Court granted certiorari today in two cases of interest to the business
CERCLA — Joint and Several Liability — “Arranger” Liability
granted certiorari today in Burlington Northern & Santa Fe Ry. Co. v.
United States, No. 07-1601, and Shell Oil Co. v. United States,
No. 07-1607, consolidating two cases that together will address two
important questions concerning liability under the Comprehensive
Environmental Response, Compensation, and Liability Act (“CERCLA”), 42 U.S.C.
§§ 9601-9675. The first question is when CERCLA liability may be imposed
under the so-called “arranger” theory of liability. The second is whether
and when liability may be apportioned among multiple potentially liable
Court resolves those issues will likely have significant implications for
landowners and for producers of hazardous substances, particularly when
their lessees or customers go bankrupt after having caused environmental
allows state and federal authorities to clean up contaminated areas and
later seek to recover the clean-up costs from those whom the statute makes
potentially liable for the contamination. 42 U.S.C.
§ 9607(a). In addition to the owners and operators of a contaminated
property, any person who “arranged for disposal or treatment … of hazardous
substances [it] owned or possessed” is potentially liable. Id. at
§ 9607(a)(3). Furthermore, although the statute itself is silent on the
question, courts have long held that CERCLA imposes joint and several
liability on all potentially liable parties. However, every court of appeals
that has considered the question also has held that apportionment of
liability under common law principles is appropriate in at least some CERCLA
cases. See Burlington Northern & Santa Fe Ry. Co. v. United States,
520 F.3d 918, 935 (9th Cir. 2008) (citing cases).
petitions that were granted today arise from a case in which two railroad
companies owned part of the land on which a facility for storing and selling
agricultural chemicals was located. The operator of that facility, Brown &
Bryant (B&B), became insolvent. The Environmental Protection Agency (EPA)
and the State of California then sought to impose liability on the railroad
companies for clean up costs at the site. It also sought to impose liability
on Shell Oil Company, which had sold some of the contaminants to B&B and
shipped them by common carrier. In the decision below, reported at 520 F.3d
918, the Ninth Circuit held that both sets of defendants were liable.
liability on an “arranger” theory, the court adopted a broad interpretation
of the relevant statutory text, § 9607(a)(3), holding that liability should
be imposed on the seller of a hazardous substance when “disposal of
hazardous wastes is a foreseeable byproduct” of the sale, even if
disposal is not the purpose of that sale. 520 F.3d at 948 (emphasis added).
Thus, according to the Ninth Circuit, “an entity can be an arranger even if
it did not intend to dispose of the product.” Id. at 949. Other
Circuits, by contrast, have adopted a far less expansive view of the
statutory language and held that intent to dispose is a predicate to
liability. See, e.g., United States v. Cello-Foil Products, Inc.,
100 F.3d 1227, 1231 (6th Cir. 1996); Amcast Indus. Corp. v. Detrex Corp.,
2 F.3d 746, 751 (7th Cir. 1993)
issue, apportionment of liability, is significant because it affects how
much money the government can recover from a particular defendant. If
damages are apportioned, then a particular defendant is responsible only for
its portion of the overall clean-up cost; if damages are not apportioned,
then each defendant is responsible for the entire clean-up cost. The
difference between apportioned and joint and several liability is
particularly pronounced when a potentially liable party is bankrupt.
regard to apportionment of liability, the Ninth Circuit held, as have other
circuits, that liability may be apportioned in accordance with common law
principles. However, it found that apportionment was not appropriate in this
case because there was no “reasonable basis for divisibility.” 520 F.3d at
943-945. According to the Ninth Circuit’s rather exacting standard, for a
landowner to escape joint and several liability, the landowner must show
that the “discrete portions of the contamination did not originate on land
they owned at the time of the toxic disposal.” Id. at 943.
Similarly, a producer who sold the hazardous substance would have had to
prove its relative contribution to the overall contamination.
extensions of time, amicus briefs in support of the petitioners will be due
on November 24, 2008, and amicus briefs in support of the respondents will
be due on December 24, 2008. Any questions about this case should be
directed to John Hahn (+1 202 263 3346) or Andrew Tauber (+1 202 263 3324)
in our Washington, D.C. office.