June 29, 2020Client Alert

Landmark Ruling Greenlights State Law Challenges to Superfund Remedial Actions, Though EPA Remains in the Driver’s Seat

Recently, the U.S. Supreme Court issued a much-anticipated decision in the case of Atlantic Richfield Company v. Christian, Case No. 17-1498, regarding the scope of federal preemption under the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA, commonly known as Superfund). In a 6-3 split, the Court held that state courts retain jurisdiction to hear state law-based claims relating to ongoing Superfund remedial actions, even if such claims constitute a “challenge” to remedies prescribed by the U.S. Environmental Protection Agency (EPA). However, the Court clarified that landowners are themselves potentially responsible parties (PRPs) under the statute, and therefore must obtain EPA approval before commencing remedial or restoration work.

The ARCO case involved the Anaconda Smelter Superfund Site, a 300-square-mile property located in Butte, Montana, with significant levels of historic contamination from ore processing. Atlantic Richfield, as owner of the smelter, was identified as a PRP in 1983 and subsequently entered a settlement agreement with EPA to remediate the site under Agency supervision. In the 37 years since, Atlantic Richfield has cooperated with EPA to manage an extensive cleanup and has contributed approximately $450 million toward those efforts. However, local landowners remained dissatisfied with conditions at the site and filed claims in state court—alleging property damage pursuant to various local common law theories, and seeking additional funds of approximately $60 million to remediate the site to levels above the threshold requirements set by EPA. Atlantic Richfield sought to dismiss the case as preempted under CERCLA by virtue of its settlement with EPA and ongoing cleanup.

Following the Montana Supreme Court’s holding that the landowner’s claims could proceed in spite of its EPA-approved settlement and ongoing cleanup effort, Atlantic Richfield appealed the issue to the U.S. Supreme Court. Specifically, Atlantic Richfield argued that the landowners’ claims were preempted because: (1) CERCLA § 113 strips courts of the jurisdiction to review challenges to EPA cleanup plans; and (2) CERCLA § 122(e)(6) provides that “no potentially responsible party may undertake any remedial action” at the site without EPA approval. As the landowners’ properties were located within the Anaconda Smelter Superfund Site, they themselves should be considered PRPs and thus subject to CERCLA § 122(e)(6).

Ultimately, the Court found CERCLA § 113 to be inapplicable given that the landowners’ claims did not “arise under” CERCLA; they arose under state law. Thus, the Court held that CERCLA did not preclude state court jurisdiction over the common law claims asserted against Atlantic Richfield. But, at the same time, the Court found the landowners to be PRPs of the Site notwithstanding any affirmative liability defenses that may be available. Practically speaking, the landowners’ state-based claims are not barred by CERCLA § 113, but the landowners must obtain EPA approval for any remedial or restoration work in accordance with CERCLA § 122(e)(6).

Though the ARCO ruling does not divest state courts of jurisdiction to hear claims related to Superfund site conditions, it does reinforce the notion that states’ ability to enforce local law is circumscribed by the principle that CERCLA means to “ensure the careful development of a single EPA-led cleanup effort rather than tens of thousands of competing individual ones.” Still, industrial PRPs should be aware of the possible uptick in state-based litigation as plaintiffs may increasingly seek to file common law tort and property claims for legacy contamination at Superfund sites. Performing PRPs will need to consider mechanisms to resolve state-based claims of third parties in light of this decision. 

It remains to be seen whether Atlantic Richfield will be held liable for additional cleanup costs assessed on the basis of landowner claims, or whether landowners will be able to get EPA approval for additional cleanup activities as requested. These developments will help to shape the lasting significance of the Court’s findings, including that plaintiffs asserting state common law claims are PRPs who may not avoid federal scrutiny by way of EPA review and approval for additional remedial activities.

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