Summary of a Recent
Judicial
Development in
Environmental Law
"Arranger" Liability under CERCLA
Walt McCarterNational AgLaw Center Research Associate
Summary of Decision
In Burlington Northern & Santa Fe Railway Co. v. United States, 129 S. Ct. 1870 (2009), the United States Supreme Court held that an oil company was not liable for environmental remediation costs as one who "arranged for disposal of hazardous substances" under the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA), because the oil company did not act intentionally to "dispose" (i.e., spill) hazardous chemicals.
Background
The Environmental Protection Agency (EPA) and the California Department of Toxic Substances Control (DTSC) cleaned up environmental pollution on land owned by the Burlington Northern & Santa Fe Railway Company, and filed an action for reimbursement of the cleanup costs pursuant to CERCLA, 42 U.S.C. §§ 9601-9675. Id. at 1872. The railroad company in turn sought contribution for the cleanup costs from the owner of an agricultural chemical manufacturing plant located on the land, and the actions were consolidated. Id. The chemical manufacturer purchased and stored various hazardous chemicals, including pesticides it bought from Shell Oil Company (Shell), which had spilled or leaked over time and contaminated soil and groundwater in the area. Id. The district court held that the railroad and Shell were both liable for cleanup costs under CERCLA, as the owner of the property and as an "arranger" of disposal of hazardous substances, respectively, and apportioned liability at 9 percent for the railroad and 6 percent for Shell. Id. at 1872-73. On appeal, the Ninth Circuit affirmed on the issue of liability as an "arranger" under CERCLA, but held that the facts were insufficient to support apportionment of fault and thus held both defendants jointly and severally liable, and all of the parties appealed. Id. at 1873.
Analysis and Holdings
The United States Supreme Court held that Shell was not liable as an "arranger" under CERCLA because under the plain meaning of 42 U.S.C. § 9607(a)(3), to "arrange" for disposal of hazardous substances means that an entity took intentional steps to dispose of a hazardous substance. Id. The facts indicated that although Shell was aware of minor, accidental spills, it took numerous steps to reduce the number of spills and was therefore not acting intentionally to "arrange" such disposals. Id. The Court also held that the railroad's 9 percent liability for remediation costs was a reasonable apportionment. Id. The district court had based its calculations on three factors: percentage of the area owned by the railroad, the duration of the chemical manufacturer's business divided by the term of the railroad's lease, and the type and source of the chemicals spilled that required remediation. Id. The district court had determined that chemical spills on the railroad's property contributed to only 10 percent or less of the total contamination, some of which did not require remediation, and therefore the Supreme Court concluded that the 9 percent apportionment of liability was reasonable. Id.
In a dissenting opinion, Justice Ginsburg opined that Shell did qualify as an "arranger" under CERCLA because it "arranged" to use bulk tankers, which were more prone to leak or spill, to transfer and deliver its chemicals rather than the safer but costlier option of using 55-gallon drums. Id. at 1884-85.
The case was decided on May 4, 2009.