Supreme Court Addresses State Court Jurisdiction and Landowner PRP Status under CERCLA

On Monday, the United States Supreme Court ruled that landowners within federal Superfund sites cannot pursue state law remediation claims without the EPA’s approval, but the Court refused to address the broader question of whether such state law claims are preempted by the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA). In Atlantic Richfield Co. v. Christian, No. 17-1498 (Apr. 20, 2020), the Supreme Court held that Montana landowners within the 300 square mile Anaconda Copper Smelter Superfund site are potentially responsible parties (PRPs) under CERCLA and must therefore obtain EPA approval for remedial actions arising under Montana state common law. The Court upheld state court jurisdiction over these claims and remanded the case for further proceedings. The decision keeps the door open for future state law remediation claims by landowners within Superfund sites so long as those landowners obtain the EPA’s approval of the state-law-based remedial actions.

Background

CERCLA (42 U.S.C. §9601 et seq.) contains several provisions aimed at streamlining the development of cleanup plans for Superfund sites. First, §113 gives federal district courts exclusive original jurisdiction over cases “arising under” CERCLA and limits the federal courts’ ability to hear challenges to removal or remedial actions. Once a remedial investigation and feasibility study has begun, §122(e)(6) requires PRPs to obtain EPA approval before undertaking any remedial action.

In Atlantic Richfield Co. v. Christian, owners of land within the contaminated Anaconda Copper Smelter Superfund site brought common law nuisance, trespass and strict liability claims against Atlantic Richfield Co. in Montana state court. The landowners sought damages to fund restoration activities exceeding the measures found necessary by the EPA to protect human health and the environment at the site.

Atlantic Richfield Co. argued that (1) §113 grants federal courts exclusive jurisdiction over all cases “arising under” CERCLA, including the landowners’ claims, and (2) the landowners are PRPs and must therefore obtain EPA approval under §122(e)(6) for any proposed remediation activities. The Montana Supreme Court rejected both arguments, and the United States Supreme Court granted certiorari to determine whether the state courts lacked jurisdiction and, if not, whether the landowners must seek EPA approval for their restoration plan.

Supreme Court Ruling – State Court Jurisdiction

The justices unanimously agreed that §113 does not strip state courts of jurisdiction over state law remediation claims at Superfund sites. The Court based this conclusion on a narrow interpretation of §113(b), which provides for exclusive federal jurisdiction over cases “arising under” CERCLA. The Court cited American Well Works Co. v. Layne & Bowler Co., 241 U.S. 257, 260 (1916), for the rule that “[a] suit arises under the law that creates the cause of action.” Because the landowners’ claims in the instant case were based on state tort law rather than CERCLA, they were not subject to §113(b)’s grant of exclusive federal jurisdiction.

The Court also rejected Atlantic Richfield Co.’s argument that §113(h) prevents state courts from hearing challenges to CERCLA cleanup plans. Section 113(h) states that federal courts shall not have jurisdiction to review challenges to removal or remedial actions, except in a few limited circumstances. The Court held that §113(h) does not apply to state courts, which retain jurisdiction over challenges to CERCLA cleanup plans arising under state law or federal laws other than CERCLA.

Supreme Court Ruling – Landowner PRP Status

Seven justices agreed that the Montana landowners seeking restoration damages qualified as PRPs and were therefore required to obtain EPA approval under §122(e)(6) for any proposed remediation actions (including the use of state law restoration damages). The Court reached this conclusion through a broad interpretation of §107(a)’s definition of “owner” of “a facility.” According to the Court, any owner of land where pollutants have “come to be located” can qualify as a PRP, regardless of the timing of release and the innocence of the landowner in causing the contamination. Under this rule, “[a] property owner can be a potentially responsible party even if he is no longer subject to suit in court.”

Key Takeaways

While this decision will be viewed as a short-term victory for Atlantic Richfield Co., it does not close the door on future state law remediation claims by landowners at CERCLA sites. These landowners retain their ability to bring state tort law claims in state court, so long as they receive the EPA’s approval of any proposed remediation activities. This decision also expressly permits state law and non-CERCLA federal law challenges to EPA-approved cleanup plans in state court. Additionally, the Supreme Court’s decision may affect how the lower courts address landowner PRP status under §107(a).

In reaching its decision, the Court also declined to address Atlantic Richfield Co.’s broader argument that state law remediation claims at Superfund sites are preempted by CERCLA. This remains an open question. The lower courts will undoubtedly provide more clarity as to the full impact of Atlantic Richfield Co. v. Christian, including with respect to state law preemption and landowner PRP status, as they interpret and apply the decision over the coming months and years. We may also expect to see EPA guidance on the subject.

Finally, parties negotiating consent decrees and orders will need to carefully consider the scope of residual state and private party claims that may be included within reservation of rights and contribution protection provisions.

This memorandum is a summary for general information and discussion only and may be considered an advertisement for certain purposes. It is not a full analysis of the matters presented, may not be relied upon as legal advice, and does not purport to represent the views of our clients or the Firm. Eric Rothenberg, an O’Melveny partner licensed to practice law in Missouri and New York, Kelly McTigue, an O’Melveny partner licensed to practice law in California, and Chris Bowman, as O’Melveny associate licensed to practice law in California, contributed to the content of this newsletter. The views expressed in this newsletter are the views of the authors except as otherwise noted.

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