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News & Press: State Bar News

Supreme Court rules claim against ARCO can proceed

Tuesday, January 2, 2018  
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In its final opinion of 2017, the Montana Supreme Court affirmed a district court order that a group of private landowners who own property within the Anaconda Smelter Superfund Site could move forward with their claim for restoration damages against the Atlantic Richfield Company.

Justice James Jeremiah Shea wrote the opinion in the 6-1 decision, which was released Dec. 29.

The private landowners contend that nearly a century of operation of the Anaconda Smelter deposited unsafe levels of arsenic in the soil and groundwater on their property. Their lawsuit seeks to require ARCO to pay for their plan to restore the soil and water to pre-contamination levels.

ARCO contended that the private landowners’ claim for restoration damages is barred by a federal law, the Comprehensive Environmental Response, Compensation, and Liability Act. ARCO says it is already complying with a cleanup plan drafted by the Environmental Protection Agency, and the landowners’ restoration plan cannot require ARCO to do more than what EPA requires. ARCO also claims the landowners may themselves be “potentially responsible parties” under CERCLA by virtue of their ownership of land that has been contaminated by the smelter, and so they must have EPA’s approval to do any restoration work to their own land. Finally, ARCO contends the private landowners’ claim for private restoration damages conflicts with the purposes of CERCLA generally.

The Silver Bow County District Court rejected all of ARCO’s arguments, and ARCO appealed to the Montana Supreme Court.

The Supreme Court held that even if some parts of the private landowners’ restoration plan have to wait until EPA has completed its cleanup, CERCLA does not prevent private landowners from seeking money damages from another private party for the purpose of restoring their own private property. Next, the Supreme Court noted that in over 30 years since the private landowners’ property was declared a Superfund site, they have never been treated as potentially responsible parties for any purpose under CERCLA; therefore, the Supreme Court rejected ARCO’s argument that the private landowners should now be treated as potentially responsible parties for the first time. Finally, the Supreme Court held that no other CERCLA provisions prevented the private landowners’ claim.

District Judge James Manley of the 20th Judicial District and District Judge John Kutzman of the 8th Judicial District, sitting for Chief Justice Mike McGrath and Justice Jim Rice, respectively, signed the opinion, along with Justice Michael E. Wheat and Justice Dirk M. Sandefur.

In a concurring opinion, Justice Beth Baker noted that the district court’s pre-emption ruling was a narrow one and that CERLCA distinguishes between the federal government’s remedial action and the recovery of damages to restore private property. The concurrence also explained that ARCO would be able to offer evidence at trial to support its claim that the property owners’ proposed restoration plan is not feasible and thus does not qualify as a temporary injury eligible for restoration damages. But the property owners should have the opportunity to show that the injury to their properties still exists despite cleanup efforts and would cease to exist if their proposed restoration plan is implemented.

Justice Laurie McKinnon dissented, concluding that while property owners may pursue monetary damages for trespass and nuisance during the pendency of the CERCLA cleanup effort, they may not pursue restoration damages because under Montana law any monies recovered must be used to actually restore the property. Property owners’ restoration plan was considered and specifically rejected by the EPA and cleanup efforts at the site are ongoing.

Justice McKinnon would hold that property owners’ restoration conflicts with the ongoing CERCLA cleanup effort and, therefore, the state court does not have jurisdiction to consider their claim for restoration damages.

The case was remanded back to the District Court for further proceedings.