Articel on Supreme Court's recent hazardous waste decision

1. ~~AY, JULY 10, 2009 l'itullorklatulout I NYLJ.(OM
Qutside(ounsel
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U.S..Supreme CourtToughens
Burdens of ptooflJnder C'ERCLA'
but it owns the raw materials
Supreme Court rocked that it provides to a formula-
the CERCLA world in By tor, maintains control over the
' Burlington Northern and ' Stanley N. formulation of the final product,
Santa Fe Railway Come
'0 n May 4, 2Ò09, the U.S. Alpert and during that process materi-
pany v. llnited States, i Two major als are disposed of. That's a good
issues were addressed. First, how case for liabilty.3 On the other
much proof is required before a hand, if all that oil companies do
company is labeled ar "arranger" upon broad classes of potentially is deliver petroleum products to '
for disposal of hazardous wastes responsible paries: òr PRPs, one service stations, without much,
under the Comprehensive Environ- of which is: further facts, a court may find'
mental Response, Compensation, (3) any person who by con-
there is not enough acttialcontrul
and Liabilty Act (CERCLA), the tract, 'agreement, or other- to impose arranger liabilty for"
federal Superfund law? The answer wise arranged for disposal or , spils at the service stations on
is more than before. Second, how treatment, or arranged with those supplying companies.4
much proof must a single potential- att'nsporter for transport'
ly responsible party (pRP) under for disposal or treatment, of Raising the Bar
CERCLA present before a courJ will hazardous substances owned
find its liabilty divisible and refuse or possessed by suèh person, Within the arranger,statutory-
to apply the general rule of joint by' any other party or entity, framework, Burlington Northern
and several liabilty? The answer at any facilty or incineration was a close call. Foryears,Sliell'
,is less than before. vessel owned or operated by , delivered hazardous chemical
In BurlÚlgton Northern, the CQur another party or entiy and' pesticides to Brown & Bryant, a:
freed Shell Oil Company of arrang- containing, such hazardous company in the business of dis~
er liabilty for pesticide disposal substances. ...2 tributing them by sprè.ading the'
even though Shell chose tosellits
pesticides on customers'fars. In"
chemicals in bulk in a manner that the mid-1960s, Shell made a busk
it knew was resulting in spils anq ness decision to stop delivering.
Knowledgethat spills in 55-gallon drums thatènsured
leak on the purchaser's property.
The èourt also disagreed with the . would result is appropriate against leakage during delivery
U.S. Court of Appeals for the Ninth evidence ofthe arranging
and transfer, instead requiring
Circuit for insisting on joint and' B&B to keep bulk storage facilities
entity's intent, but mere that leaked in the ordinar course'
several liabilty for the two railroad
owners of a portion of the prop~rt knowledge of spills is not of business, which Shellknew.Cal-
when, based on a thin fact record, ifornia and the U.S. Deparment of.
suffcient to impose Justice said this fit squarely under
the lower court was ,able to find
divisible harm. CERCLA liability. CERCLA liabilty for "arrang(ing)
On its face, it looks like the for disposal" because Shell knew
Ceurt is itching for taxpayers to Once an entiy is identified asa. that the' deliveries would result
foot the bil to clean up PRP-chal-' PRP"it may be required by admin- '" in spilling. The governments con- ,
lenged sites: the Court applied a istrative order or court proceeding ceded that the purpose of the
high standard of evidence before it, to clean upa contaminated area or transaction was the. deliverynf
would impose aranger liabilty and a useful product, but maintained
it may be required to reimburse
applied a low standard of evidence the government for its past and, that deliveries with knowledge
to permit th~ avoidance of joint and . future response costs, including that spils and leak would result
several liabilty. On closer examina- oversight costs. There isa huge was suffcient to impose CERCLA
tion, these cases remain intensely incentive, for a PRP to obey and, arranger liabilty.
fact -specific,;al)d the. tria! team take over the cleanup itself, in Par The Court raised the bar for the
at.~~ngtA tBhl(;~JiabiJity. when~, dl.etn- pote.nti~penalties that iiay governments to impose liabilty.
liabilty should lie must investigate be imposed and hi påitbêcaùse it Yes, knowledge that spils would
well and present the.facts well in always costs far moreto remediate result is appropriate evidence
light of the heightened scrutiny when the EPAcleans up a site: of the arranging entiy's intent,
Burlington Northern implies. ,Companies that directly but mere knowledge of spils is
CERCLA imposes strict liabilty arrange for the disposal o( not sufficient to impose CERCLA
for environmental contamination Wastes are plainly within the liabilty. The evidence as a whole
CERCLA cleanup liabilty scheme; must show an intenttoenter into
Thè issue in Burlington Northern an arrangement for disposal of tlle
d STANLEY N. ALPERTÎs environmental of
, wastes. Shellinust have entered
related to more ,subtle "arrang~
counsel to Constantine Cannon and fore
, into the arrangement with B~..
ern behavior. For example, let's
mer chiefofEnvironmentalUtigation at say a pesticide company is not with the intention that at lease
the U.S. Attorney:S 9(fce,in (hi: Eastern' a portion qqb~"prR9HFt~Rß~il "
~~T~i~J~V~pt;4~i~r~h~aJJf~f~) ~e disPo~~1; of ~Jr~l:g 'uvt,1ffeE ql
District ôfNew'York.'dd" L'''''' ' ,', ' "l:" _:...- _"''-.. - '_'j'; "',__' '-'" '--".
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, ,

2. Outside Counsel/Disciplinary ProceedinQs '1"'1
whether such settlements,wil three of the chemicals driving the
Burdens be fewer under the new regi¡Ié. remediation were disposed of on
the railroad portion. Hence, usIng'
(( Continued from page 4
Apportioning liabi.lity a multiplier, the tria: court found it
the transfer process. The Court was possible to apportion liabilty
turned to its own evlIluation of The courts reviewing CERCl- and it relieved the railroads from
the evidence, and found that liabilty decided early on, based the normal burden of joint and
while Shèllwas aware of regular, on the legislative history, that the several liabilty. The Ninth Circuit,
minor spils, it had nonetheless broad liabilty mandate required reversing, found the evidence to
taken affirmative steps to require that under common law principles be insufficiently exact to answer
the purchaser to reduce the likeli- joint and several liabilty must be whether the contamination from
hood of spils. On that evidence, imposed, unless the PRP can meet the railroad portion of the site
the Court held, no "arrangement~ the difficult burden of proving wàs connected to the présenceof
for "disposal" had occurred, and. that Its coìitamination is divisible contaiination across the site and
Shell was not liable at all. from the rest.6 In the second major hence not really "divisible."
In dissent, whHe agreeing it was holding in Burlingon Northern, the '. Taking three pages to reject
ac10se case against Shell,Justke Supreme Court leap-froggedover . the Ninth Circuit's long, scholarly
Ruth Bader Ginsburg sided with the Ninth Circuit and back to the ' discussion, the Supreme Court
the Ninth Circuit and the trial trial court's ç1ecision to do rough acknowledged the weakesses in .
court and quickly spun the facts justice byusiiìg uncertain facts to the evidence to allow apportion-.
to qualiy Shell as an arranger. apportion liabilty, finding divjsibil" ment but affrmed the denial of
Shell chose the manner of deliv- ity where it might not havebeeii joint andseveralllabilty anyway,
ery. It chose the fact that owner- found before. holding the apportionment evi-
ship of the chemicals transferred Two railroads had leased. a dence to be suffcient.
The Court mClY have been reach~
ing'to do fairness tothe railroad
defendants whose role ~ lessors
Aft~r 'Burlington.Northern; counsel s'eeking to successfully
in the contamnation was relatively
impose arranger liability mùst carefully probe all aspects of minor. But again, a critièal view of
intent, developing evidence of the reasons for certain the Court's decision finds the evi~ ,
dentiarystandards tightened fori
commercial transactions and how those transactions proving liabilty, as an arranger,' i
demonstrate intent to enter into an arrangement to dispose and loosened when another par !
exoneration of a
of at least some of the' sold chemicals.' . , . seeks the partial
divisibilty finding. J.ustice GinS':
burg would have reipanded for
upon arrival at the destltiation, portion of the facilty property a full hearing on whether divis-
a factOr which Justice Ginsburg. to B&B at the. time that disposalof ibilty was really p'ossible, as the
called "eminently shipper-fi:x~ the chemica:s took place,pla:cing governments contended thatthe'
able." While "mere knowledge" them squarely under CERCLA's trial court's decision to make an
may not suffce, useful product landowner .liabìlty. The. Ninth apportionment calculation had
sales, Justice Ginsburg held, did Circuit rec'ognized that joint come without warning and, with"
not immunize Shell. from CER- and several liabilty. may result out the opportunity to present
CLAliabiltygiven the control in unfairness; particularly where evidence. .
reIn Shell held over the mode of the property owner pary did not The lesson here is as with the
delivery and transfer. itself create the contamination arranger issue: practitioners must
After Burlington Northern, and may have few or norècords . dedicate increaed energ to devel-
counsel seeking to successfully of what was disposed of where oping the liabilty facts to meet
Impose arranger liabilty must, and when, meáning its burden of the heightened evidentiary chalc
carefully probe all aspects of proving divisibility is difficult to lenges posed now by the Supreme
intent, developIng evidence of meet. But Congress mandated this Court.
the reasons for certain commer- structure, and the circuit cpurt ........._..............~...~
cial transactions and how those emphasized that any stCltutorily
transactions demonstrate intent responsible party who gained 1. --,ö.,~.'2ÔÔ!j"WL'nì;j84g"'(M1?'r."
2009).
,.toenter)nto an arrangement to: some benefitfromthe PQIlution 2, 42 U,S,C, §9607(a) (emphasis súp;
of the
. dispose of at least some 'must bear the mantle of joint and ' plied).
3, United States v, Aceto Agcultural
sold chemicals. Previously this severalliabilty (subje~t to a hear- ' Oiemicals Corp., 872 F,2d 1373 (8th Clr,
was taken fat more for granted; Ing on apportionment inacon- 1989).
In the, Long Island Mattlace . tributlon phase) to keep the bil 4, Generdl Electrc v. MMCO Transmis-
sions. 962 F.2d 281 (2d Clr 1992), Common
Superfund case, hundreds.. of . from being foisted on the totâlly law product liabilty may, however, be a dif-
companies had arranged for' innocent U.S. taxpayer.1 '. .... ferent mailer. inteons of Iiabilty,for leak
the disposal of wastes because.. . Without reài proof ofdivisiblle oil
at Im1ependent service stations. as the
Industry has found in the MTBE products ii-'
they sent almost"empty cheini': . ity having been presented, the abilty multi-districtlitigation before Judge
caldrums back to. the site with trial court apportioned bMeqoÎi
knowiedge that, In re.:uslng the . loose anduncertalnfigu~ès;t,e
.dru' s;the chenil~al distributo ,railroadportionofthe prope .'
2005), .
Shira Schelndlln In New Yorko In re MTE
Liigtion. 379 F.Supp,2d 348 (S.D.N.¥.
5, See http:llww,constantinecannon:
comlP4ilet~l~P~rtarlChem,ii;a1wast~,,)i:¡;, (¡
. " . tii'~'g.r~!JS a lt'19'P~.t~èn,tql tbe.Qýèr ;;
, ................'
........ .0nlHégÍ'()un 6. Uni(eM~ate.~J?;,9hern Qrnf'.G'I'P., ga
h'edtâIlraad'leasë to B&B
F. Supp, 802 (5,D, Ohio 1983).
ylf6ÛiêÕüipanies settièdtò., ¡45 per~~nt of the time thatB&B. 7.520 F.3d 918. 94lJ1 (9thCi, 2008). i
åyoidan arranger triaL. Query' .operated; and,' only two out of