SCOTUS Hears Oral Arguments in Arco v. Christian

By Partner Earl L. Hagström and Associate Barry Bryan

December 5, 2019

Earlier this year we reported that the United States Supreme Court would hear the potentially game-changing environmental contamination case, Arco v. Christian. This case is significant because property owners and industrial concerns could be held liable for restoring contaminated sites even if EPA deemed a previous cleanup adequate. On Tuesday the Supreme Court held oral argument and indicated it would be reluctant to expand liability as far as the plaintiffs requested. The Court’s opinion is expected sometime between May and July of 2020.

Background

In this case, small landowners near the Anaconda Copper Mining Company’s now-defunct copper smelter sued for damages to pay for cleaning up their land and removing all contamination caused by the copper smelting. Anaconda’s successor, Atlantic Richfield Company ("ARCO"), argued that because it had already agreed with EPA to perform a cleanup under CERCLA it should not bear any further costs, and that the trial court should throw out the landowners’ case.

The Montana Supreme Court disagreed, finding for plaintiffs on three issues:

  1. The property owners’ claim did not "challenge" the EPA-approved cleanup – by delaying or otherwise altering the remedy – because it sought to put the damages in a trust only to be used after the EPA cleanup had been performed.
  2. The property owners were not "potentially responsible persons" ("PRPs") because they had never been part of the underlying CERCLA case between ARCO and EPA. PRPs can only remediate contamination with EPA approval.
  3. The property owners’ claims were not otherwise in conflict with CERCLA through constitutional preemption of state law claims because, along with other federal environmental laws, CERCLA allows states to set a higher bar for cleanups, and to allow for individualized, common law claims like nuisance.

Supreme Court Oral Argument

Justices on both sides of the political spectrum stated a strong preference for total EPA control over future actions that will or could impact the remedy ARCO is performing, including any actions taken after the remedy is completed by 2025. Justice Kagan said that, if she were writing CERCLA, she would place every decision about contaminated sites in EPA’s hands and leave the states with no authority. The justices were sympathetic to ARCO’s argument that, if plaintiffs succeed, they would be forced to fund a restoration that could spread the contamination further, thus leading to a violation of the EPA cleanup order.

However, the Court also appeared to recognize that EPA lacked this power without finding that the landowners are PRPs. EPA never gave the landowners notice they were considered PRPs and did not include them in its settlement negotiations. Both are required under CERCLA. However, there is no question that, before the statute of limitations ran out many years ago, these landowners were potentially liable as CERCLA imposes strict liability on current owners of contaminated property.

There was lengthy discussion as to whether a previously, potentially liable party and a PRP are tantamount. Many courts have lamented CERCLA’s ambiguity in several areas, leaving it to courts and EPA to resolve issues not explicitly defined by the law. This is one such area. The Court focused on this question, and it spent little time on the other issues: whether the plaintiffs’ suit challenged the remedy, or whether CERCLA preempts their common law claims.

The Court also repeatedly referred to a finding that the landowners are PRPs as the simplest solution. This finding would not necessarily prevent the landowners from obtaining the remedies they seek. But it would subject them to CERCLA’s requirement of obtaining EPA approval for any of their restoration plans. This would also prevent the landowners from interfering with some of the remedial technologies applied by ARCO, potentially spreading or otherwise exacerbating the contamination problem.

Analysis

A finding that would allow either side to completely prevail would significantly affect future actions. A complete finding for ARCO would essentially require landowners of legacy toxic sites to keep contaminants on their property and prevent them from making alterations to their land, possibly in perpetuity. A finding for the landowners would open parties liable under CERCLA to extraordinary damages to restore land to a pre-contamination position, assuming individual states allow for full restoration damages. Further, the decision of who gets to restore the land would rest with a jury, and lead to inconsistent verdicts, allowing clean up in some cases, and denying it in others.

It appears highly likely the Court will adopt a "split the baby" approach and find that the landowners are PRPs in the hope that EPA will be able to fashion an adequate remedy for all parties. This would require a remand to the Montana State Court, where the question of whether ARCO is liable to the landowners would ultimately be decided. We await the Court’s decision and will report back on its potential ramifications at that time.