Environmental Law Update

Amid the COVID-19 pandemic and the recent civil unrest around the country and the world, it is hard to imagine that there are ongoing developments in the world of environmental law. Strangely, the past few months in the environmental world have been astonishingly busy at all levels of government, including the US Supreme Court. In particular, the following two decisions have potentially wide-ranging implications across the country.

Supreme Court Holds Clean Water Act Applies to Groundwater

In April, the US Supreme Court held that the Clean Water Act (CWA), 33 USC §§ 1251-1387, regulates some discharges that travel through groundwater, overturning a Ninth Circuit decision that adopted a different standard. County of Maui v. Hawaii Wildlife Fund, 140 S. Ct. 1462 (2020). In a 6-3 decision, the Court created a new test for courts to apply to determine when the CWA applies to discharges that travel through groundwater to so-called navigable waters of the United States, i.e., bodies of water subject to federal regulation.

In the Ninth Circuit decision, the court held that the CWA requires a permit for discharges from a point source that are “fairly traceable” to a navigable water “such that the discharge is the functional equivalent of a discharge into the navigable water.” Hawai’i Wildlife Fund v. County of Maui, 886 F.3d 737 (9th Cir. 2018), vacated and remanded, 140 S. Ct. 1462 (2020). The Supreme Court rejected the Ninth Circuit’s “fairly traceable” test because the standard is so broad as to allow the Environmental Protection Agency (EPA) “to assert permitting authority over the release of pollutants that reach navigable waters many years after their release…and in highly diluted forms.” The Court also rejected the defendant and the US government’s position that the CWA does not apply if a pollutant travels from a point source through any amount of groundwater before reaching navigable waters.

The standard articulated by the Supreme Court for determining whether EPA has permitting authority is whether “there is a direct discharge from a point source into navigable waters or when there is the functional equivalent of a direct discharge.” In applying the “functional equivalent” test, the Court points to several factors that courts should consider to determine EPA’s permitting authority, including:

(1) transit time, (2) distance traveled, (3) the nature of the material through which the pollutant travels, (4) the extent to which the pollutant is diluted or chemically changed as it travels, (5) the amount of pollutant entering the navigable waters relative to the amount of the pollutant that leaves the point source, (6) the manner by or area in which the pollutant enters the navigable waters, (7) the degree to which the pollution (at that point) has maintained its specific identity.

Id. at 1475-77. The Court emphasized that time and distance are the most critical considerations in the majority of cases.

Stakeholders should keep a close eye out for forthcoming guidance from EPA and equivalent state agencies on how the Supreme Court’s holding will broaden the scope of permitting authority under the CWA.

Supreme Court Holds Landowners May Pursue State-Law Remedies against Superfund Defendants

In another April decision with potentially wide-ranging implications, the Supreme Court, also by a 6-3 vote, held that a group of landowners might sue a defendant under theories of state common law for costs to restore their properties located within a Superfund site. The defendant, however, had settled with the EPA to resolve its liability under the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA). Atlantic Richfield Co. v. Christian, 140 S. Ct. 1335 (2020). The Court further held, however, that the landowners could not restore their properties in the absence of EPA approval, as each landowner is considered a “potentially responsible party” (PRP) under CERCLA.

The case involves a Superfund site known as the Anaconda Company Smelter Site in Butte, Montana. The site operated copper smelters for nearly one hundred years, beginning in 1884. Atlantic Richfield Company purchased the site in 1977 and ceased operations in 1980. Much of the history of the smelters was before the advent of environmental laws. High concentrations of arsenic, lead, copper, cadmium, and zinc contaminated approximately 300 square miles around the former smelters.

In 1983, EPA placed the site on the Superfund National Priorities List and subsequently entered into several administrative orders with Atlantic Richfield to address the contamination. Remediation at the site has proceeded since that time and is expected to finish in 2025.

A group of 98 landowners brought suit against Atlantic Richfield in Montana state court under theories of common law nuisance, trespass, and strict liability. The landowners sought restoration damages, a remedy that Montana law requires to be spent on rehabilitation of a property.

The case raises two primary questions: (1) whether Montana courts have jurisdiction over the landowners’ claims; and (2) whether the landowners are entitled to restoration damages under Montana law.

As to the first question, the Court held that CERCLA did not strip the Montana courts of jurisdiction over the lawsuit. Atlantic Richfield relied on Section 113(b) of CERCLA, which provides that “the United States district courts shall have exclusive original jurisdiction over all controversies arising under this chapter . . . .” 42 U.S.C. § 9613(b). The Court noted that a “suit arises under the law that creates the cause of action.” As the landowners’ common law nuisance, trespass, and strict liability claims arise under Montana law, not under CERCLA, Montana courts have appropriate jurisdiction to hear the case.

On the question of whether the landowners are entitled to restoration damages under Montana law, the Court found in favor of Atlantic Richfield. The issue hinges on whether the landowners are considered PRPs under CERCLA and thus are prohibited from taking restoration activities at their properties by CERCLA Section 122(e)(6), 42 U.S.C. § 9622(e)(6). That provision prevents a PRP from undertaking remedial action at a Superfund site without EPA approval once EPA has commenced its remedial investigation and feasibility study.

The Court held that the landowners are indeed PRPs under CERCLA and thus need to obtain EPA approval to conduct any restoration activities at their properties. To determine that the landowners were PRPs, the Court looked at the definition of “covered person” in CERCLA Section 107, CERCLA’s liability section, which includes any “owner” of a “facility.” 42 U.S.C. § 9607(a). “Facility,” in turn, is defined to include “any site or area where a hazardous substance has been deposited, stored, disposed of, or placed, or otherwise come to be located.” Id. § 9601(9). Because both arsenic and lead were found on each of the landowners’ property, the landowners’ properties are considered to be part of the “facility.” The landowners are thus “owners” of that facility and therefore are PRPs under CERCLA.

In short, the Atlantic Richfield decision clarifies two critical points for parties hoping to recover from CERCLA settling parties. First, state law causes of action do not arise under CERCLA despite the damages to the property caused by contamination regulated by CERCLA. Second, landowners within Superfund sites are limited in remedies available under state law without running into EPA oversight. As with County of Maui, it will be interesting to follow how the decision plays out across the country.