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Burlington N. & Santa Fe Ry. v. United States - 556 U.S. 599, 129 S. Ct. 1870 (2009)

Rule:

The Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C.S. § 9601 et seq., imposes strict liability for environmental contamination upon four broad classes of potentially responsible parties: (1) the owner and operator of a vessel or a facility; (2) any person who at the time of disposal of any hazardous substance owned or operated any facility at which such hazardous substances were disposed of; (3) any person who by contract, agreement, or otherwise arranged for disposal or treatment, or arranged with a transporter for transport for disposal or treatment, of hazardous substances owned or possessed by such person, by any other party or entity, at any facility or incineration vessel owned or operated by another party or entity and containing such hazardous substances; and (4) any person who accepts or accepted any hazardous substances for transport to disposal or treatment facilities, incineration vessels, or sites selected by such person, from which there is a release, or a threatened release which causes the incurrence of response costs, of a hazardous substance. 42 U.S.C.S. § 9607(a). Once an entity is identified as a potentially responsible party, it may be compelled to clean up a contaminated area or reimburse the government for its past and future response costs.

Facts:

The Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) is designed to promote the cleanup of hazardous waste sites and to ensure that cleanup costs are borne by those responsible for the contamination. In 1960, Brown & Bryant, Inc. (B&B), an agricultural chemical distributor, began operating on a parcel of land located in Arvin, California. B&B later expanded onto an adjacent parcel owned by petitioners Burlington Northern and Santa Fe Railway Company and Union Pacific Railroad Company (Railroads). As part of its business, B&B purchased and stored various hazardous chemicals, including the pesticide D-D, which it bought from petitioner Shell Oil Company (Shell). Over time, many of these chemicals spilled during transfers and deliveries, and as a result of equipment failures.

Investigations of B&B by the California Department of Toxic Substances Control and the federal Environmental Protection Agency (Governments) revealed significant soil and ground water contamination and in 1989, the Governments exercised their CERCLA authority to clean up the Arvin site, spending over $8 million by 1998. Seeking to recover their costs, the Governments initiated legal action against Shell and the Railroads. The District Court ruled in favor of the Governments, finding that both the Railroads and Shell were potentially responsible parties under CERCLA--the Railroads because they owned part of the facility and Shell because it had "arranged for disposal . . . of hazardous substances," 42 U.S.C. § 9607(a)(3), through D-D's sale and delivery. The District Court apportioned liability, holding the Railroads liable for 9% of the Governments' total response costs, and Shell liable for 6%. On appeal, the Ninth Circuit agreed that Shell could be held liable as an arranger under § 9607(a)(3) and affirmed the District Court's decision in that respect. Although the Court of Appeals agreed that the harm in these cases was theoretically capable of apportionment, it found the facts present in the record insufficient to support apportionment, and therefore held Shell and the Railroads jointly and severally liable for the Governments' response costs.

Issue:

Was the judgment of the Court of Appeals that Shell and the Railroads were jointly and severally liable for the remediation costs proper?

Answer:

No

Conclusion:

The U.S. Supreme Court first held that Shell’s knowledge of minor, accidental spills at the site was insufficient to establish that Shell arranged for the disposal of hazardous substances within the meaning of CERCLA, since there was no showing that Shell took intentional steps to dispose of the substances, and in fact took steps to encourage reduction of the spills. Also, apportionment of the owner's liability was warranted since fewer spills occurred on the owner's property, and the owner's liability was capable of apportionment based on the size of the parcel leased to the distributor, the duration of the lease, and the types of contamination.

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