Supreme Court Avoids Major Controversy in High-Stakes CERCLA Ruling

By Partner Earl Hagström and Associate Barry Bryan
April 27, 2020

In August, we reported on a high-stakes environmental contamination case in which landowners near a former copper smelter sought "restoration damages" from Atlantic Richfield Company ("ARCO"), the successor to the Anaconda Copper Mining Company. ARCO is already implementing an EPA-approved cleanup plan under the Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA"), but the plaintiffs' state common law claims could have required ARCO to pay for further cleanup, which would restore their property to the condition it was in before any mining activities commenced.

The Decision

The case, Atlantic Richfield Co. v. Christian et al., No. 17–1498 (April 20, 2020), decided on Monday, had the potential to upend the certainty of EPA- or state-approved remedial actions, by allowing private parties to obtain an order requiring cleanup beyond that which EPA has deemed necessary to protect human health and the environment. The apple cart was not upset.

The Supreme Court ultimately decided the issue on perhaps the least controversial and, as they themselves admitted, the simplest option: it established that the landowners were "potentially responsible parties." As current landowners whose property was contaminated, albeit by ARCO’s smelter operations, plaintiffs are one of the four classes of covered persons who can be found liable under CERCLA. As stated under CERCLA section 122(e)(6) once a remedial investigation process begins no potentially responsible party (PRP) may challenge the process without EPA’s approval. The Court determined plaintiffs were PRPs regardless of whether EPA or any other party had actually sued them – typically "innocent" landowners are not brought into suits of this nature – and regardless of the fact that EPA did not include them in settlement negotiations. CERCLA requires EPA to include PRPs in these types of negotiations, but EPA chose to exercise its enforcement discretion not to do so based upon its own guidance.

These ninety-eight plaintiffs now cannot bring an action to obtain funds from ARCO for the restoration cleanup of their property without EPA approval of that cleanup plan, because any such cleanup would be a "challenge" to an EPA-selected remedy, and is explicitly barred by CERCLA. After a tortuous jurisdictional analysis under sections 113(b) and 113(h) of CERCLA the Court did imply, and some may say found, that private parties, such as these landowners, could challenge the process in State Court based upon state common law claims.

The Court dismissed arguments that this ruling would prevent landowners from so much as installing sandboxes in their back yard, reasoning that such actions are not remedial in nature (and dismissed property rights-centered arguments made by Justice Gorsuch and joined by Justice Thomas). But the Court did not define the boundaries between remedial actions and non-remedial actions.

What’s Next?

Another outstanding question raised by this decision is the impact on EPA- or state-led negotiations with potentially responsible parties. As the plaintiffs were not invited into these discussions, their only input in the remedial process was commenting on a selection of remedies after they had been designed. In the future, we may expect that landowners like these will demand a seat at the table from the outset of the process, which could create further disputes and delays if EPA continues to exclude them.