May 04, 2009

Superfund Liability

Posted on May 4, 2009 by Theodore Garrett

In a stunning 8-1 decision, the Supreme Court changed the landscape of Superfund liability, holding that a company’s mere knowledge of spills in the course of delivery of a product is not a sufficient basis for liability as an arranger, and that defendant may avoid joint and several liability based on reasonable evidence supporting apportionment. Burlington Northern & Santa Fe Railway co. et al. v. United states et al. (No. 07–1601, May 4, 2009.)

In 1960, Brown & Bryant, Inc.(B&B), a now defunct agricultural chemical distributor, began operating on a parcel of land in California and expanded on to an adjacent parcel owned by two railroads. As part of its business, B&B purchased and stored various hazardous chemicals, including a pesticide supplied by Shell Oil Company. Many of these chemicals spilled during transfers and deliveries and equipment failures, resulting in soil and ground water contamination. In 1989, the EPA and the state cleaned up the site and then brought suit to recover their costs against Shell and the Railroads.

The District Court ruled in favor of the Governments, finding that both the Railroads and Shell were potentially responsible parties under CERCLA—the Railroads because they owned part of the facility and Shell because it had “arranged for disposal . . . of hazardous substances,” 42 U. S. C. §9607(a)(3). The District Court apportioned liability, holding the Railroads liable for 9% of the Governments’ total response costs, and Shell liable for 6%. On appeal, the Ninth Circuit agreed that Shell could be held liable as an arranger under §9607(a)(3). Although the Court of Appeals agreed that the harm in this case was theoretically capable of apportionment, it found the facts present in the record insufficient to support apportionment, and therefore held Shell and the Railroads jointly and severally liable for the Governments’ response costs. 

Arranger Liability. The Supreme court, in an opinion by Justice Stevens, held that Shell is not liable as an arranger for the contamination at the Arvin facility. Because CERCLA does not specifically define what it means to “arrang[e] for” disposal of a hazardous substance, the phrase should be given its ordinary meaning. In common parlance, “arrange” implies action directed to a specific purpose, thus under §9607(a)(3)’s plain language, an entity may qualify as an arranger when it takes intentional steps to dispose of a hazardous substance. The facts found by the District Court do not support the conclusion that Shell entered into sales with the intent that at least a portion of the product be disposed of during the transfer process. The evidence shows that Shell was aware that minor, accidental spills occurred during transfer from the common carrier to B&B’s storage tanks; however, it also reveals that Shell took numerous steps to encourage its distributors to reduce the likelihood of spills. Thus, Shell’s mere knowledge of continuing spills and leaks is insufficient grounds for concluding that it “arranged for” disposal. 

Apportionment. The Supreme Court also found that the District Court reasonably apportioned the Railroads’ share of the site remediation costs at 9%. Calculating liability based on three figures—the percentage of the total area of the facility that was owned by the Railroads, the duration of B&B’s business divided by the term of the Railroads’ lease, and the court’s determination that only two polluting chemicals spilled on the leased parcel required remediation and that those chemicals were responsible for roughly two-thirds of the remediable site contamination—the District Court ultimately determined that the Railroads were responsible for 9% of the remediation costs. The District Court’s detailed findings show that the primary pollution at the site was on a portion of the facility most distant from the Railroad parcel and that the hazardous chemical spills on the Railroad parcel contributed to no more than 10% of the total site contamination, some of which did not require remediation. Moreover, although the evidence adduced by the parties did not allow the District Court to calculate precisely the amount of hazardous chemicals contributed by the Railroad parcel to the total site contamination or the exact percentage of harm caused by each chemical, the evidence showed that fewer spills occurred on the Railroad parcel and that not all of them crossed to the B&B site, where most of the contamination originated, thus supporting the conclusion that the parcel contributed only two chemicals in quantities requiring remediation. 

STEVENS, J., delivered the opinion of the Court, in which ROBERTS, 

C. J., and SCALIA, KENNEDY, SOUTER, THOMAS, BREYER, and ALITO, JJ., joined. GINSBURG, J., filed a dissenting opinion. The following is a link to the opinion:

Tags: Hazardous Materials

Hazardous Materials

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