In Atlantic Richfield Co. v. Christian, the Supreme Court will determine whether the Comprehensive Environmental Response, Compensation, and Liability Act preempts state common law claims for restoration damages for pollution also addressed by an EPA-directed cleanup plan. In this case, a Montana copper smelter polluted its neighbors’ properties for decades, but has also spent $450 million to remediate this pollution under a plan negotiated with EPA. Believing Montana state law entitles them to more extensive restoration than the EPA plan provides, neighboring property owners sued Atlantic Richfield for trespass and nuisance, seeking restoration damages and other relief. Jonathan Wood and Corbin Barthold join us to discuss the oral argument in this case and its implications for CERCLA and property rights.
Jonathan Wood, Senior Attorney, Pacific Legal Foundation
Corbin K. Barthold, Senior Litigation Counsel, Washington Legal Foundation
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Operator: Welcome to The Federalist Society's Practice Group Podcast. The following podcast, hosted by The Federalist Society's Environmental Law & Property Rights Practice Group, was recorded on Tuesday, December 3, 2019, during a live teleforum conference call held exclusively for Federalist Society members.
This call's topic is a Courthouse Steps Oral Argument teleforum on Atlantic Richfield Company v. Christian. The speakers for this teleforum are Mr. Jonathan Wood, who is a Senior Attorney with the Pacific Legal Foundation and Mr. Corbin K. Barthold, who is Senior Litigation Counsel for the Washington Legal Foundation. Corbin will begin the discussion.
Corbin Barthold: So this case, basically, begins back in the late 19th century when copper was discovered in Montana. The Anaconda Company quickly became one of the largest companies in the nation and their copper mines in Montana became one of the largest copper mines in the world for about a century. The Anaconda area was a source of, I think, something around a quarter of the world's copper.
So the good news is, we got a lot of copper. That means telephone wires, infrastructure, all kinds of good stuff like that. The bad news is that copper ore, when you smelt it, releases tons of pretty awful stuff, arsenic being the main one, but also lead and other bad metals.
In 1977, Atlantic Richfield purchased the Anaconda Company and took over the site and in 1980, they closed it. 1980 happens, also, to be the year that Congress passed the Comprehensive Environmental Response, Compensation, and Liability Act, which, as probably many on the call know, is a pretty quirky statute, very detailed with a lot of fascinating features that you don't see elsewhere in the law.
One of those features is that liability, at least at the outset, spreads very widely anywhere that a CERCLA site -- within the boundary of a CERCLA site. So the purpose of the law, in short, is to empower the EPA to quickly and thoroughly clean up hazardous waste sites. It is able to round up landowners in the area and, basically, try and coordinate a cleanup among potentially responsible parties in the area. There's really no statute of limitations and the connection between your polluting and your responsibilities for cleanup can be kind of tenuous. This case goes to the heart of where the boundaries are, in terms of that responsibility and that timing.
The Anaconda site was declared one of the first superfund sites, one of the nation's largest superfund sites. The EPA and Atlantic Richfield have spent decades working on cleaning it up. Atlantic Richfield spent somewhere around $450 million on the project. There have been many orders directing a very detailed cleanup, down to how many parts per million of the soil must be arsenic to require cleanup and things like that.
In, I think it was 2008, a group of landowners in Montana brought suit in Montana State Court saying, "We don’t think the EPA cleanup is adequate," and challenging some of those measures. Some of the specific ones are in residential areas within the CERCLA lots of the plaintiffs: anything over 250 million parts per million of arsenic in the soil must be cleaned out to a depth of, I've actually seen in the record, both 18 inches or 12 inches. The landowners say, "Well that's still a risk to health. We believe it should be 15 parts per million." Another example would be, the EPA declared that if the aquafer is clean under the dirt, plaintiffs seek to have trenches built so that water can be, basically, filtered underground. Another thing is that pastureland, EPA basically decided, should be left alone and the landowners say, "No, you should clean that up, as well. We don't want arsenic just sitting around in the dirt out in the pastureland."
They brought claims for nuisance and trespass, other state law claims. The fundamentals of those claims are not at issue in the case. What's really brought the dispute forth is a unique Montana remedy for restoration that allows the landowners to get, not just the market value of their land as damages, but to actually get money to restore the land. And they have to show several things in order to get that money, including that they actually plan to spend that money restoring their land to, basically, the health it was at before the smelter put arsenic or lead on it.
Atlantic Richfield, in Montana State Court, said, "Well, the other claims, we don't think CERCLA necessarily has any problem with, but the restoration claim runs into several hurdles," is their case. The State Court and the Montana Supreme Court disagreed with that, leading to the Supreme Court case that we just heard oral argument in.
There are three arguments that Atlantic Richfield makes. The first one, which, as we'll probably get into, got almost no attention at oral argument -- well, no questions at oral argument. Atlantic Richfield claimed that Section 113 of CERCLA bars jurisdiction in the state court case. Section 113(b) says that all controversies arising under CERCLA have to go to federal court. Federal courts, alone, will have jurisdiction. The United States says that that alone is enough to, basically, strip the state court of jurisdiction, here. The landowners say, "No, all you've got to do is look at, say 28 U.S.C. § 1331, which has similar language for arising under federal question jurisdiction." And in that statute, the federal question has to actually be arising under federal law, literally. Your claim needs to be a federal law claim in almost every circumstance to create federal question jurisdiction. This should operate the same way, that 113(b) should only apply in the case of a claim that actually is brought under CERCLA.
Atlantic Richfield also points to Section 113(h), which says, well okay, federal courts will have jurisdiction. But even federal courts will not have jurisdiction to a challenge to a CERCLA remedial action. So a challenge must be a subset of claims that are arising under. So if (h) is an exception to (b), then (b) must encompass challenges to CERCLA remedial action.
The landowners point out, it's kind of odd, because section 113(h) says federal courts cannot hear challenges to CERCLA remedial action, but they can hear cases under diversity jurisdiction. So the explanation gets shaky. Well, why would federal courts not be able to hear challenges, but can hear claims under state law diversity jurisdiction? And if those aren't challenges -- or sorry, if those are challenges that are allowed, then it weakens the notion that federal courts have to be the only ones that are hearing these claims. That's the first argument.
The second argument: Atlantic Richfield claims that under Section 122(e)(6) of CERCLA a potentially responsible party must get EPA's permission to take any remedial action on a superfund site. The definition, or the potentially responsible party is not defined in the statute, and we'll get into this more, I'm sure, because it was a big deal at oral argument.
Another section of the statute defines a covered person as pretty much anybody -- this is only slightly overstating it, anybody who owns land on a superfund site—it doesn't matter if you were the polluter, necessarily, or not—there are defenses and exceptions. But CERCLA starts off sweeping broadly and then narrows, which actually is the core of the landowners response. They say, "Well, potentially responsible party -- keyword there is potentially. You may start off as a potentially responsible party and a covered person, but if, say, the statute of limitations runs, or you have solid defenses, you're no longer a potentially responsible party. You're just an innocent landowner minding your own business on a CERCLA site, so why should section 122(e)(6) apply to you?”
They also point out that section 122(e)(6) is in a section of CERCLA that deals with settlements, so their argument goes -- the whole point is to make sure that EPA has extensive control over the site at the outset so it can round up the people that it wants to partake in the settlement and contribute to the cleanup. And once that's been sorted out, a section like 122(e)(6) can fade away.
The third argument is preemption. Atlantic Richfield raises, both, impossibility and conflict preemption arguments. The impossibility preemption argument can pretty simply be stated as, we would have to do a different restoration plan and that goes against the plan that we're ordered to do by the EPA, and so there's impossibility preemption to which the landowners respond, "Well, no, you're not doing the alternative cleanup. You're paying us money to take alternative measures."
The conflict preemption argument is a little more nuanced at saying, well, CERCLA's a very complicated statute with a lot of provisions. Among them being that the EPA has to cleanup a site in accord with the National Contingency Plan, which has just an amazing number of different provisions the EPA has to satisfy in order to do a proper cleanup, including: getting input from landowners, getting input from the pertinent state, making sure they meet criteria to protect health, and what not. And this is more of a claim that, in addition to our previous argument under Section 113 and 122, because letting the landowners do their own cleanup would violate the National Contingency Plan in various ways, there's conflict preemption.
The landowners respond, among other things, but they point to saving clauses in CERCLA. They are quite broadly stated savings clauses and they claim, "These clearly give us the breathing room to undertake our own remedial actions."
I'll also mention this is a fascinating case in that both sides’ first arguments in their briefs received no questions during oral argument. I already mentioned the Section 113 argument that got no attention. The landowners claim the Court does not have jurisdiction because this is only dealing with the restoration issue and not the nuisance, or trespass, or other claims. The response to that is, "Montana decided this on a supervisory writ, which Montana treats as an original proceeding and, therefore, the Court should, as well."
That's all I've got, as by way of introduction.
Jonathan Wood: Thank you for that introduction. I think you've covered all the areas well. The only thing I'll add, just to set up the stage for the discussion and the actual argument. The property owner's jurisdictional claim, I think, explains why the case is so complicated here. The fact that there is not currently a remediation plan makes the case even more hypothetical than it, otherwise, might be. As we'll get into, when we get into the weeds of the oral argument, a lot of it was about what's really at stake here, and then what are all the possible hypotheticals that could potentially be at stake.
If this case were being reviewed at a later time, where there was actually a remedy to being reviewed, I think maybe some of those might have been simplified.
Corbin Barthold: I think one way to just start going through it is to discuss where the justices seem to be and what questions seemed pertinent. Normally I am trying to divide questions that I see in oral argument between questions that aren't necessarily what the justice is truly thinking but are probing weaknesses in their own position or exploring. And then the questions, here's what I really think about this. And I have to say there were a lot fewer questions at this oral argument than others I've seen that I looked and thought, “Oh, well, that's what that justice really thinks.” I think there was a lot of probing by pretty much all of the justices who spoke.
One place I would start with is Justice Sotomayor, who, at the outset of Atlantic Richfield's argument, asked Lisa Blatt some questions that made it look like Sotomayor has a lot of concerns about conflict preemption here, and then proceeded, when Joseph Palmore got up to make it sound like there's clearly conflict preemption here. She was holding her cards kind of close to the vest. And the trend that I saw in that, if I had to sum up the argument in a nutshell, I got the sense that the justices on the whole really didn't like Atlantic Richfield's statutory interpretation of 122(e)(6) and maybe some of the consequences of it. But also, really didn't like the potential consequences of giving the landowners everything they want in this case.
Jonathan Wood: I think that's right. There were a couple of questions asked by the justices, including Sotomayor, that seemed to suggest they really liked the policy consequences of Atlantic Richfield's statutory argument on 122, but weren't quite sure the statute got them all the way. Several of the questions were actually framed to the property owner's attorney as, "Well, what's wrong with that as a policy?” “Why isn't it a good thing for anyone who wants to do remediation work, to first go to the EPA and ask them permission?" Which is a separate question from what the statute says, and the response was, "Well, that's not what the statute says in our view." The justices didn't seem to be satisfied by that. They actually wanted to talk about the underlying policy merit.
Corbin Barthold: Yeah, in fact Justice Kagan was explicit about that. At one point she said, "It's policy, I'm all in favor of the EPA directing this, but," and her big but was, "when I read 122(e)(6), I don't see it doing what you, Atlantic Richfield, want it to do." She definitely seemed to take very seriously the landowners argument that, "why would this provision about -- be a section on settlement, if what it's meant to do is, basically, lock in these remediations forever?" If you want to tell landowners that they cannot pursue their own plan, pretty much indefinitely, because they have to leave the arsenic in the soil, they can't dig out things to a deeper level and whatnot, why would you hide that in -- maybe even just say section 122(e)(6), kind of hidden in there.
Lisa Blatt from Atlantic Richfield's response was, "There are elephants everywhere in CERCLA." I thought she did amazingly well in other things that maybe we'll get into, but I wasn't convinced by that response.
Jonathan Wood: That might be true, but when you're asking the Court to find preemption where it's not necessarily clear on the face of the statute saying, "Well, this statute's got a ton of elephants in it and really complicated," it didn't seem to me that that satisfied the judges.
Corbin Barthold: What ended up happening, I felt, as the argument went on and it was pretty clear that -- well, first of all, 113 never even came up. There was never really an opportunity to say, "If you don't like what I'm selling here, here's this other thing." It's fascinating, we don't know what'll happen with that.
But they weren't satisfied with the explanation about 122(e). I had thought, and I mentioned this to you beforehand, that well if the justices don't like the 113 argument, and if they don't like the 122 argument, I'm kind of skeptical that they're going to say, "conflict preemption anyway," because everybody knows CERCLA is meant to be covering this situation, and yet they kind of drifted towards that, some of them, later in the argument. I felt Sotomayor asking, basically, just said, shouldn't there be conflict preemption?
Justice Ginsburg asked a question along those lines. Justice Alito asked a question along those lines and Justice Kavanaugh made the point, "It's the comprehensive environmental law, so shouldn't we take the very name of it seriously?" You have different feelings about that, but that's the direction I felt the argument moved.
Jonathan Wood: Yeah, but at the same time the justices also asked enough questions cutting the other way that it seems to me there's still a lot of uncertainty. You mentioned Sotomayor's first question was, "What, in the statute, suggests that Congress is setting a federal ceiling?" The way it's actually framed, it seems like a federal floor and then you have these savings clauses that expressly say states can regulate above it. And it seemed to me that she didn't get a very good answer to that on just the general conflict, preemption argument. There's the “122 may be the answer there,” but as a standalone preemption argument, it seemed to me that that's a big challenge. That the way the statute's written, it's not clear why or that Congress wished to, basically, cap remediation at whatever EPA says.
Corbin Barthold: Yes, and what ended up being stop-gap solution that I feel people came in, Sotomayor brought this up right at the outset, but it seemed to be where several justices were heading, was, "Well, why don't we basically rule for the landowners with the exception," and it's an exception that kind of swallows everything for the landowners, but say the landowners have to prove in court that the EPA—not might—will approve their alternative plans. A satellite conversation around this was, "Are we now just arguing about who has the burden? Is it up to the EPA at the outset to make it clear that it thinks parties are potentially responsible parties so that it protects itself against the statute of limitations? Or is it up to the landowners at the outset to make clear that they want a different plan and get the EPA's approval before they take any further steps." And I felt that that dispute was left kind of in the air.
Jonathan Wood: Kavanaugh and, if I recall correctly, Kagan expressed some concern, given these sites are huge, and there are over 1,300 of them, how is the EPA ever supposed to know what every individual landowner is doing. So you put the onus on the EPA to use other tools, other than preemption, to try to supervise remedial efforts, how is that supposed to work?
So in this particular superfund site, it's 300 square miles. There's a ton of property owners using their properties in very different ways. So if the EPA is supposed to know, instantly, what those landowners are up to and what actions might have environmental consequences, that would be very difficult to administer.
Corbin Barthold: So that was definitely a concern. A related concern that I thought Chief Justice Roberts, a slight sort of a partner to that concern that he raised is it's not just these landowners. One topic that also didn't really get resolved is do the landowners plans -- are they more or are they different? And Lisa Blatt kind of put in those terms at one point: more is not necessarily better with environmental cleanup. So the EPA says, "We tell you that you need to dig out your dirt to 12 inches, then we cap it, we put some fresh vegetation over that to keep any arsenic that's even deeper down, protect it. If you, then, proceed to dig up 18 inches or more, you're potentially aerating that arsenic," and that's actually a worse outcome than just having one plan and EPA doing one coordinated effort.
Joe Palmore said, "Actually, EPA just came up with these concerns out of thin air. They're not on the record." And Chief Justice Roberts didn't seem satisfied with that. He said, "Maybe so for this case; what about other cases?" Once again, you have a justice who is really tapping into the, "Well, I believe in the notion that the purpose of CERCLA is to have a coordinated cleanup with one overseer that has the broadest vision of the landscape and is, basically, calling the shots and making sure that people don't go their own way." Maybe even the point of one landowner doing something that another landowner doesn't want or puts another landowner in danger with, again the, okay, but where do we implement that? Where do we see that in the statute? How do we get there? Are we allowed to get there? Is that simply not what the statute says, as Kagan sometimes suggested? Again, going to my point of real dissatisfaction with both the potential results and the statutory text in front of them.
Jonathan Wood: On that point, I think the position taken by the United States only further complicates it because, I don't know if you got this sense, but both in the oral argument and reading the transcript, my sense was, the United States was careful not to say, or was careful to not say that this cleanup would necessarily be bad for the environment or that they wouldn't actually approve this cleanup.
The case might have been simpler if they just said, "Oh no, absolutely not. What these guys have in mind is bad for the environment and we would definitely reject it," then I think the justices might have had a clear way through. But the fact that the United States wasn't willing to commit on that, unless it's completely open, I think makes that judgement hard. Because, and this is something that the property owner's attorney referenced, is that under CERCLA, EPA is not only considering environmental effects of impacts.
It's balancing those impacts against the costs of remediation. And CERCLA might weigh that balance one way, and state law might weigh it differently. And what do you do with the cleanups that might cost more, but also get you more environmental benefits? All the questions seem to assume that if there's a conflict, it's only where remediation might actually have some environmental downside. The justices didn't seem to be that concerned with the idea that this is inconsistent in the sense that it costs more in exchange for more environmental benefits.
Corbin Barthold: Although she didn't put it on those terms, I think Justice Sotomayor was thinking in that way with her questions about, "with the floor, is it a ceiling?" And Justice Gorsuch explicitly mentioned the concern, "What do we do with the EPA and sort of inconsistent statements?" I think you're right, that if the EPA had just taken a firm stand from the outset, it might be a very different case. And I would imagine, there're probably inside [inaudible 00:22:38] reasons for that. If you're the attorney for the United States, it's probably actually very hard to get an agency to, at the outset, give that kind of answer.
Jonathan Wood: Particularly at this stage of the case. We don't even really know what the remedial plan necessary would be.
Corbin Barthold: Well, Chief Justice Roberts kind of tapped into that in defense of the government, saying, "The government is allowed to -- it's a big plan, it's complicated, they can take steps and they should be allowed," Chief Justice Roberts kind of argued, "to do step A, B, and C, and not have people coming in and suing about D if they haven't come in and figured out what they want to do yet." I have sympathies in both directions. It's a complicated cleanup plan, on the other hand. Certainly, in this case, if the EPA doesn't have a firm position on these things by now . . .
Jonathan Wood: Yeah, that's right. And for background, the EPA estimates that this remediation will be wrapped up in 20-, is it 2025, the current deadline?
Corbin Barthold: They said 2025, which I could be wrong, I think they tacked three extra years on.
Jonathan Wood: I know, I thought it was earlier than that, but yes. This cleanup has been in the works for, since 1983, so they're well into the planning. They should be at the end of the actual work. And I think they're probably going to mention, they've done all the work they're going to do on the properties at issue in this case. So the idea that, “Oh, you don't like the way the EPA is going to get to that,” doesn't really fit the facts of this case.
The next thing I wanted to talk about is I agree with you that it seemed like the overall momentum in the oral argument was towards this idea of, you either have to prove you would get EPA approval to bring this kind of state claim, or there has to be some process by which the EPA approves any work that would happen as a result of this state claim. The question that that brings up in my mind—and this didn't come up in oral argument—is what standard EPA would use in deciding whether to allow that remediation to go forward? Because under CERCLA, as I mentioned, they have to balance cost versus environmental benefits. The state law doesn't require that same balance. Assuming the justices don't do the Section 122 argument, they just create this amorphous idea of EPA has to supervise and approve a state remediation plan, what standard would EPA use?
Corbin Barthold: That's actually a really good question, and I'm surprised it didn't come up at oral argument because the answer may well be that EPA needs to come up with a plan that meets the national contingency plan, which is what they already have. And that because they have met that, and satisfied it, they are now free to, basically, decide on whatever standard they feel like. If they think your backyard pool is a bad idea, they can block it. If they think your extra digging is a good idea, they can grant it. That seems like a weird outcome, and certainly like something you'd hoped your reticulated statute would have accounted for at some point, if that was the true rule envisioned.
Jonathan Wood: Yeah that could be, maybe, the out. And there was one question that I wasn't sure was trying to get at this. I think it may have been the Chief Justice who asked it. Or maybe it was Kagan, but maybe the idea is that EPA's approval authority at that point is just limited to would this actually interfere with what we're doing? Will it undo -- cause environmental consequences we were avoiding, or make what we've done less effective? As opposed to EPA saying, "No, we think the requirements under state law are too expensive for the polluters so we're just not going to allow it."
Corbin Barthold: Yeah, forcing them to make that distinction would be good. That's still basically writing into the statute, though.
Jonathan Wood: Yeah, absolutely.
Corbin Barthold: To comply with the National Contingency Plan, you don't have to worry about, well, if it's more expensive -- what am I trying to say? That it's more, if you've already decided that what you've done meets the health standards in compliance with the plan, then there's kind of no distinction between "it disrupts our plan," and "it doesn't." If something is better, but disrupts, they still have wide ranging discretion and kind of do what they want.
Jonathan Wood: I think it depends a lot on “what disrupts” or “conflicts with” mean, and that was definitely a point of which there was very little clarity in the oral argument. Because I think Lisa Blatt's argument was, essentially, that whatever EPA decides, that's it, and any departure in either direction from that is going to interfere with, or undo, what EPA is doing. But I could see a narrow argument, or a narrow rule, that simply says that EPA's analysis, after any work under the National Contingency Plan is over, it's just limited to environmental impact. Will this make things worse, or will it make their efforts less effective, as opposed to considering technological capabilities or cost, or some of the other factors that they would have to consider. Because the first is less intrusion on state authority and private property rights, than the second.
At one point the Chief Justice even asked, "The work you want to do on your property doesn't stop at the boundaries of your property. It's going to have effects on your neighbors." And that, to me, sounds like a nuisance type tort problem. But that wouldn't extend to the cost [inaudible 00:27:57].
Corbin Barthold: Well, it's certainly true that it's possible that the statute allows landowners to do things. In the event, I'm sure the landowners will dispute that this is what their work will do, but let's say their work aerates arsenic. Then the other landowners, they're property owners, they have their rights, they can bring their lawsuit against the first landowners. It's not automatic that CERCLA would preclude that, although it would be an odd outcome. To try and come back at another angle, I think what we're coming to is that, if all EPA has to do is comply with the National Contingency Plan, then they would have full freedom to deny any requests to do something that is more expensive and better, but different.
Which, going back, that, too, is a weird outcome. You want to make it even better than your plan. Why can't we do that? And at one point, Justice Breyer certainly seemed comfortable with that outcome. One of his comments was, "Look, we have the citizen suit provision in CERCLA. Once everything is done, you are free to go into court and use that, which would be entirely unsatisfactory to the landowners because, basically, what the citizen suit provision says is you can go in and use the Administrative Procedure Act to say that what the EPA did here was arbitrary and capricious. The only thing you can really complain about is if they failed to comply with the National Contingency Plan, which goes back once again to, you may have something better, but if you can't show it violated the plan, too bad. And then you're limited to the administrative record that the EPA has compiled. Granted, you would have had an opportunity, I suppose, to submit to it, as landowners do, earlier, but that's still -- you're bringing in no new evidence.
At one point, Justice Breyer almost kind of blithely said, "Well, what's wrong with that? Go use the citizen suit provision."
Jonathan Wood: I think that's definitely -- Breyer, to me, seemed most inclined to rule in Atlantic Richfield's favor, either on the preemption or on the 122 argument. To me, his questions weren't quite clear which way his thinking was going, but he definitely seemed okay with the idea that -- I think at one point he even half joked about the idea that this is, in the facts, imposing an easement on every property contained within every superfund site in the country, limiting what property owners can do with their own money. And that's one of the other ironies in this case, is that if the 122 argument is accepted, that's not just about holding the polluter liable. If that argument's right, even a property owner who wanted, with their own money, to do work to improve the health of their property, would have to get EPA approval.
The property owner's attorney argued that, in practice and possibly in this very case, that restriction would apply forever.
Corbin Barthold: The landowner who wants to use his or her own money -- it goes even further than that. Even in a situation where there's no, "you'll make it worse," argument; they'd still need approval.
That doesn't necessarily mean that all is lost on the Atlantic Richfield side because I think the fundamental tension that the justices were grappling with, and there aren't necessarily clear answers, is two things can be absolutely true at once, as Lisa Blatt pointed out. The reason the rule lasts so long is because arsenic lasts long. And if you have a cleanup that you're packing away the toxins, if the toxins don't go away, then neither should the remediation plan. And there's a sense to that. If you're doing a cleanup plan and you need it to work. And part of that involves stowing away toxic goods, then there's no reason to believe that doing something 30 years to undo that is somehow okay just because of passage of time. And then that flies completely in the face of what PLF talks about in their brief and Justice Gorsuch touched on, and Justice Kagan touched on, are this notion of forever. That's an awful long time. Time is a long thing, as Churchill said. That doesn't square with, really, even basic notions of how property law works in any other context and should CERCLA really be special.
Jonathan Wood: And there also seemed to be a suggestion from several of the justices, with the exclusion of Justice Breyer, who I think mocked this idea a little bit, that CERCLA affects a lot of activities you might not think of. That remedial action is defined so broadly that -- maybe it's not so broad that if you want to create a garden, you're going to have to get EPA approval. But a lot of other earth moving activity that disturbs any sort of polluted area could require EPA approval, and that significantly intrudes on private property rights.
Corbin Barthold: Well, in this case, so 12 inches of top-soil --
Jonathan Wood: If you wanted to dig below that.
Corbin Barthold: Your kids playing in the yard could do a lot of -- make a lot of headway towards that. So it is interesting, there seems to be debate over how much are you allowed to do, and "oh, well, you can plant a garden, and you can do this and that and the other, but you just can't upset the remediation." I'm not sure what . . . planting a garden may well involve digging a foot of soil.
Host: We actually do have one question.
Roger Candelaria: Hi. This is Roger Candelaria and thank you for a very interesting discussion on a topic about which I know very little. Let me pose it this way, if you were a small government, free enterprise, constitutionalist conservative and the justice who had been assigned to write the opinion calls you and says, "How should I hold on this thing?" what would be the best outcome, given the complicated posture that the case is in?
Jonathan Wood: I think one of the funny things about that questions is you have attorneys from two small government-inclined non-profits who took opposite positions in the case. So I guess we'll start, Corbin, from your perspective, why is a win for Atlantic Richfield the best outcome here?
Corbin Barthold: One data point that is in the record, and I'm not claiming that it's necessarily correct or fully accurate, but it does give a good flavor. It's been claimed that to restore the property would cost about seven times as much as the market value of the properties. Because mind you, we're not talking about, okay you're property's been damaged and like, in most other tort suits, what you're entitled to is the market value of your land so that you're made whole.
In almost every other context of law, you are made whole if you get the market value. Here, we're doing something that, from certainly Atlantic Richfield, and perhaps the larger economy's perspective, is very inefficient if you spend seven times the market value of the land to restore land. I'd make a pretty solid argument that it's not pareto optimal.
Now, I'm not claiming there are not arguments on the other side. There's been the claim of-- somebody's made the comment about "well, my children's height that I've penciled in on the door are not in any other house." That kind of argument is not normally something we worry about in common law tort claims. It's more about making sure that things operate efficiently and that we don't engage in large amounts of waste.
That would be the economic argument for why, if you're going to have CERCLA, you might as well try and make sure you have a single plan that is being operated efficiently and so it is a good -- I suppose I've drifted from your constitutional to more of a law and economics analysis, but perhaps that's because if we try to do a small-government constitutional thing, we end up begging the question. We end up arguing, "Well, what does CERCLA say?" I would say a big part of that kind of attitude is rule of law. Tell me what the statute says; I want to apply it, and I want to apply it as it is written. And as we saw at the oral argument, that's a tricky question. I'm not sure there's a lot of agreement.
So the last thing I'll say, and then I'll hand it over to Jonathan. One quick and dirty heuristic, if you're interested in who's filed where in this case: the Chamber of Commerce and the Washington Legal Foundation are on one end, but they're aligned with the Environmental Protection Agency. On the other hand, you've got the Pacific Legal Foundation fighting for property rights. They're aligned with a public citizen and with a group of states, all of which are either Democrat controlled, or one of them, Mississippi, has a Democrat Attorney General. And I would argue strenuously, those alignments don't really tell you much. It's an interesting case in that regard.
The major environmental groups have not come in. It's an interesting case that kind of cuts through those lines and asks, "Well, what do you do with this statute that has its defects and its problems. And which of its defects speak to you when you look at it?"
Jonathan Wood: I completely agree. I think the complication of the statute and some of the arguments explains the lineup and makes it difficult to have a clear answer to the question. But, to give my perspective. I filed an amicus brief on behalf of Pacific Legal Foundation and the Property Environment Research Center environmental group based out of Bozeman, Montana. And our approach was to argue constitutional avoidance, that the rights the property owners are invoking are constitutionally protected property rights. If Congress wants to take those away, courts should expect Congress to speak clearly. And without a clear statement and statute to provide to that affect, the presumption should be that the rights haven't been preempted. So that was the approach we took.
I certainly take your concern that -- because the reason why they're seeking these remedies are because they are going to be a lot more than the property's worth and that does sound inefficient. The policy argument we make in our brief is that, that may be okay if you take the longer view. The reason why these remedies exist, and they exist in quite a few states for torts and for property rights violations, is that it creates the right incentives at the front end. If I'm someone who's thinking about polluting, and I know that I can keep your property without your permission, and all I'll have to pay is the effect change in the market value, then I, as the polluter, essentially have the private equivalent to the eminent domain power. But, if I know that the state courts might make me restore the property, then I have much stronger incentives to go to you at the front end and say, "Look, my activity is going to involve pollution. What can I pay you to have the right to pollute and to resolve amicably through the market?" I think that's more likely to happen with these sorts of claims, and so that's one of the policy reasons why our brief supported the property owner.
But I absolutely agree that the statute is so vague, and the questions are so complex, that it's very easy to wind up on either side of this case.
Corbin Barthold: Well, and two follow-ons to that. One with it and one against it. One of the weird things about CERCLA is it takes pollution from -- pollution here started in the 1890s, and you get these wacky results under CERCLA where -- I'm not absolving Atlantic Richfield, here. They bought with their eyes open. But there are other situations with CERCLA where, oh my god, you just kind of wake up one morning and you realize there's this chemical on your land and it really wasn't your fault, and you're paying through the nose.
So on the one hand, while you're not going to be able to negotiate in that situation. On the other hand, I love that argument because it is a real-life application of the Coase theorem. When it is forward-looking, it is a literal application of it. You have a low-transaction cost situation in which -- it doesn't even matter who starts with the property rights. You'll go out and negotiate and you'll reach a voluntary agreement; the government never needs to get involved. It's beautiful.
Jonathan Wood: One of the issues that I was surprised -- not that it came up, but the way that it came up. You mentioned Gorsuch, I think Sotomayor, and Kagan all raised the prospect of, “these are property rights at stake.” They didn't seem to raise that in support of an avoidance type argument, like the one I was describing we made. Instead, they were just seemed to be asking, "Is there perhaps, takings claim here, and if so, who's it against and when does it arise?" and that surprised me. What do you think about that?
Corbin Barthold: You know, as between the two of us, you're probably the takings expert. So here's my reading on it, you can tell me what's wrong. Gorsuch brought up the takings claim; I'm glad he did. Start with Lisa Blatt from Atlantic Richfield. She has no reason to really have any argument with that. She doesn't represent the government, so if she gets her company out of greater liability and then landowners bring payment claims, God speed. That's basically -- she politely, basically said that. So the real question to the government, and they got asked the same question, and their attitude was roughly, "Well, look, in this kind of situation, what you'd be looking at is the diminution of the value of the land.” I have to assume that they're thinking from the market value. There was a suggestion about with the arsenic. I don't think that's right. It's market value without arsenic on your land. But I think they're probably thinking market value and not restoration value, and it just doesn’t worry them much, was my read on it.
Jonathan Wood: I'm glad you brought this, because I thought the United States’ answer there was unclear, and Gorsuch asked a few follow-ups. They initially, their response was, "There's no takings claims if we've increased the value of the property by doing this cleanup work." That if they wanted the baseline to be the heavily polluted version of the property, in which case, CERCLA improved the value. And Gorsuch pushed back and said, "Well, no, why wouldn't the value be -- with all of the property rights state law recognizes, including restoration, and that's what you've taken away." If that's right and it's pursued as a takings claim, as opposed to an avoidance claim, I think you're right. Digging at what the proper means of compensation for that is really complicated.
Corbin Barthold: I think what might happen -- well, rather than staking my own opinion, I'll say, this is my guess of what the government was thinking. They're thinking, what's happened here, the taking, is not the pollution from day one, because Anaconda's not the government. But what has happened is, with CERCLA requiring the cleanup, the government has then stepped in and frozen it in place, and said, "You can't change it until the taking is, everything under the 12 inches of soil, or the soil that can't have the trench in it." Basically just these things around the edges and then they see that as just the diminution of value that you can't dig deeper. That's probably their attitude.
I looked into this, and it's absolutely clear that CERCLA -- the CERCLA cleanup ends, you go into the federal claims court, you make your takings claim, and that's happened. There's been cases where you have to have a well built on your land and you go in and the government owes you for that well. So maybe their attitude is just, "it's going to be diminution of a value, it's not much. We're not fazed by that." And if that's your attitude, there's really -- maybe “no need for avoidance” is their attitude.
Another angle, and there's an Eleventh Circuit opinion that has this issue, but it all goes to 113, which was never discussed in oral argument, is, well, you want your clear statement. Here's your clear statement. Federal court cannot hear a challenge to a CERCLA remedial action. Now, you still have that weird diversity jurisdiction thing I mentioned way at the outset for anybody who's been listening closely. And, of course, you have the fact that the landowners don't think that applies in this case, but were to apply, actually Judge Carnes in the Eleventh Circuit, who's no fool, even said, "Look, Congress is allowed to strip even constitutional claims, temporarily, and say you have to wait because this cleanup needs to get done and once the cleanup's done, then you can go to the federal claims court and do your thing, and there's nothing suspect about that."
Jonathan Wood: And that is absolutely the argument Lisa Blatt argued in her reply, which I thought was a little dismissive about what kind of consequences that could mean for the federal government. Because one of the reasons for the Court to have, in the past, required a clear statement before interpreting a statute to take private property is, courts might accidently impose a lot of ideality on the federal government that Congress never intended or allowed. And the temporary taking, the fact of the pollution below 12 inches could significantly affect the value of properties multiplied over the hundreds of square miles on one site times the 1,300 total sites. You're talking about someone's home. The home probably loses a lot of value if the buyers all know that, oh yeah, there's arsenic 12 inches down. Be careful when you dig.
We were talking before that we're both recent dads. And I don’t know about you, but I probably wouldn't buy that house knowing that that's there, no matter what the discount is. I'm not buying that house. And so that seems to be part of the concern to the landowners and they emphasize this in their briefs and in some of the media they've done about is, "these are our homes in our community. It's not the pollution of some commercial site where maybe some of these concerns aren’t the same."
Corbin Barthold: Well, I am glad that Justice Gorsuch--
Host: Gentlemen, I just want to hop in, real quick. We have another question that's popped up. I want to make sure that we have time to get to that person.
Larry Schnapf: Hi, this is Larry Schnapf, I'm a CERCLA practitioner and also an environmental law professor. I came in late to your conversation, so I apologize if these questions I have, you've already covered. But my understanding, this was originally a 113(h) question as to whether, in terms of the pre-enforcement bar, which I think you guys just mentioned, is only a temporary bar. And then, we have a lot of risk-based cleanups under CERCLA where contaminated soil is allowed to be removed, and the way they've been typically enforcing this is through deed restrictions and institutional controls. And if the adjoining property owner doesn't comply, they're deemed to have -- they could be a potentially responsible party because they haven't exercised appropriate care.
And the other thing is, we're developing a lot of sites across the country where contamination is a depth, and you do have, say, 12 inches or 24 inches of protected soil, or a cap. And the last thing is that the case was pretty clear under CERCLA that CERCLA doesn't preempt common law claims if there's no double recovery. So, for example, here in New York, you can bring nuisance actions and they're not preempted by CERCLA, provided there's not double recovery. And since CERCLA is limited to course recovery, I'm not sure what the question is about property damage claims. They should be able to continue forward.
Jonathan Wood: That last point did come up in oral argument. The property owner's attorney cited the prohibitions on double recovery in support of the argument that, here, that's not a concern. The recovery would be for additional work beyond that ordered by EPA. Of course, neither the United States, nor ARCO are claiming that the property owners are resulting in double recovery, so it's really a site issue.
As we said at the outset, the jurisdictional argument was raised by ARCO early in the argument, but it got no questions, so my sense is it doesn't have a lot of supporters on that.
Corbin Barthold: It's an interesting question. There's a certain amount of past dependence with the oral argument. And so you never know. It could be in someone's mind. It could pop up in the opinion. But it didn't get a single question.
Jonathan Wood: Similarly, it's possible that the property owner's jurisdictional argument will have purchase. Again, I don't know how you feel about this, but my sense of the oral argument, and thinking about it before the oral argument, was this case has significant potential for a weird split. Not a 5-4 split, but a 2-2-2-2-1 split. And if the Court's unable to reach a majority, does that affect their thinking that maybe these jurisdictional questions get a bit more attention. Because maybe they're easier.
Corbin Barthold: That could be. I, for one, am satisfied that if Montana wants to say a supervisory writ as an original controversy, that goes so then the landowners jurisdictional issue goes away. But nobody's asking me write on it, so we'll see.
Jonathan Wood: And yeah, I think the Court could go that direction without saying that we could never review an issue like that. They might simply dig it and say, "We’ll look at it when we have an actual remedy."
Corbin Barthold: It would be pretty rough on all the parties and everybody if 113 becomes a big deal in the opinion. If only because it's really complicated. It's not an easy issue. You have a rule that says, "A rising under CERCLA equals federal courts." And you have arguments about what that means. And then you have an exception to that rule that says, "Challenges to remedial actions, except if there's diversity jurisdiction." And how does that inform the rule? Does it inform the rule? What does challenge even mean? The landowners don't go quietly into the night. That means the kind of remedies that they're looking for, here -- there are just worlds within that dispute, all by itself, in this case. And so for that to be dispositive with no discussion at oral argument would be very striking.
Jonathan Wood: And it's another example where the complexity of the statute probably makes that argument more difficult, too, because if you look at the challenge language in isolation, I think ARCO's argument's pretty strong. But then when you look at it in a context of a broader position saying federal courts get to review claims under CERCLA, then it doesn't necessarily seem as broad. So it goes back to Kagan's questions about 122 being in the settlement provision. To what extent does the context where these provisions are located effect how they're interpreted?
Corbin Barthold: Absolutely. And I think we can all agree on Thurgood Marshall's comment that CERCLA's not a model of legislative craftsmanship.
Jonathan Wood: Is there an argument for making the ruling as just chaotic as possible to force Congress to come back to the drawing board?
Corbin Barthold: It would be very unfortunate if you have a decision, everybody comes to the Court and says, "Please clarify the meaning of the statute" and they end up having a fractured opinion that just causes more confusion. It would be too bad. My guess, and this is kind of getting into the broader world, the superfund is chronically underfunded and people on all sides have complaints about it. Although you could argue the fact that everybody complains about it shows it's kind of doing its job – nobody's satisfied. Maybe, but you could also argue that it needs a fresh look. That's an interesting question. I haven't really thought about it. I certainly wouldn't want them to do it as a deliberate pact, but it would be very interesting if they reached a decision that was so fractured that it caught eyes across the street at the Capitol.
Jonathan Wood: On that point, one of the interesting things is, it didn't come up in oral argument, but because superfund has been so chronically underfunded, there are groups that would like to engage in private voluntary cleanups, good Samaritans. And there's a defense to the statute to protect them, but it's got some concerns and hasn't necessarily worked the way Congress intended. I think one of the things that, perhaps, the Court should have been reminded of, or had in mind, is that if they go down this route of, EPA approval is always necessary for everything, that's going to affect, not only the ordinary landowner who you might be concerned will do something they shouldn't or get in over their head, but also the state environmental groups that are buying these lands for the express purpose of cleaning them up. And if you rule them out, you've lost a potential source of revenue that could fill the gap left by other underfunded CERCLA.
Corbin Barthold: That's an interesting point.
Host: I'd like to thank our speakers today on behalf of The Federalist Society and also our audience for joining us. We welcome listener feedback by email at firstname.lastname@example.org and thank you all for joining us. We are adjourned.
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