February 25, 2020

Atlantic Richfield Company v. Christian, et al.

ENVIRONMENTAL LAW

May a State Court Require Common-Law Environmental-Cleanup Relief of Polluted Property in Addition to a Cleanup Ordered by the Environmental Protection Agency?

CASE AT A GLANCE

The Atlantic Richfield Company bought the Anaconda Company, the operator of a massive copper smelter in Deer Lodge County, Montana, in 1977. The Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA) enables the Environmental Protection Agency (EPA) to control environmental cleanup and recover the costs from liable parties. To date, Atlantic Richfield has spent about $450 million on EPA-led remediation. Respondents sued the company in Montana state court in 2008 seeking “restoration” damages in addition to the EPA-required remediation. The trial court held that CERCLA permitted the restoration remedy, and the Montana Supreme Court agreed, diverging from federal appellate court rulings.

Docket No. 17-1498
Argument Date: December 3, 2019
From: The Supreme Court of Montana
by Barbara L. Jones
Minnesota Lawyer, Minneapolis, MN

ISSUES

  1. Is the Montana Supreme Court’s order a final order such that this Court has jurisdiction? 
  2. Is a common-law claim for restoration damages a “challenge” to EPA’s cleanup that is jurisdictionally barred by Section 113 of CERCLA? 
  3. Is a landowner at a Superfund site a “potentially responsible party” that must seek EPA’s approval under CERCLA Section 122(e)(6) before taking remedial action? 
  4. Does CERCLA preempt state common-law claims for restoration?

FACTS

In what could be described as one of the worst deals in history, the petitioner acquired the Anaconda Company and its copper smelters in 1977. The copper smelters were built starting in 1884 and continued operation until 1980.

In 1983, the Environmental Protection Agency (EPA) designated the area as a Superfund site—300 square miles of property containing arsenic and other toxic elements after a century of copper smelting pollution. Under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), the petitioner acquired a remediation obligation that is still ongoing and is one of the country’s first and largest Superfund sites.

In 2008, a group of landowners, respondents here, within the smelter site sued in state court, bringing claims for traditional tort relief, which are allowed under CERCLA. However, they also sued for up to $58 million in restoration damages to fulfill what they assert is a state-law duty to return the land to a pre-1884 unblemished state as if the smelter never existed. (The tort claims are not at issue in this appeal.) The respondents seek cleanup beyond that envisioned by the EPA. The EPA countered that the respondents are potentially responsible parties who are prohibited from cleanups at Superfund sites unless authorized by the federal government, and that their planned restoration conflicted with the EPA’s efforts.

The petitioner won the first round on summary judgment on statute of limitations grounds, but the Montana Supreme Court reversed. On remand, the trial court held that CERCLA permitted respondents’ restoration remedy, rejecting the arguments made by the petitioner and amicus United States.

First, the court said that the respondents’ cleanup would not interfere with the EPA and that respondents were “simply asking to be allowed to present their own plan to restore their own private property to a jury of twelve Montanans who will then assess the merits of that plan.”

Second, the court held that Section 122(e)(6)’s prohibition on unauthorized remedial actions by potentially responsible parties did not bar relief, even though the EPA strenuously opposed respondents’ remedy. Third, the court held that CERCLA did not preempt respondents’ claims.

CASE ANALYSIS

“This is a case about property rights, federalism, and statutory text,” the respondents start out, followed by a succinct distillation of events that could be said to have begun in 1983, when the property in question became a Superfund site. At the Supreme Court, the litigants’ disparate views of the environmental cleanup are couched in the familiar legal theories of jurisdiction, preemption, statutory interpretation, and federalism.

Both sides lead off with jurisdictional arguments.

The petitioner first argues that CERCLA Section 113 deprives state courts of jurisdiction to hear challenges to EPA remedial plans. First, Section 113(b) vests federal courts with exclusive original jurisdiction over all controversies arising under the law. Second, Section 113(h) withdraws from federal courts any authority they would otherwise have to hear “challenges” to the EPA’s chosen CERCLA remedy.

The respondents’ suit constitutes a “challenge” because it would be a very different type of cleanup that the EPA ordered and would “uproot” EPA-led cleanup efforts, petitioner argues. If it is a “challenge,” then it is also a “controversy” under Section 113(b), such that the federal court has exclusive jurisdiction.

A different reading of Section 113 would create a loophole the size of a copper mine through which private parties could drive their alternative cleanup plans, the petitioner argues. The Montana Supreme Court declined to find a “challenge” because the respondents say they would wait until the EPA is done to take action, the petitioner continues. “But the meaning of a ‘challenge’ to EPA remedial action cannot turn upon who wields the shovels, or whether they wait ten seconds or ten years to wreck EPA’s remediation efforts,” petitioner counters.

The petitioner then turns to a different part of CERCLA, Section 122(e)(6), which prohibits any “potentially responsible party,” or PRP, from taking “remedial action” at a Superfund site without EPA’s approval, once a remedial investigation has begun. Respondents say they are not PRPs. But respondents are “classic PRPs,” argues the petitioner, because they own land containing hazardous substances and have been included as PRPs for nearly 30 years. A contrary definition of PRP would allow landowners to launch hundreds of contradictory cleanups, effectively creating a “heckler’s veto” over EPA community-wide plans.

The Montana Supreme Court accepted the respondents’ argument that only parties affirmatively designated as PRPs qualify as PRPs. If they have not been so designated within CERCLA’s six-year limitations period, the PRP horse has “left the barn,” the court said. That was wrong, the petitioner argues, because a potentially responsible party is not necessarily ultimately liable under the statute. Furthermore, CERCLA does not include a deadline for designating PRPs.

The court’s interpretation would unleash a “stampede” of practical problems, preventing the EPA from expeditiously starting cleanup efforts, petitioner argues. A party such as petitioner could spend millions of dollars on cleanup, with no guarantee that their liability could be satisfied.

Petitioner’s third argument is that the Supremacy Clause is an insuperable bar to the respondents’ plan because the state remedies are preempted by federal law. Impossibility preemption applies here because CERCLA forbids the petitioner from implementing the putative state-law remedy. The petitioner cannot comply with federal and state law at the same time. Preemption exists even if the petitioner would pay damages to the respondents to implement the state-law remedy, not do the work itself. “In every civil preemption case, defendants could pay damages to avoid following a conflicting state law duty, yet impossibility preemption exists nonetheless,” the petitioner argues.

The remedy proposed by respondents also would constitute “obstacle preemption” because it would destroy the EPA’s community-wide remedial scheme and discourage PRPs from cooperating with the agency. CERCLA does include some savings clauses for state-law claims, but not those for restoration damages as raised by the respondents, petitioners assert. “The Supremacy Clause provides the ultimate backstop. If nothing else, private parties cannot be subjected to state-law duties that directly conflict with their CERCLA obligations, including their duty to follow EPA’s remedial plans,” petitioner argues. In contrast, Montana said that CERCLA’s savings clauses make state law supreme.

The respondents counter with their own jurisdictional arguments, including the Supreme Court’s own jurisdiction to review the Montana Supreme Court’s order, which it calls interlocutory, or not final. This was raised in the dispute over the petition for certiorari, which obviously was granted, and is not addressed by the petitioner in its initial brief on the merits. Earlier in the proceedings, the petitioner argued that the state court’s writ of supervisory control is a final judgment.

Respondents continue with their jurisdictional argument, first addressing Sections 113(b) and (h) of the statute. Section 113(b) grants federal courts exclusive jurisdiction only over cases “arising under” CERCLA, and respondents argue they are not pressing CERCLA claims and that CERCLA permits state-law claims.

Respondents argue that Section 113(h) addresses judicial review of EPA orders but does not strip state courts of jurisdiction over state-law claims. Section 113(b) does not import Section 113(h) into state court, and Section 113(h) would not preclude state-law claims even if it did. Section 113(h) only precludes federal claims. The respondents’ claims do not depend on the invalidity of any EPA action, and a claim for a cleanup that is different from the EPA’s is not precluded.

“Neither ARCO nor the [amicus] government attempts to reconcile the theory that CERCLA strips state courts of jurisdiction over state-law actions with the fact that CERCLA’s key jurisdiction-stripping provision expressly exempts state-law actions,” the respondents continue.

In a similar vein, the respondents continue, the “potential responsible party” label found in Section 122(e)(6) does not pull them into court. A PRP refers to someone that faces a risk of CERCLA liability, but the respondents say they have no potential CERCLA liability because the statute of limitations has run, as Montana determined. The term PRP has been used to describe  a “covered person” who is potentially liable under CERCLA, but the terms are not identical and this Court has never held that they are. Furthermore, the PRP term is most frequently used to describe someone who might settle under Section 122.

The petitioner’s interpretation of PRP “forever prevents anyone whose property has been contaminated from taking any steps to clean their property without EPA approval.…ARCO insists Landowners can never disturb even a ‘cubic foot’ of soil in their own backyards without EPA’s say-so,” respondents argue. “Such federal destruction of private property rights cannot be reconciled with CERCLA’s text.” (Emphasis in original)

And the landowners’ request for restoration damages is not preempted because petitioners could easily work with the EPA to undertake restorative work. CERCLA does not set a ceiling on cleanup and contemplates that additional remediation efforts would occur.

Respondents also argue that the restoration-damages remedy is not preempted because they seek damages for trespass and nuisance, not an order for a second cleanup. Under the statute, doing the actual cleanup is the respondents’ responsibility. “Congress nowhere took the further step of forbidding all state-law actions that contemplate additional hazardous waste remediation. And it is the statute Congress enacted, not the one ARCO wishes it had, that controls.”

SIGNIFICANCE

The context of the case is interesting, although not necessarily outcome-determinative.

The copper smelter operated on the property resulted in large amounts of highly toxic chemicals contaminating the land. But when the copper smelter closed, many people lost their jobs and the community took a significant hit. It may be that the petitioner is not popular in the community, either for being in business (through its predecessor) or for going out of business.

The case pits the authority of the federal government against the power of the local landowners and the state government. Many of the people involved may not want the federal government regulating their lives and their property, which is why the respondents note that the case is about federalism and property rights as well as the statutory text. Interestingly, the Montana court said the matter should be decided by a Montana jury, a comment that the petitioner mentions more than once in its brief.

The EPA has been involved in the cleanup of this property since 1983. The respondents brought suit in 2008, after federal resources had been committed. The petitioner and the United States, appearing as amicus curiae, see the case as a spoke in the federal wheel. “The Court’s decision whether to permit such claims to proceed will have a significant effect on the cleanup at this Superfund site and others throughout the country,” the government warns. It supports the theories of jurisdiction and preemption posited by the petitioner.

Several other amici weighed in supporting the petitioner. One is the Washington Legal Foundation (WLF), a public-interest nonprofit law firm. It writes, “CERCLA prohibits a State or a private party from using state law to interfere with the EPA-directed cleanup of an environmental-hazard site. Yet the decision below allows Montana landowners to do just that. If allowed to stand, the decision will undercut the federal government’s ability efficiently and effectively to manage environmental restoration under CERCLA. WLF urges reversal.”

The Chamber of Commerce and other trade associations also appear as amici in support of the petitioner, and thereby in support of the EPA-led CERCLA cleanup and, more globally, in support of a stable business environment.

On the other hand, the Pacific Legal Foundation and the Property and Environment Research Center say that the preemption arguments raised would erode constitutionally protected property rights while also limiting the ability of states and private property owners to secure a cleaner environment. The petitioner’s position raises “core constitutional concerns” under the Takings Clause of the Fifth Amendment by impeding ownership of property without a legitimate public use, the groups say.

The Clark Fork Coalition and the Montana Environmental Information Center, state conservation organizations, advise the Court that they are invested in seeing that the federal CERCLA scheme and well-established state environmental protections continue to work in harmony. “The only way Montana will achieve long-term cleanup of such a thoroughly contaminated watershed is through a combination of tools. Superfund and Montana’s state law remedies must remain on the table,” the amici contend.

Also appearing as a group are 15 states that argue that preemption is not a problem because Congress deliberately did not preempt state laws and restoration damages are not an obstacle to CERCLA. Also unmoved by the preemption argument is the amicus Public Citizen, a consumer advocacy organization. It agrees with respondents that CERCLA does not preempt state-law claims.

The amici on both sides thoroughly delineate the state-federal division that runs through this controversy.

Barbara L. Jones is an attorney and editor of Minnesota Lawyer newspaper. She can be reached at barbarajones14@comcast.net or 651.587.7803.

PREVIEW of United States Supreme Court Cases 47, no. 3 (December 2, 2019): 15–18. © 2019 American Bar Association

ATTORNEYS FOR THE PARTIES

  • For Petitioner Atlantic Richfield Co. (Lisa Schiavo Blatt, 202.434.5050)
  • For Respondents Gregory A. Christian, et al. (Joseph Russell Palmore, 202.887.6940)

AMICUS BRIEFS

In Support of Petitioner Atlantic Richfield Co.

  • Chamber of Commerce of the United States of America, et al. (Aaron Michael Streett, 713.229.1234)
  • Treasure State Resources Association of Montana, et al. (Kyle Anne Gray, 406.252.2166)
  • United States (Noel J. Francisco, Solicitor General, 202.514.2217)
  • Washington Legal Foundation (Corbin Knight Barthold, 202.588.0302)

In Support of Respondents Gregory A. Christian, et al.

  • Clark Fork Coalition and Montana Environmental Information Center (Caleb Adam Jaffe, 434.924.4776)
  • Pacific Legal Foundation and Property and Environment Research Center (Jonathan Calvin Wood, 202.888.6881)
  • Public Citizen, Inc. (Scott Lawrence Nelson, 202.588.1000)
  • Virginia, et al. (Toby Jay Heytens, 804.786.7240)