May 04, 2009

Supreme Court Decides Burlington Northern & Santa Fe Railway Co. v. United States

On May 4, the Supreme Court decided Burlington Northern & Santa Fe Railway Co. v. United States, No. 07-1601.

The Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) imposes liability on a number of potentially responsible parties (PRPs) for the cleanup of hazardous waste. Among the classes of PRPs is "any person who . . . arranged for disposal . . . of hazardous substances owned or possessed by such person." 42 U.S.C. § 9607(a)(3).

In Burlington Northern, the Court considered whether Shell Oil Company could be held liable as an "arranger" because it sold new chemicals as a product to a company that spilled or leaked part of them in the course of using them, and because Shell continued selling the chemicals even after it learned of the leaking. The Court held that Shell was not liable. "Although we agree," wrote the Court, "that the question whether § 9607(a)(3) liability is fact intensive and case specific," nonetheless "under the plain language of the statute," an entity may qualify as an arranger under § 9607(a)(3) only "when it takes intentional steps to dispose of a hazardous substance." Although knowledge that a product "will be leaked, spilled, dumped, or otherwise discarded may provide evidence of the entity's intent to dispose of its hazardous wastes, knowledge alone is insufficient to prove that an entity ‘planned for' the disposal, particularly when the disposal occurs as a peripheral result of the legitimate sale of an unused, useful product." Under the facts of this case, there was no evidence that Shell intended to dispose of its new chemicals by selling them to a customer, and so it was not liable as an arranger.

A second question presented in Burlington Northern was whether the liability of two railroads who owned a portion of the property that was contaminated was properly limited to only 9 percent of the total remediation costs. The Court embraced the approach of the district court decision in United States v. Chem-Dyne Corp., 572 F.Supp. 802 (S.D. Ohio 1983), holding that the starting point for the apportionment analysis is § 433A of the Restatement (Second) of Torts. Under § 433A(1)(b), apportionment is proper when "there is a reasonable basis for determining the contribution of each cause to a single harm." "Equitable considerations play no role in the apportionment analysis," the Court held. "[R]ather, apportionment is proper only when the evidence supports the divisibility of the damages jointly caused by the PRPs." The Court found a sufficient basis for apportioning liability on the record before it, based on the railroads' length of ownership of their parcel of land, the size of the railroads' parcel compared to the overall contaminated parcel, and the volume of relevant activities on the railroads' land compared to the volume on the rest of the parcel.

Justice Stevens delivered the opinion of the Court, in which Chief Justice Roberts and Justices Scalia, Kennedy, Souter, Thomas, Breyer, and Alito joined. Justice Ginsburg filed a dissenting opinion.

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