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U.S. Supreme Court Limits Use of Tort Claims By Affected Homeowners at Superfund Sites


Written by Christopher D. Thomas, P. Derek Petersen, Katherine E. May, Perkins Coie LLP

The U.S. Supreme Court stepped into the long-simmering debate about the rights of residential homeowners affected by Superfund response actions, ruling that they are indeed bound by the federal statute’s ban against potentially responsible parties taking additional, unauthorized remedial actions. The case, Atlantic Research Company v. Christian et al., 590 U.S. ___ (April 20, 2020), arose out of remedial action of historic hazardous substances releases from the former Anaconda smelter site in Butte, Montana.

The releases impacted surface soils at nearby residences, and the U.S. Environmental Protection Agency (EPA) selected a response action that called for surface soil containing excess levels of lead and arsenic to be excavated and removed, with soil impacted below those risk-based goals left in place and capped. Though that is standard practice for soil cleanups under the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA), 42 U.S.C. §§ 9601 et seq, the homeowners were unhappy with the selected cleanup goals. In 2008, 98 of them filed suit in Montana state court under a variety of common law theories.

It is undisputed that CERCLA creates a cause of action for recovery of cleanup costs that must be filed in federal courts, while preserving the rights of affected parties to pursue non-conflicting common law claims against polluters. It is likewise clear that CERCLA precludes federal courts from entertaining collateral attacks on EPA-approved remedies and bars potentially responsible parties (PRPs) from disrupting EPA’s ongoing efforts at Superfund sites by taking unauthorized actions.

What has been greatly disputed is how these CERCLA provisions should apply to owners of homes within Superfund sites, given CERCLA’s broad definition of such sites to include “all areas where hazardous substances have come to be located.” In this update, we review the facts and holdings of Christian, discuss key takeaways, and consider the practical implications of the holding on residential cleanups generally.

Facts

Anaconda Copper Company mined copper in the Butte area from 1884 until its stock was acquired in 1977 by Atlantic Richfield Company (ARCO). As Anaconda’s corporate successor, ARCO is liable for necessary remediation. Since the site was listed on the federal National Priorities List in 1983, under EPA supervision ARCO has spent more than $450 million cleaning up some 300 square miles affected by the former smelter’s stack emissions. Part of the cleanup work required by EPA, selected after the usual study and public comment process, has included removing hundreds of thousands of cubic yards of soil from residential yards and pasture fields.

The residential landowners within the Superfund site sued ARCO in Montana state court for common law nuisance, trespass, and strict liability—seeking at least $50 million in restoration costs to return their properties to their original condition. Like many states and Restatement (Second) of Torts § 929 (1978), Montana allows homeowners affected by contamination to recover the costs of restoring their personal homes even if the restoration costs exceed the value of the property. And the homeowners sought a declaration that ARCO was liable for the costs of removing impacted soil that EPA agreed could be safely left in place.

ARCO moved for summary judgment on the restoration damages claim, arguing that CERCLA precluded the Montana courts from hearing the case and also that, as PRPs, the homeowner plaintiffs were prohibited from taking additional cleanup action without EPA approval. After the Montana Supreme Court disagreed on both counts, the U.S. Supreme Court granted certiorari to address the following:

  1. Whether state courts are barred from entertaining common-law claims for restorations that are inconsistent with an EPA-selected remedy by the prohibition against collateral attacks on remedial action decisions established under CERCLA § 113(h), 42 U.S.C. § 9613 (h)
  2. Whether CERCLA preempts such conflicting state-law claims
  3. Whether residential homeowners within the broadly defined reach of a Superfund site are PRPs subject to the CERCLA Section § 122(e)(6) prohibition against engaging in remedial action without EPA approval

The United States filed an amicus brief agreeing with ARCO that a state-law claim for restoration damages is a “challenge” to EPA’s remedial plan over which the federal courts have exclusive jurisdiction pursuant to CERCLA § 113(b). The agency likewise agreed that CERCLA preempts the landowners’ claims and, further, that as PRPs the homeowners could not take remedial action without agency approval.

Holdings

Addressing the jurisdictional issues, the Court held that while CERCLA provides for exclusive federal jurisdiction over claims brought under the statute itself, it does not wholly displace state-court jurisdiction over common law claims for restoration damages. The Court reasoned that CERCLA § 113(b) “deprives state courts of jurisdiction over claims brought under [CERCLA]. But it does not displace state court jurisdiction over claims brought under other sources of law.” The Court further ruled that the Section 113(h) bar against federal courts entertaining challenges to remedies did not by itself limit state-court jurisdiction. The Court opined: “Atlantic Richfield remains potentially liable under state law for compensatory damages, including loss of use and enjoyment of property, diminution of value, incidental and consequential damages, and annoyance and discomfort.”

After declining to limit the jurisdiction of state courts to entertain restoration claims, however, the Court’s next ruling made it unlikely that homeowners could accrue such claims. Section 122(e)(6) of CERCLA prohibits PRPs from undertaking “any remedial action” absent EPA approval at any facility where EPA or a PRP acting under an administrative order or consent decree “has initiated a remedial investigation and feasibility study.” Disagreeing with the Montana Supreme Court, the Court ruled that the landowners were PRPs and, as such, were prohibited from taking remedial action without EPA approval.

The Court’s majority rejected Justice Neil Gorsuch’s contention that their interpretation violated CERCLA’s “saving clauses”—which provide that CERCLA does not preempt liability or requirements under state law. On the contrary, the majority held that interpreting CERCLA’s savings clauses to erase the clear mandate of §122(e)(6) would allow CERCLA “to destroy itself.” And the Court noted that Atlantic Richfield remains potentially liable under state law for damages, including costs from the landowners’ own remediation beyond that required under CERCLA—so long as the landowners first obtain EPA approval of that remedial work. But the Court assumed that the landowners’ proposed plan, which required additional costly soil removal to achieve heightened cleanup goals, was inconsistent with the EPA-selected remedy—which the EPA had already determined to be protective of human health and the environment.

Key Takeaways

  • The Court’s interpretation of CERCLA should reduce the litigation leverage of homeowners over industrial parties remediating residential yards under CERCLA. While it did not rule that common-law tort claims are preempted, the Court effectively limited the relief available for restoration claims in circumstances where the cost of restoration exceeds the value of the property. Obtaining EPA preapproval for additional remediation—which the Court established as a precondition to obtaining monetary relief—is likely to be difficult.
  • Ironically, as the dissent warned, the ability of EPA to effectively foreclose restoration relief against PRPs may increase the agency’s own litigation risk. Nothing in CERCLA precludes the government from takings claims when CERCLA is invoked to impose use restrictions.
  • The decision underscores yet again the role the administrative record can play in subsequent tort litigation. EPA does not approve remedial actions unless it determines that they are protective of human health and the environment. The Christian opinion will give targets of tort claims additional support for the argument that removing all traces of contamination is not necessary to eliminate liability for common law damages.

About the Authors

Christopher D. Thomas, a Partner and Environmental Lawyer at Perkins Coie LLP, has advised industrial, commercial and municipal clients across the United States on a variety of litigated and non-litigated environmental disputes and regulatory compliance issues for more than 30 years. He focuses on complex infrastructure permitting, hazardous substance and toxic tort litigation, enforcement defense and site remediation. Chris has handled matters under all of the major federal environmental and natural resource statutes and numerous parallel state law and tort theories.

Derek Petersen is a Partner and an environmental and business litigator at Perkins Coie LLP with over a decade of experience representing clients before both state and federal courts. He has successfully resolved disputes throughout all stages of litigation—from pre-litigation counseling to jury and bench trials to appeals.

 

Katherine May is an Associate at Perkins Coie LLP that focuses on complex commercial, environmental, constitutional and regulatory disputes for clients in the mining and minerals, metals, aerospace, health care, real estate and financial services industries. She has experience representing clients in federal and state courts at both the trial and appellate levels, as well as before the Arizona Office of Administrative Hearings and other state agencies.

Poison and Preemption: U.S. Supreme Court Considers Common Law Claims and CERCLA Remedies

Written by Gary Shockey, Baker Donaldson

The Anaconda Smelter served southwestern Montana’s mining industry for almost one hundred years before its closure in 1980. Today, the 585-foot “Big Stack” remains as one of the largest free-standing masonry structures in the world and the centerpiece of the Anaconda Smoke Stack State Park. The smelter also has a darker legacy, comprising part of a federal Superfund site of approximately 300 square miles, including soils and groundwater contaminated with arsenic, copper, lead, and other metals from historic mining and smelting operations. Despite more than a quarter century of investigation and cleanup, much of the site remains in remediation overseen by EPA. In a case currently pending before the U.S. Supreme Court, site owner Atlantic Richfield Company (ARCO) has challenged the jurisdiction of Montana state courts to order additional “remediation damages” in a suit by private landowners within the Anaconda Site.

The case now pending before the Court began as one for nuisance, trespass, and strict liability by numerous landowners in and around Opportunity, Montana. Those landowners sought damages for various injuries to their property allegedly caused by the smelter contamination, including “restoration damages.” Under Montana law, those damages would compensate the landowners for restoring their property to its pre-contamination state, with the costs placed into a trust upon which they could draw to carry out the restoration work themselves. According to the landowners’ experts, that restoration should be based on a lower cleanup level for arsenic in soils – resulting in removal and re-disposal of substantially more “dirty dirt” – and a lengthy, underground permeable barrier wall for treatment of groundwater. Both of these proposed actions were considered and rejected by EPA when it selected the CERCLA remedy for the site years earlier. ARCO moved for summary judgment on the restoration damages claim, arguing that the state court lacked jurisdiction to order remedies that went beyond those approved by EPA, at least while the EPA-approved remediation continued. The state court disagreed and ARCO sought a writ of supervisory control from the Montana Supreme Court.

In its 2017 decision, Atlantic Richfield Co. v. Montana Second Judicial District Court, 408 P.3d 515 (Mont. 2017), the Montana Supreme Court rejected ARCO’s preemption arguments. The court found that the potential restoration damages did not constitute a challenge to EPA’s remedy, which would be prohibited by the timing of review provisions of CERCLA § 113(h). The court reasoned that nothing in the landowners’ preferred remedy interfered with ongoing or planned work by EPA and thus fell within CERCLA’s state law savings clauses, CERCLA §§ 114(a), 302(d). In that court’s view, “The Property Owners are 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.” Id. at 521. Notwithstanding the contrary views of the U.S. Department of Justice and one dissenting justice, the Montana court did not see that potential judgment by 12 Montanans as a challenge to EPA’s selected remedy. The Montana court also rejected an argument that the landowners were themselves potentially responsible parties (PRPs), whose “inconsistent response action” would require prior EPA approval under CERCLA § 122(e)(6). Rather, the court found that CERCLA’s six-year statute of limitations would bar any efforts to brand them PRPs. Finally, the court concluded that the restoration damages remedy was not otherwise preempted by CERCLA under the doctrine of federal conflict preemption.

The United States Supreme Court granted certiorari in June 2019 to review the Montana court’s decision. Joined by a plethora of amici on both sides, Petitioner ARCO and Respondent landowners presented their arguments to the Court, along with those of the Solicitor General. In oral arguments held on December 3, 2019, the Court’s liberal justices seemed concerned that ARCO’s preemption theories were hard to reconcile with CERCLA’s state law savings clauses. The parties disagreed about whether CERCLA remedies were “a floor” or both “a floor and a ceiling.” All of the justices seemed concerned over the “restoration damages” procedures requiring that a judgment be deposited into a trust account and doled out to landowners for restoration work in the future. The Solicitor General attempted to address the Court’s concerns by arguing that the Respondents remained free to pursue damages and tort remedies that did not question EPA’s selected remedy, while states could set more stringent cleanup levels in accordance with the ARAR process of CERCLA § 121. Several commentators noted after the oral argument that the Court seemed to be searching for a narrow rationale to overturn a troublesome decision without eliminating the states’ role in cleanups and vindicating the rights of their citizens at common law. The Court’s decision is expected before the end of the term in June 2020.

This article has been republished with the permission of the author.  It was first published on the Baker Donaldson website.


About the Author

Gary has been certified as a Civil Trial Specialist by the National Board of Trial Advocacy. His experience includes environmental, personal injury, class action, antitrust, health care and construction cases. In addition, he has represented businesses and individuals in white collar criminal investigations and prosecutions and conducted numerous internal investigations.

His extensive pro bono practice has included representation of inmates on Tennessee’s death row, veterans, battered women, children and immigrants. He has served in various leadership positions in the Tennessee Bar Association, including on its Board of Governors and as chair of its Litigation and Environmental Law Sections, and as a character and fitness investigator for the Tennessee Board of Law Examiners and a District Hearing Committee officer for the Board of Professional Responsibility. A frequent speaker and author, Gary has published more than 35 articles on evidence, civil and criminal procedure, legal history and related topics.