Superfund Ruling Highlights EPA's Authority Over Cleanups

The U.S. Supreme Court recently decided Atlantic Richfield Co. v. Christian, a case involving landowners who sought to use state law claims to compel Atlantic Richfield, the successor by merger to a copper smelting company, to perform a more extensive cleanup than federal regulators had required under the Comprehensive Environmental Response, Compensation, and Liability Act, or CERCLA, also known as the Superfund law.

While formally remanding the landowners’ claims to state court for further evaluation — because the claims require the U.S. Environmental Protection Agency’s permission to meaningfully proceed — the decision emphasizes the EPA’s continued primacy in remediation decision-making.

The decision should give a measure of comfort to parties performing federally supervised cleanups. But parties still may be vulnerable to state court claims by landowners that convince the EPA that the remedies they request do not threaten overall cleanups.

Background

The site involved in Atlantic Richfield is old and massive. Beginning in 1884, the Anaconda Copper Mining Company began copper smelting operations 26 miles west of Butte, Montana, eventually constructing three smelters, the largest of which featured a 585-foot-tall smokestack.

Continuing in operation for almost a century, Anaconda refined much of the copper used in telephone and electric lines across the U.S. When CERCLA passed in 1980, Atlantic Richfield — the successor by merger to Anaconda — faced strict liability for contamination resulting from copper smelting operations, which were found to affect an area over 300 square miles in size.

Since 1983, the EPA has managed an extensive cleanup of this area, including remediation of more than 800 residential and commercial properties; removing 10 million cubic yards of mine tailings; capping in place more than 500 million cubic yards of waste over 5,000 acres; and reclaiming more than 12,500 acres of land.

How the Supreme Court Became Involved

In 2008, a group of almost 100 landowners in this Superfund site sued Atlantic Richfield in Montana state court, asserting trespass, nuisance and strict liability claims under Montana state law, which permits damages in excess of how much a property has been diminished in value.

To collect these damages, a property owner must show two things: First, that properties can be repaired, and second, that any damages will be used to restore the property. The landowners proposed a plan that was more stringent than what the EPA had approved.

Specifically, it would restore property to a maximum soil contamination level of 15 parts per million of arsenic, rather than the 250 parts per million set by the EPA; excavate soil in residential yards to two feet, in contrast to the one-foot depth set by the EPA; and capture and treat shallow groundwater using an 8,000 foot long, 15-foot deep and 3-foot wide underground permeable barrier that the EPA had rejected as costly and unnecessary. The total cost of these remedial activities was estimated to be between $50 and $58 million dollars.

Atlantic Richfield argued that CERCLA Section 113(h) — which limits parties’ ability to challenge the EPA’s cleanup decisions in court — barred the landowners’ claims for restoration of damages. After the Montana courts rejected Atlantic Richfield’s argument, Atlantic Richfield filed a challenge with the U.S. Supreme Court.

The Supreme Court’s Ruling

The Supreme Court overturned the Montana Supreme Court’s decision and remanded the case to Montana courts to determine whether the landowners’ preferred remedy conflicted with the EPA’s remediation efforts, even though the EPA had previously stated that the landowners’ proposed plan created environmental risks.

Interestingly, because the case is being remanded to Montana state court for this evaluation, the Supreme Court sidestepped Atlantic Richfield’s main argument: that additional remediation in the form of “restoration damages” fundamentally conflicted with CERCLA centralizing remediation decision-making with the EPA. Below are the key takeaways.

1. Parties that own land near Superfund sites should engage in Superfund investigation and remediation processes, rather than wait to pursue state claims later.

Because the CERCLA statute contains provisions that temporarily preclude court challenges to regulatory decisions from being filed until remediation is complete, parties that own land on or near Superfund sites should engage with regulators when cleanup investigations begin. This decision emphasizes that Superfund is broad, and that statutory liability can affect parties’ rights, even when regulators do not compel those parties to participate in cleanup activities.

In Atlantic Richfield, the Supreme Court emphasized that CERCLA’s broad definition of who is liable can effectively preclude access to traditional state law remedies. This main policy takeaway will likely not surprise Superfund practitioners.

2. Parties performing work at Superfund sites must remain aware that, at some point in the future, the EPA could allow parties to file state law claims to compel more stringent cleanups.

While the gist of the decision is that the EPA has the broad right to determine how a site should be remediated, the court’s decision effectively allows the EPA a back door to permit parties to use state law remedies to compel more stringent cleanups. Once the EPA has reached a decision regarding how a site should be cleaned up, there is some incentive for regulators in a future administration to stand by cleanup determinations made by prior administrations.

Because the court remanded the case to Montana courts with the instruction that the landowners’ claims could proceed with EPA approval, the court may have created a back door that could permit parties to revisit determinations under state law, at least with EPA approval. EPA approval — in the majority’s view — “could ameliorate any conflict between the landowner’s restoration plan and EPA’s Superfund cleanup, just as Congress envisioned.”

Even though the EPA here stated that it did not approve of the landowners’ plan because it the plan presented environmental risks, the EPA could theoretically come to a different conclusion in other circumstances or under a different administration, without directly undercutting its prior determinations under federal law.

3. For practitioners, the best answer as to whether federal remedial decisions can be trumped by state court decision making is “usually not.”

Corporate lawyers or environmental managers likely look to this opinion with one question: Can third parties use state litigation to broaden remedial obligations beyond those imposed by a federal cleanup agreement?

However, because much of this decision is focused on CERCLA statutory design, and not on the EPA’s already expressed decision that the landowners’ proposed remedial plan posed environmental risks, this big-picture question may have been left for future cases.

This article is reprinted with permission from Law360, April 23, 2020, www.Law360.com.