Supreme Court Limits Liability of Certain Potentially Responsible Parties Under CERCLA
On May 4, 2009, in Burlington Northern and Santa Fe Ry. Co. et al. v. United States, No. 07-1601, 07-1607, 2009 WL 1174849 (May 4, 2009), the United States Supreme Court significantly limited the scope of “arranger” liability and, perhaps more notably, clarified the applicability of “joint and several” liability under the federal Superfund law (CERCLA). The court ruled that apportionment is proper where (1) the harm (i.e., the contamination) is divisible, and (2) there is a reasonable basis for determining the contribution of each party to such harm. This could mean that joint and several liability—USEPA’s big stick—could become more difficult to impose.
Clarification of “Arranger” Liability
In Burlington Northern, the government sought to recover cleanup costs resulting from the spillage of various chemicals by Brown and Bryant, Inc. (B&B), a now-defunct agricultural chemical company in California. Shell Oil Company (Shell) sold B&B a specific pesticide, and leaks and spills of that pesticide occurred during B&B’s handling of the chemical, resulting in soil and groundwater contamination. The U.S. Court of Appeals for the Ninth Circuit found Shell liable for arranging for the disposal of a hazardous substance because Shell knew that spills occurred during the transfer of the chemical to B&B’s equipment. The Supreme Court reversed, finding that “knowledge alone is insufficient to prove that an entity ‘planned for’ the disposal.” The Court went on to explain that, to be held liable as an “arranger,” Shell must have entered into the agreement to sell the pesticide “with the intention that at least a portion of the product be disposed of during the transfer process.”
“Reasonable Apportionment” of Cleanup Costs
The Court’s second holding is of potentially greater significance and dealt with whether the Burlington Northern and Santa Fe railroad companies (the Railroads) could be held jointly and severally responsible for the entire cleanup as co-owners of a portion of the property on which B&B conducted its business. The district court apportioned 9 percent of the total cost to the Railroads based on three factors: the size of the Railroads’ parcel, the amount of time B&B leased the parcel, and the volume of hazardous-substance-releasing activities that had taken place on the parcel. The Ninth Circuit reversed the district court’s finding, holding that the Railroads could be held liable for all costs. The Supreme Court reversed the Ninth Circuit, noting that CERCLA does not contain language establishing the concept of joint and several liability. The Court reinstated the district court’s decision, finding that the facts in the record “reasonably supported the apportionment of liability.” The Supreme Court’s holding may make it easier for a party to establish that cleanup costs should be apportioned and that joint and several liability should not be imposed.
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