Extracted from Law360.com
On June 10, 2019, the U.S. Supreme Court granted a writ of certiorari to review a decision by the Montana Supreme Court allowing common-law “restoration” claims for environmental cleanup at sites already subject to U.S. Environmental Protection Agency cleanup orders. The case, which includes issues of federalism and jurisdiction, could implicate the EPA’s authority in selecting site remedies and the statutory scheme designed to prevent inconsistent remedial obligations.
The Comprehensive Environmental Response, Compensation, and Liability Act, or CERCLA — also known as Superfund — has primary goals of promoting the timely cleanup of hazardous waste sites, ensuring polluters are held responsible for cleanup efforts and encouraging settlement through specified contribution protection.[1] One of the ways that CERCLA achieves these goals is through Section 113(b) and (h), which read together generally forbid judicial review of any “challenges” to removal or remedial actions in both federal and state courts, and thereby give finality to EPA decisions except for certain enumerated exceptions.[2]
If plaintiffs were permitted to widely challenge EPA-ordered remedial actions in court, some cleanups would be substantially delayed, and responsible parties may be less cooperative if a selected remedy may be invalidated in court. Given CERCLA’s policy goals and jurisdictional bars, courts usually tread carefully when addressing claims for relief that could conflict with EPA-selected remedies, often deferring to agency decisions.
The Montana Supreme Court decision, however, seemingly broke from this approach in Atlantic Richfield Co. v. Montana Second Judicial District Court.[3] In that decision, the court ruled that state courts may award common-law remedies for “restoration” requiring environmental cleanups at Superfund sites, even if the site is already subject to existing EPA cleanup orders.
The case involves the Anaconda Smelter site, which processed copper ore for nearly 100 years before shutting down. In 1980, Atlantic Richfield Company, or ARCO, acquired most of the site. In 1983, shortly after passage of CERCLA, the EPA designated the site as a Superfund site. In 1998, after ordering ARCO to begin a remedial investigation at the site, the EPA ordered a detailed plan of ARCO’s cleanup responsibilities.
ARCO worked with the EPA for 35 years, culminating in a remedial order for ARCO to remove and replace up to 18 inches of soil to meet the required arsenic concentrations. The remedial orders include more than 1,000 pages of detailed soil and water reports, topographical surveys and scientific analyses to support the EPA’s decisions.
Members of the public also participated in the process, with notice-and-comment periods, public meetings and outreach programs. To date, ARCO has spent approximately $470 million in implementing the EPA’s orders.
In 2008, landowners within the site sued ARCO in Montana state court for damage to their land from the Anaconda Smelter operation. The plaintiffs filed a common-law claim for “restoration” damages, seeking more remediation than required by the EPA’s orders. Specifically, the plaintiffs demanded monetary awards that they would use to cleanup arsenic in the soil to levels 31 times lower than required by the EPA, and to remove 33% more topsoil compared to the requirements in the EPA-ordered plan.
As of September 2016, ARCO had completed all EPA-ordered remediation work on landowners’ properties, but the entire remediation effort sitewide, according to the EPA, is expected to continue until 2025. The case eventually reached the Montana Supreme Court, which ruled in favor of the plaintiffs.
The Montana Supreme Court’s decision hinged on the meaning of the word “challenge” in CERCLA Section 113(h). Section 113(h) states that “[n]o Federal court shall have jurisdiction … to review any challenges to removal or remedial action.” Read together with Section 113(b), which grants federal courts “exclusive original jurisdiction over all controversies arising under [CERCLA],” the provision forbids state court review of “challenges” to EPA-ordered remediation plans as well.
However, the Montana Supreme Court construed the word “challenge” narrowly, to mean only those cases seeking remedies that “actively interfere with EPA’s work, as when relief sought would stop, delay, or change the work EPA is doing.”[4] Applying this narrow definition, the court concluded that requiring ARCO to spend more money to clean up the land for property owners’ benefit is not a “challenge” under Section 113.
The court’s rationale was that property owners restoring their own land beyond levels required by the EPA using monetary awards does not actively interfere with the EPA’s work or stop, delay or change the existing remedial plan. Arguably, however, the ruling essentially allows a plaintiff to indirectly revise an existing EPA-ordered remediation plan, as long as the plaintiff requests monetary damages for additional “restoration” work, and does not demand that the EPA and defendant directly change the existing remediation plan.
According to ARCO’s petition for certiorari, the Montana Supreme Court’s ruling, however, undermines the EPA’s selected remedy. For example, the plaintiffs’ experts have disagreed with the EPA on the remedial approach, and the plaintiffs are seeking funding for trenches and barriers, even though the EPA determined that construction of these features may exacerbate environmental conditions.
Moreover, some areas are capped or backfilled with clean soil, vegetation or other protective barriers. The EPA maintained that tearing up the protective layer by subsequent “restoration” activities could increase dust transfer, bioavailability of lead and soil ingestion.
Additionally, if the private plaintiffs are able to obtain damages for additional cleanup obligations on portions of a site already subject to an EPA order, they could divert funds from existing cleanup efforts to work that the EPA may have already rejected as unnecessary or counterproductive. While the EPA’s plan was prepared under a structured regulatory scheme based on expert determinations, negotiation incentives and public concerns, a privately initiated restoration effort is not subject to the same process and could therefore interfere with the EPA’s goals.
While the Montana Supreme Court cites numerous federal cases in reaching its determination, it appears that it did not consider some precedent, such as the Ninth Circuit’s holding in ARCO Environmental Remediation LLC v. Dept. of Health & Environmental Quality of the State of Montana,[5] where the court applied a much broader interpretation of the word “challenge” in Section 113(h). In ARCO, the court construed the term “challenge” as it “is related to the goals of the cleanup” as opposed to delaying or interfering with a cleanup. Indeed, no federal appellate court has explicitly adopted the narrower interpretation of the term “challenge” adopted in Montana.
While the Montana Supreme Court’s decision addresses federal jurisdictional issues in interpreting Section 113, the U.S. Supreme Court’s decision to review this case is somewhat surprising, since there is no clear federal circuit split on the issue, and the Montana decision likely has very limited precedential value. In addition, the Trump administration had taken the position on the petition for certiorari that the issue was not ripe for review, and that this case was not a proper vehicle for the court to make a ruling on the issue.
One can speculate that the Supreme Court insists on reviewing this case to prevent Montana’s decision from setting an unofficial precedent that other courts may follow. It is also possible, however, that the Supreme Court decided to take the case because it addresses questions of federalism, and the authority of federal agencies’ directives to preclude or otherwise preempt claims at the state level. Whatever the reason for taking the case up for review, the precedent of a decision by the Supreme Court that state claims do not survive in a Superfund setting would have a significant impact on the landscape surrounding cost recovery litigation throughout the country.
Footnotes:
[1] Chubb Custom Ins. Co. v. Space Sys./Loral Inc., 710 F.3d 956 (9th Cir. 2013).
[2] Fort Ord Toxics Project v. Cal. EPA, 189 F.3d 828, 832 (9th Cir. 1999).
[3] Atl. Richfield Co. v. Mont. Second Judicial Dist. Court, 408 P.3d 515 (Mont. 2017).
[4] Atl. Richfield Co., 408 P.3d at 520.
[5] ARCO Environmental Remediation LLC v. Dept. of Health & Environmental Quality of the State of Montana, 213 F.3d 1108, 1115 (9th Cir. 2000).