Should property rights give way if environmental cleanups seem too costly?

Last week, the Supreme Court heard oral argument in Atlantic Richfield v. Christian, an important case concerning whether property owners can sue neighboring polluters for money to cleanup their polluted land. At issue in the case is whether state courts and individual property owners deciding how to clean up polluted land would interfere with the Environmental Protection Agency’s work under the Comprehensive Environmental Response, Compensation, and Liability Act (more commonly known as Superfund). Although the argument suggests its unlikely that the Court will prevent entirely such suits, some of the Justices suggested that property owners should have to seek EPA permission before cleaning up their own land, which depending on the standards EPA applies could significantly undermine the role of property rights in protecting the environment.

In this case, a copper smelter dumped tons of arsenic and other toxic pollutants on its neighbors in Opportunity, Montana. Since the 1980s, it has spent nearly half a billion dollars cleaning up some of the affected properties in a 300 square mile Superfund site under a plan developed by EPA. Now that the EPA plan is wrapping up, property owners whose land hasn’t been restored have sued the polluter under Montana law, seeking funds to clean up their properties. The polluter claims that it can’t be sued for these costs, because any further remediation work would be inconsistent with EPA’s plan.

Sometimes oral argument indicates which way the Supreme Court is leaning. This was not one of those times. Instead, the oral argument suggests that the Justices are genuinely sympathetic to both arguments. On the one hand, they recognize the polluter’s argument would be an unprecedented federal intrusion on property rights, by letting EPA void rights without the owners’ consent or participation. On the other, they’re worried about people working in polluted areas without EPA oversight. [I gave an immediate reaction to the oral argument in a podcast for the Federalist Society.]

Early in the argument, Justices Sotomayor, Kagan, and Kavanaugh voiced concerns about taking property rights away from folks who were in no way responsible for the pollution:

JUSTICE SOTOMAYOR: [S]ome justices might have a problem with the concept that someone who didn’t pollute and doesn’t encourage the polluting would be financially liable. . .

JUSTICE KAGAN: [W]hy do we think the statute requires those consequences as to a person whom has — who has never been treated as a [potentially responsible party] by the government, who has never been involved in settlement negotiations, who, under reigning law, including the statute of limitations, has no liability exposure? I mean, it would seem a big deal to take a person like that and say you’ve lost some significant property rights. Why? . . .

JUSTICE KAVANAUGH: But it seems a very indirect way for Congress to have gone about this, as Justice Kagan says, to, in essence, hinder a landowner from doing any significant action for decades.

On the other hand, Chief Justice Roberts, Alito, Ginsburg, and Breyer appeared to favor a result that would require any cleanup to go through EPA. Responding to these concerns, the property owners’ attorney explained that EPA has never suggested that further cleanup would cause environmental harm. Instead, it decided that requiring more from Atlantic Richfield would cost too much under Superfund, which requires a balancing of public health concerns against cleanup costs.

If the Court gave EPA a right to veto landowner cleanups, it’s unclear how EPA would exercise this power. Would it only consider whether the cleanup would cause further environmental damage? Or, as EPA does under Superfund, would it consider also whether the cleanup would cost the polluter too much?

The former may be unnecessary, since any property-owner led cleanup would already have to comply with federal and state environmental standards. But it also, for the same reason, poses less risk to the environment.

The latter, however, would fundamentally alter the role of property rights and state law in discouraging pollution. As PERC and PLF explained in an amicus brief, secure property rights are a critical safeguard against pollution. But this is only so if property owners have adequate means to protect their rights. To ensure adequate protection, judicial remedies for trespass and nuisance are not limited to compensation for lost property value. Instead, violators’ actions may be enjoined or they may be required to restore the property to its prior condition, even if the cost of these remedies exceeds the value of the property. Although these remedies may seem unreasonable from the perspective of the polluter, they play an essential role by disincentivizing the violation of property rights and encouraging the resolution of competing demands to land and other resources through voluntary exchange.

If EPA has broad power to reject landowners’ plans to clean their own property, this would be a fundamental shift.

Palmore: [EPA’s plan] overall is targeted to be completed in 2025. But it’s never over because all of the arsenic and other contaminants will not be removed. There is a five-year review process where more remedial action could be taken. ARCO could be required to do it. And that will go on literally forever. So the argument on the other side is that EPA has a permanent easement on my client’s property requiring them to store ARCO’s arsenic and lead forever unless we get EPA permission to remove it.

This raises the prospect that Superfund would effect a taking of private property rights at every property at every one of the 1300 Superfund sites, a point Justice Gorsuch raised in the oral argument.

JUSTICE GORSUCH: Is there — is there a takings claim, do you think, that arises from the government’s position that any remediation efforts for a period of, I guess, 45 years is prohibited by landowners?

MR. MICHEL: [O]f course, one could raise a takings claim, but I think it would be a very weak claim given that, in fact, EPA’s remedy has improved the value of the property and that you have to start from the premise that the property is — is covered with arsenic.

JUSTICE GORSUCH: Well, it’s — it’s — it’s improved the value of the property from its prior state but not — not to a level that state law would allow. . . .

Palmore: Why might this be a taking. It depends on what the default rule is, right? Where does the property right lie? Does it lie with –lie with EPA? Or does it lie with the landowners? Under Montana law, we have a right, a wrongdoer has put arsenic on our land, and we have a state law right to get a judgment sufficient to remove it. It’s not — that’s not applying the CERCLA health standard. That’s applying bread-and-butter Montana property law.

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