trial court sided with plaintiffs.
Before the Montana Supreme Court, ARCO argued that CERCLA sections 113(h) and 122(e)(6) preempt plaintiffs’ restoration damages claims because the damages are for remediation that exceeds and contradicts EPA’s selected CERCLA remedy. That court held that CERCLA’s section 113(h) bar against remedy challenges does not apply to cases brought in state courts, and even if it did, would not bar plaintiffs’ state law claims, because they do not “actively interfere with EPA’s work” or “stop, delay, or change the work EPA is doing.”
The Montana Supreme Court further held that the homeowners are not PRPs under CERCLA and therefore need not receive EPA’s authorization before undertaking a remedial action under CERCLA section 122(e)(6). ARCO petitioned for certiorari, and the U.S. Supreme Court took the case.
The U.S. Supreme Court’s decision
Acknowledging that the landowners’ proposed restoration plan “goes beyond EPA’s own cleanup plan,” the Court framed the threshold issue as “whether the Montana Courts have jurisdiction over the landowners’ claims for restoration damages.” In an opinion authored by Chief Justice Roberts, the Court held that they do.
CERCLA does not preempt state law claims or direct them to federal court
The Court began by analyzing CERCLA section 113(b), which states: “the United States District Courts shall have exclusive original jurisdiction over all controversies arising under this chapter.” The Court reasoned that Congress’s use of the phrase “arising under” in CERCLA “echoes [its] more familiar use of that phrase in” 28 U.S.C. § 1331, which establishes federal question jurisdiction in the federal courts, and that generally “a suit arises under the law that creates the cause of action.” The Court held that “[t]he landowners’ common law claims for nuisance, trespass, and strict liability arise . . . under Montana law and not under [CERCLA]” and therefore that “the Montana courts retain jurisdiction over this lawsuit, notwithstanding the channeling of Superfund claims to federal courts in § 113(b).”
The Court next examined CERCLA section 113(h), which provides that “[n]o Federal court shall have jurisdiction under Federal law other than under section 1332 of title 28 (relating to diversity of citizenship jurisdiction) . . . to review any challenges to removal or remedial action” under CERCLA. The Court rejected reading section 113(h) as expanding the preclusive scope of section 113(b) to state courts. Instead, the Court determined that sections 113(b) and (h) operate “independently of one another,” with section 113(b) operating to divest state courts of jurisdiction over CERCLA actions, while section 113(h) operates to limit federal courts’ jurisdiction over specific CERCLA actions.
Observing that section 113(h) speaks only of limitations on federal courts, the Court questioned how Congress could have intended to preclude state courts from hearing a category of cases under section 113(b), when it stripped the federal courts of jurisdiction over that category under section 113(h). The Court further observed that section 113(h) contains a carve-out for federal courts sitting in diversity, which allows those courts to entertain state law claims “regardless of whether they are challenges to cleanup plans.” The Court questioned the logic of allowing such state law claims to proceed in federal courts, but not in state courts.
Finally, the Court observed the presumption in favor of concurrent state court jurisdiction over federal claims, absent an “explicit statutory directive” to the contrary, “unmistakable implication from legislative history,” or “a clear incompatibility between state-court jurisdiction and federal interests,” none of which was present here.
Remedial action, even on state law claims, requires EPA approval
The Court then determined that plaintiffs are PRPs and therefore subject to the section 122(e)(6) bar on conducting remedial actions absent EPA approval. The Court noted that “covered persons” identified in section 107 includes “owners” of “any site or area where a hazardous substance has been deposited . . . disposed of . . . or otherwise come to be located.” The Court found further that the plaintiffs’ status as PRPs is unaltered regardless of whether they would be held liable for response costs, and is therefore not affected by the running of CERCLA’s statute of limitations, the availability of CERCLA’s affirmative defenses, or EPA’s policy of nonenforcement against putatively innocent residential property owners.
The Court found this interpretation consistent with CERCLA’s objective of ensuring EPA’s “careful development” of a single cleanup effort, rather than many competing individual efforts. The Court rejected plaintiffs’ concerns that their PRP status would create a permanent easement on their property, finding that section 122 “does nothing of the sort.” The definition of “remedial action,” while broad, “does not reach so far as to cover planting a garden, installing a lawn sprinkler, or digging a sandbox.” The Court concluded that plaintiffs, as PRPs, must obtain EPA approval of any remedial action they undertake.
The Court remanded the case to Montana state courts for proceedings not inconsistent with its decision. On its face, the ARCO decision appears to provide parties with an avenue through state courts to challenge an ongoing cleanup or otherwise seek remedies long before an EPA-selected remedy has been completed. It remains to be seen the degree to which the PRP-bar to seeking such recovery in the absence of EPA approval will hinder the utility of that avenue.