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Supreme Court Confirms State Court Jurisdiction Over Property Damage Claims, but Limits Restoration Remedies for Superfund Sites

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On April 20, 2020, in Atlantic Richfield Company v. Christian (ARCO v. Christian or ARCO),[1] the U.S. Supreme Court held that federal Superfund law does not preclude individuals from filing state claims for further cleanup of contaminated sites. While this sounds earth-shattering at first, the requirement for EPA approval in most cases probably means that at the end of the day, companies paying for or performing a Superfund cleanup will still have to answer to only one master, the U.S. Environmental Protection Agency (EPA), and not to state court judges or juries. And for companies in Massachusetts (or states with similar privatized cleanup programs), because the vast majority of hazardous waste cleanups occur under M.G.L. Ch. 21E (the Massachusetts Superfund law) and the Massachusetts Contingency Plan (MCP), which require landowner consent before recording restrictions on private property, its application may be even more limited. 

Plaintiffs in Arco are a group of 98 Montana landowners near the site of a former copper smelter, which was subject to an EPA cleanup order under the federal Superfund law (the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, CERCLA or the Act). For nearly a century, the copper smelter processed ore and released chemicals into the environment. In 1983, a few years after the smelter was shut down, the EPA designated the 300 square miles surrounding it as a Superfund site, requiring the parties responsible for the pollution to take steps to clean it up. ARCO, the owner of the smelter, estimates that it has spent more than $450 million implementing the EPA’s orders. 

The plaintiff landowners brought an action in Montana state court asserting claims for trespass, nuisance, and strict liability, and sought restoration damages to clean up their properties under a new cleanup plan that was more extensive than the EPA’s cleanup plan. The landowners’ proposed plan sought, among other requirements, a cleanup level of 15 parts per million (ppm) of arsenic, rather than the 250 ppm level set by the EPA.

The question before the Court was whether the landowners could sue in state court for damages to implement a restoration plan that goes beyond the remedy that the EPA and ARCO were already implementing under CERCLA.

The Court held that CERCLA does not preclude the landowners’ rights to assert state law claims like nuisance and trespass that do not arise under the Act. The majority held that Section 113(b) of the Act gives federal district courts jurisdiction over controversies “arising under” the Act, but the landowners’ state law claims do not fit that definition. The Court held that Section 113(h) allows federal courts in diversity cases to entertain state law claims “regardless of whether they are challenges to cleanup plans.” But the Court also held that the landowners, all of whom had contamination on their property, were technically potentially responsible parties (PRPs) under CERCLA and therefore must seek the EPA’s approval before implementing any remedial action. The Court noted that the definition of “remedial action” is broad.

What is the practical significance of this decision?

  • At the end of the day, the EPA remains the ultimate gatekeeper as to what remedy will satisfy CERCLA and National Contingency Plan (NCP) requirements. As usual, some parties will likely think the cleanup excessive, others will think it does not go far enough. It is possible some plaintiffs would still assert claims seeking additional cleanup under the guise of restoration, but it seems the state court’s job would be limited to determining whether the EPA approved the proposed additional cleanup or, possibly, staying the case while the plaintiff seeks EPA approval.
  • If landowners with contamination on their property are dissatisfied with the EPA-approved cleanup as it affects their property, they can sue in state court for common law property damages, but damages will be limited, as the Supreme Court describes, to compensatory (i.e., money) damages for “loss of use and enjoyment of the property, diminution of value, incidental and consequential damages, and annoyance and discomfort.” Note that federal courts can still exercise jurisdiction over property damage suits seeking money damages (but not additional cleanup).
  • Landowners who are dissatisfied with a proposed cleanup should consider taking advantage of the opportunities for public participation in the remedy selection process. In some cases, this can involve petitioning the EPA for a technical assistance grant to help them retain professional assistance to evaluate and comment on the remedy as part of the administrative record. After all, community participation and comment in remedy selection and approval is a requirement of the NCP. If they do not, their options are limited once a remedy is selected.
  • It is an open question whether the EPA would entertain individual requests to approve additional remedial work on specific privately-owned land not inconsistent with the approved remedy. Since the CERCLA remedy selection process is a formal one, subject to specific regulatory requirements, it seems unlikely but remains to be seen. A related question is whether a formal amendment to the Record of Decision or an Explanation of Significant Differences would be required under the NCP.[2]
  • Parties performing or paying for EPA-approved cleanups have a powerful defense to state court claims for additional cleanup. Nonetheless, to avoid litigation and potentially high damage suits (or even toxic tort suits), they may voluntarily agree to a “better” cleanup than the EPA could require. Presumably they too would need to obtain EPA approval.
  • For cleanups proceeding only under Chapter 21E and the MCP, this case will have little impact. In most cases the performing party will have to obtain the landowner’s consent to record a use restriction, commonly an Activity and Use Limitation (or AUL), to leave contamination on the landowner’s property. Negotiations over AULs often include monetary payments or other concessions to compensate the landowner for the loss of use.

If you have any questions about the scope of this decision or its impact on your facility, please feel free to contact a member of Nutter’s Environmental practice group. 

 This advisory was prepared by Matt ConnollyMichael Leon, Ashley PaquinMary Ryan, and Matt Snell in Nutter’s Environmental, Regulatory and Compliance practice group. If you would like additional information, please contact one of the above individuals or your Nutter attorney at 617.439.2000.

This update is for information purposes only and should not be construed as legal advice on any specific facts or circumstances. Under the rules of the Supreme Judicial Court of Massachusetts, this material may be considered as advertising.  

[1] Atl. Richfield Co. v. Christian, No. 17-1498, 2020 WL 1906542 (U.S. Apr. 20, 2020), https://www.supremecourt.gov/opinions/19pdf/17-1498_8mjp.pdf

[2] https://www.govinfo.gov/app/details/CFR-2011-title40-vol28/CFR-2011-title40-vol28-sec300-435/summary

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