Kristin Hines

March 1, 2009

On February 24th, the United States Supreme Court heard oral argument on the consolidated cases Burlington No. & Santa Fe R. Co. v. United States and Shell Oil Co. v. United States concerning apportionment of hazardous waste cleanup costs under The Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA). These cases present two primary questions: 1) whether a manufacturer of hazardous substances can be held liable under CERCLA 42 U.S.C. § 9607(a)(3) for spills or leakages that occur during product delivery to a purchaser; and 2) whether, in order to reimburse the government for the costs of remediating hazardous waste sites, a court may impose joint and several liability on potentially responsible parties (PRPs) rather than apportion damages among them, as allowed by common law when there is a reasonable basis for doing so.

The present cases arose out of an action to recover cleanup costs brought by the United States and the State of California. From the 1960s on, Brown & Bryant Company, now insolvent, had stored chemical products manufactured by other companies, including Shell Oil, on land it leased from Burlington Northern & Santa Fe Railway Company and Union Pacific Company. Due to improper handling and storage, including routine spills during delivery from Shell, chemical product leaked onto the property, causing substantial soil and groundwater contamination later discovered by the EPA. The EPA and California Department of Toxic Substances Control (DTSC) sued Brown & Bryant, Shell, and the railroads to recover the costs of cleanup under CERCLA's strict liability provision, attempting to hold the railroads liable as "owners" and Shell for "arranging" for disposal of hazardous substances (on the theory that Shell's knowledge of the routine product spills during delivery constituted "disposal").

The United States District Court for the Eastern District of California found Shell liable for 6% of the cleanup costs and the railroads liable for 9%. Brown & Bryant was at this time insolvent, however, thereby leaving the government responsible for the remainder of the costs. The DTSC and EPA appealed, and the Ninth Circuit reversed, holding the parties joint and severally liable for all costs because they had failed to show a "reasonable basis" for apportionment. Shell and the railroads petitioned the Supreme Court for certiorari, with Shell essentially contesting its designation as an "arranger" on the grounds that spills did not constitute intentional disposal, as Shell argued CERCLA requires. Both Shell and the railroads contend that the public, not them, should pick up the tab when the primarily responsible party is insolvent. The United States, on the other hand, argues that reading CERCLA more broadly comports with the legislative intent to distribute the costs of cleanup among the responsible parties --even those minimally contributing to the contamination --rather than the public.

The Supreme Court's decision is anticipated to have a significant impact on how courts will apportion CERCLA liability in the future. Manufacturers of products containing hazardous substances also await the Court's construal of "arranger," which could potentially impose significantly greater liability on sellers than has previously existed.

Sources

Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C. §§ 9601--9675 (2000).

Lauren Jones & Gary Liao, Legal Information Institute, Cornell University Law School, Burlington No. & Santa Fe R. Co. v. United States (07--1601); Shell Oil Co. v. United States (07--1607), http://topics.law.cornell.edu/supct/cert/07-1601 (last visited Mar. 1, 2009).

Adam Liptak, Justices Hear Cases on Paying for Superfund Cleanups, N.Y. Times, Feb. 25, 2009, available at http://www.nytimes.com/2009/02/25/washington/25scotus.html?_r=2&emc=eta1.

United States v. Burlington North & Santa Fe, 502 F.3d 781 (9th Cir. 2008).