Ryan Whaley Coldiron Shandy

In a case decided May 4, 2009, the United States Supreme Court held that (1) CERCLA Section 9607(a)(3) “arranger liability” only attaches to a party that takes intentional steps to dispose of a hazardous substance, meaning that mere knowledge of continuing spills and leaks is insufficient grounds for liability; and (2) liability under CERCLA Section 107 is “divisible” where the record reasonably supports the apportionment of liability.

In Burlington Northern & Santa Fe Railway Co. v. United States and Shell Oil Co. v. United States, an agricultural chemical distributor expanded its operations onto a parcel owned by Burlington Northern. As part of its business, the distributor purchased and stored pesticides from Shell. Over time, many of the chemicals spilled during deliveries. EPA and the California state environmental agency discovered the contamination, and by 1998 had spent over $8m to clean up the site. When the agencies sued Burlington Northern and Shell for response costs (the distributor had gone bankrupt), the district court found them liable. Specifically, Burlington Northern was liable as an owner of a portion of the overall site, and Shell was liable as an “arranger” for its role in delivering pesticides to the site.

Having found liability and legal divisibility of the harms, the district court then ruled that the portions that each defendant contributed to the overall harm at the site were divisible in fact. Based on the percentage of surface area at the site owned by Burlington Northern, the duration of its ownership vis-à-vis the contamination, and the contribution of the chemicals spilled on Burlington Northern’s parcel to the overall harm, along with a factor accounting for math error, the court affixed 9% of the liability for the total cleanup costs to Burlington Northern. Based on an estimate of contribution to the overall harms from spills of Shell’s pesticides on delivery, the court affixed 6% of the liability for the total cleanup costs to Shell. While the Ninth Circuit Court of Appeals upheld the ruling on liability, it ruled that the evidence in the record did not support the divisibility in fact of the cleanup costs.

While the Supreme Court agreed with the trial court with respect to Burlington Northern’s liability under Section 107, it applied the ordinary meaning of the word “arrange” – a term that CERCLA does not define – to hold that “arranger liability” requires an element of intent. Although knowledge of leaks and spills may be used as evidence that a PRP intended to dispose of hazardous wastes, knowledge alone does not satisfy the intent element required for “arranger liability.”

In the other portion of the opinion, the Supreme Court affirmed the growing trend among the Courts of Appeals in favor of dividing Section 107 liability “when two or more persons acting independently caus[e] a distinct or single harm for which there is a reasonable basis for division . . . .” In this case, although the evidence in the record did not yield exact determinations of apportioned harm, it did provide a reasonable basis for affixing 9% of the cleanup costs on Burlington Northern. So the Supreme Court reversed the Ninth Circuit and reinstated the district court’s findings of fact as to Burlington Northern’s proper portion of the cleanup costs. The Supreme Court was careful to note that equitable considerations do not play a role in divisibility, as they only arise under Section 113(f) contribution claims, not Section 107 claims.