US Supreme Court Expands CERCLA Jurisdiction and PRP Definition
The Supreme Court’s April 20, 2020 decision in Atlantic Richfield Co. v. Christian adds another layer of complexity to the “devilishly difficult statutory provisions” of the Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”). The decision opens the door for state courts to hear claims that challenge EPA-approved clean-ups and has the potential to expand the “potentially responsible party” (“PRP”) class for current “owners” of a “facility.” See Atl. Richfield Co. v. Christian, No. 17-1498, 2020 WL 1906542, at *6, *8, *14 (U.S. Apr. 20, 2020).
Decision’s Immediate Implications
The Court’s decision introduces new considerations into CERCLA liability analysis and settlement strategy. The Court’s holding will have many immediate ramifications, including the following:
- It may be argued that the decision broadens the definition of PRP. CERCLA’s already-expansive definition of PRPs now includes landowners whose soil is contaminated by another PRP’s facility because a release has “come to be located” on their land.
- The decision has the potential to unravel comprehensive and time-consuming CERCLA requirements in a federally-approved clean-up scheme. For example, if EPA waives the requirement to adopt state applicable or relevant and appropriate requirements (“ARARs”) at a federal CERCLA site, it seems entirely plausible that some litigants could use a nuisance or similar lawsuit to seek to impose ARARs that EPA specifically considered and waived.
- The decision might have created an additional layer of CERCLA requirements that apply to PRPs that desire to bring state law claims in state court. Though they were found to be PRPs, the plaintiff landowners were allowed to present their own plan to restore their own private property as long as they obtained EPA approval, but it is unclear what process the landowners would use.
- The decision might reduce the incentive to enter into CERCLA settlements with EPA if parties are not shielded from contribution claims − which now could arise by exposing settling parties to potential litigation at the state level. While the Court noted that CERCLA: (1) encourages covenants not to sue which cap liability to the Government and (2) protects settling parties from contribution claims by other PRPs, the decision seems to contradict both of those positions and undermines finality of settlements.
The case involved one of the landmark CERCLA §104 sites listed on the National Priorities List (“NPL”) – the Anaconda Smelter Site – which covers 300 square miles (“Site”). A group of 98 landowners living within the Site (in the towns of Opportunity and Crackerville, Montana) sued Atlantic Richfield in Montana state court alleging that the contamination addressed at the Site under EPA oversight nonetheless constituted a nuisance, trespass, and weas subject to strict liability under Montana law. Id. at *7. Atlantic Richfield argued on summary judgment that the Montana state court lacked jurisdiction, but the state court denied the motion, and the Montana Supreme Court affirmed. The U.S. Supreme Court agreed with the supreme court of Montana that landowners living within a CERCLA NPL Site could bring claims arising under state law in state court in order to compel Atlantic Richfield to conduct more remediation than EPA was requiring. However, the Court refused to allow the landowners to pursue their remediation demands because the landowners themselves were PRPs and could not alter EPA-approved clean-up plans without EPA approval.
The contamination at the Site arose from a 585-foot smoke stack “taller than the Washington Monument,” which caused arsenic and lead contamination over 300 square miles. (The stack is now part of a state park that includes areas too contaminated for public access. Id. at *17.) EPA has required Atlantic Richfield to “remediate more than 800 residential and commercial properties; remove 10 million cubic yards of tailings, mine waste, and contaminated soil; cap in place 500 million cubic yards of waste over 5,000 acres; and reclaim 12,500 acres of land.” Id. at *4. In the litigation, the landowners proposed a maximum soil contamination level of 15 parts per million of arsenic, rather than the 250 parts per million level set by EPA. The landowners also sought to excavate offending soil within residential yards to a depth of two feet rather than EPA’s chosen depth of one foot. Id. at *5.
Court’s CERCLA Jurisdiction Holding
CERCLA Section 113(b) provides federal district courts with exclusive jurisdiction for claims “arising under” CERCLA. However, Section 113(h) limits that jurisdiction. Specifically, Section 113(h) prevents federal courts from hearing any “challenges to removal or remedial action” except in certain limited situations. This limit to the federal court’s jurisdiction ensures that once EPA chooses a removal or remedial action at a site under EPA’s oversight (namely at a CERCLA §§ 104 or 106 site), litigation cannot challenge the removal or remedial action because this would delay the completion of a clean-up. Atlantic Richfield argued that the landowners’ state-law claims were a “challenge” to EPA’s remedial action and thus a controversy arising under CERCLA 113(b) that should remain under the exclusive control of the federal courts.
The Supreme Court rejected that argument for two primary reasons. First, Section 113(h) only limits jurisdiction of federal courts, not state courts. Id. at *7. Second, Section 113(h) includes an exception for cases that fall within the Court’s diversity jurisdiction. Section 113(h) provides that “[n]o Federal court shall have jurisdiction under Federal law other than under section 1332 of title 28 (relating to diversity of citizenship jurisdiction) … to review any challenges to removal or remedial action” selected under the Act. 42 U.S.C. § 9613(h), emphasis added. Thus, the Court held that Section 113(h) permits federal courts in diversity cases to entertain state law claims even when those claims challenge EPA-approved cleanup plans.
The Court criticized Atlantic Richfield’s interpretation of CERCLA because it did “not even try to explain why the Act would permit such state law claims to proceed in federal court, but not in state court.” Id. at *8. The Court believed Congress did not intend to strip “state courts of jurisdiction to hear their own state claims.” Id., emphasis in original. EPA and Atlantic Richfield had argued that, pursuant to CERCLA section 122(e)(6), once EPA has approved a remedial investigation and feasibility study no court other than a federal district court has jurisdiction to hear the claims to challenge EPA’s clean-up determinations. That argument seemed to make sense because CERCLA provides the opportunity to challenge EPA’s clean-up determinations during the public participation and state involvement phases of cleanup action plan development. 42 U.S.C. 9621(d)(l). CERCLA specifically allows EPA to consider, adopt, or waive “applicable or relevant and appropriate requirements” of state environmental law (“ARARs”). 42 U.S.C. 9621(d)(4), (f)(2)(A).
Now, the Court’s decision in Atlantic Richfield v. Christian has the potential to unravel these comprehensive and time-consuming CERCLA requirements, and plaintiffs may seek relief in state court to modify a federally approved clean-up scheme. For example, if EPA waives the requirement to adopt state ARARs at a CERCLA §§104 or 106 site, any litigant – other than a PRP – could attempt to use a nuisance or similar lawsuit to impose ARARs that EPA had specifically considered and waived. Thus, if litigants who are PRPs at a CERCLA §§ 104 or 106 site have state claims, like the plaintiffs in Atlantic Richfield v. Christian, then those claims will be delayed until the litigants obtain EPA approval for the remedial work they seek to carry out. If on the other hand, the litigants are not PRPs, then it appears that no EPA approval is needed and the litigants may proceed in state court to challenge EPA-approved clean-ups.
As other courts have observed, divesting federal courts of exclusive jurisdiction in CERCLA cases runs the risk that Congress’s purpose “could be thwarted . . . by allowing state courts to issue injunctions halting CERCLA cleanups.” Fort Ord Toxics Project, Inc. v. California EPA, 189 F.3d 828, 832 (9th Cir. 1999) (holding that the California Environmental Quality Act should not delay CERCLA clean-ups.) The new decision also may weaken arguments that CERCLA preempts state law. In the past, some federal courts have said that CERCLA preempts state law contribution or cost recovery claims, other than contract claims. See e.g., NCR Corp. v. George A. Whiting Paper Co., 768 F.3d 682, 712 (7th Cir. 2014) (holding that common-law tort claims were preempted because the court would not “use state law effectively to undo CERCLA’s remedial design. . . .”) Other courts have found that CERCLA does not completely preempt state tort liability for damages caused by the release of hazardous substances. See e.g., Niagara Mohawk Power Corp. v. Chevron U.S.A., Inc., 596 F.3d 112, 138 (2d Cir. 2010); Kitchin v. Bridgeton Landfill, LLC, 389 F. Supp. 3d 600, 615 (E.D. Mo. 2019).
Court’s PRP Definition Holding
The Supreme Court ruled that CERCLA defines “‘potentially responsible parties’ to include owners of polluted property. . .” Id. at *9. Accordingly, the Court found that the plaintiff landowners were CERCLA PRPs subject to the response action limitations in Section 122(e)(6). CERCLA §122(e)(6) provides that “[w]hen either the President, or a potentially responsible party … has initiated a remedial investigation and feasibility study for a particular facility under this chapter, no potentially responsible party may undertake any remedial action at the facility unless such remedial action has been authorized by the President.” 42 U.S.C. § 9622(e)(6). Based on Section 122(e)(6), the Court found that the plaintiffs were “prohibited from taking remedial action without EPA approval under § 122(e)(6) of the Act.” Id. at *6, 13.
The Court, however, also agreed that some landowners potentially could have qualified as contiguous property owners and not PRPs – but the Court held that these landowners could not establish the CERCLA contiguous property owner defense because they “had reason to know their property ‘could be contaminated by a release or threatened release’ of a hazardous substance.’” Id. at *13. The Court noted that all of the property owners had purchased the property after the 1900s when Anaconda had obtained smoke and tailing easements authorizing the disposition of smelter waste onto many of the properties owned by the landowners. Id.
The Court’s PRP analysis may be used by plaintiffs to broaden the already vast scope of liability under CERCLA. Some of the plaintiffs in the case consisted of property owners who unfortunately owned land contaminated by defendant’s operations and who never moved (because as “one homeowner put it, ‘I couldn’t find a kitchen door that’s got all my kids’ heights on it.) Id. at *18. If PRP status depends merely on owning real property that is contaminated by another PRP’s hazardous substance, then could that mean, for example, that every owner of property contaminated by releases from a CERCLA §§104 or 106 site is a PRP? The answer to that question arguably is no because in order to apply Atlantic Richfield v. Christian to future cases, a court would need to complete the analysis under CERCLA, taking into account that PRP designation alone is not sufficient to impose liability.
PRPs are liable for response costs caused by a release from their facility. See e.g., 42 U.S.C. §§ 9606(a), 9607(a); Pakootas v. Teck Cominco Metals, LTD., 830 F.3d 975, 981 (9th Cir. 2016). Atlantic Richfield v. Christian analyzes the first prong of liability – PRP classification for current owners of a facility – but it does not analyze whether a release occurred from the PRPs’ “facilities” (i.e., their properties). The parties before the Court did not raise the issue of whether releases occurred from each of the plaintiff’s properties given that Atlantic Richfield had assumed liability for the releases from the Anaconda smelter. Notably, the unique fact about the plaintiffs in the case was that many of the property owners had arguably allowed dumping of smelter waste on their properties under the smoking and tailing easements. Thus, there is a potential that the decision in the future could be read narrowly to apply only to similarly situated PRPs and not read to apply to all owners of polluted property that fall into PRP classification due to pollutants that came to be located on their land. The Atlantic Richfield v. Christian decision raises the likelihood that owners of polluted property will try to distinguish themselves and argue that their conduct did not cause or allow a release from their property and that the Court’s decision only applies to PRPs that actively allowed waste disposal.
Though they were found to be PRPs, the landowners in Atlantic Richfield Co. v. Christian ultimately were allowed to present their own plan to restore their own private property as long as they obtained EPA approval, but it is unclear what process the landowners would use. The Court may have created a new layer of CERCLA requirements that apply to PRPs that desire to bring state law claims in state court.
Before concluding its analysis, the Court noted that CERCLA “encourages potentially responsible parties to enter into . . . agreements [with EPA]. . . authorizing EPA to include a ‘covenant not to sue,’ which caps the parties’ liability to the Government.” On this point, the Court explained CERCLA “protects settling parties from contribution claims by other potentially responsible parties.” Id. at *11. Ultimately, the Court’s decision may undermine the certainty that previously provided one of the main incentives to settle government CERCLA claims and may expose parties who have settled CERCLA claims to litigation at the state level.
In an attempt to clarify the law, the decision in Atlantic Richfield Co. v. Christian introduces confusion and could generate contradicting interpretations of CERCLA’s jurisdictional parameters and PRP designations for current owners of contaminated property.