By Andrew H. PerellisJeryl L. Olson, and Patrick D. Joyce

Seyfarth Synopsis: Consider this hypothetical. Acme Company’s historic operations has contaminated its property and those of its adjacent neighbors. Acme is undertaking a CERCLA remedy under the oversight of U.S. EPA which the neighbors find inadequate, so the neighbors join together and sue in state court using common law theories of nuisance, trespass, negligence and strict liability. The neighbors seek to have their property restored to a level beyond what EPA’s cleanup plan requires. Does CERCLA foreclose – or preempt ­– this type of state court claim? Would your answer be different if the state court action sought only damages for injury other than the cost of restoration, such as diminution in value?

In a closely watched case, Atlantic Richfield Co. v. Christian, No. 17–1498, the Supreme Court ruled April 20, 2020, that state court claims seeking restoration where EPA is engaged in or overseeing a CERCLA remediation cannot proceed except as allowed by Section 122(e)(6) of that statute. This little known and rarely cited provision of CERCLA states that once a Remedial Investigation/Feasibility Study has commended, no “potentially responsible party” may “undertake remedial action” at a site without EPA approval. To invoke this provision, the Supreme Court majority determined that adjacent landowners whose property were contaminated were themselves “potentially responsible parties.” As such, where neighbors seek to impose or fund a remedy beyond that which EPA consents, their state court claim must fail. However, if the damages sought in state court were not anchored to actual restoration, then EPA approval is not needed, and the claim can proceed.

Underlying this controversy is the nature of the common law action that can be maintained under Montana law for property damage. If the damage is “permanent” and not abatable, then the landowner’s relief is limited to “diminution in value.” However, if there is damage to a private residence and the damage is temporary and abatable, the plaintiff may seek restoration damages, even if such exceeds the diminution in value. However, to proceed with such a claim, injured party must “establish that the award actually will be used for restoration.” The plaintiffs in Atlantic Richfield claimed that restoration was possible, and proposed having Atlantic Richfield establish an approximate $50 million trust fund, that then would be used for performing remediation beyond that which EPA had contemplated implementing under its CERCLA authority.

The practical import of the ruling by the Supreme Court will be to alter how neighbors impacted by contaminated sites undergoing CERCLA remediation frame the common law relief being sought. Neighbors remain free to pursue state law for compensatory damages, including loss of use and enjoyment of property, diminution of value, incidental and consequential damages, and annoyance and discomfort. In fact, neighboring landowners’ own remediation beyond that being performed under CERCLA can be pursued “so long as the landowners first obtain EPA approval for the remedial work they seek to carry out.”

Justice Roberts delivered the opinion. All justices joined in the portion of the opinion concluding that the decision of the Montana State Court was reviewable. Justices Gorsuch and Thomas filed an opinion concurring in part and dissenting in part. Those two justices would have allowed the state court claim to proceed, finding that CERCLA would not foreclose a state action seeking a more stringent remedy that what EPA has proposed if allowed under state law.

For more information on this or any related topic, please contact the authors, your Seyfarth attorney, or any member of the Workplace Safety & Environmental Team.