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Burlington Northern v. United States: CERCLA Arranger Liability Requires Intent to Dispose of Hazardous Substances

Beveridge & Diamond, P.C., May 5, 2009

On May 4, 2009, the United States Supreme Court issued the Court’s most recent statement on the scope of liability and the apportionment of damages under the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (“CERCLA”).  Burlington N & S.F. R. Co. v. United States, No. 07-1601 (May 4, 2009).  With respect to scope of CERCLA liability, the Court held that an entity that sells a product has not “arranged for disposal” of that product for CERCLA purposes unless the entity intended that at least a portion of the product be disposed of during the transfer process by one or more of the methods described in 42 U.S.C. § 9607(a)(3).  On the issue of apportionment, the Court upheld as reasonable the trial court’s method for dividing damages among multiple defendants.

In Burlington Northern, the Supreme Court addressed whether Shell Oil was potentially responsible as an “arranger” under CERCLA where it sold a product and knew that the product would spill or leak during the transfer of the product from buyer to seller.  The Court concluded that because “arrange” implies action directed to a specific purpose, “under the plain language of the statute, an entity may qualify as an arranger under §9607(a)(3) when it takes intentional steps to dispose of a hazardous substance.”  Consequently, “Shell’s mere knowledge that spills and leaks [occurred during the transfer process] is insufficient grounds for concluding that Shell ‘arranged for’ the disposal” of a hazardous substance within the meaning of §9607(a)(3).

In its discussion of apportionment, the Court observed that CERCLA does not mandate joint and several liability in every cost recovery case.  Citing the Restatement (Second) of Torts, the Court noted that “apportionment is proper when ‘there is a reasonable basis for determining the contribution of each cause to a single harm.’”  CERCLA defendants seeking to avoid joint and several liability must establish that a reasonable basis for apportionment exists.  Although none of the parties before the trial court attempted to establish that the damages were subject to apportionment, the trial court itself concluded that the case “was a classic ‘divisible in terms of degree’ case.”  The trial court apportioned 9% of the damages to two railroad defendants, ultimately leaving the government to absorb the remaining 91% of the total damages.  The trial court based its apportionment on the percentages of land area owned by the respective defendants, the time of ownership, and the types of hazardous substances used by the defendants in their relation to the contamination at the site.  In Burlington Northern, the Supreme Court upheld the trial court’s basis for apportionment as reasonable, even though it was inexact and at least somewhat based on estimates rather than empirical evidence.

For more information about the impact of this decision, please contact Rob Brager (rbrager@bdlaw.com, (410) 230-1310)) or Timothy M. Sullivan (tsullivan@bdlaw.com, (410) 230-1355)).

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