U.S. v. Burlington Northern & Santa Fe

Mar 25: In the U.S. Court of Appeals, Ninth Circuit, Case No. 03-17125, 03-17153, and 03-17169. In this important and complicated opinion, a now-defunct company, Brown & Bryant, Inc. (B&B), owned and operated a facility at which toxic chemicals were stored and distributed. Part of the land on which the chemical operation was located was owned by two railroad companies (the Railroads), and some of the chemicals used by B&B were supplied and delivered to the facility by Shell Oil Company (Shell). Because toxic chemicals remaining at the facility threatened groundwater and may continue to do so in the future, U.S. EPA and the State of California’s Department of Toxic Substances Control (DTSC) spent a considerable amount of money to clean up the site and may need to spend more in the future.

The two agencies sought to recover these response costs under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), but the district court held the Railroads and Shell liable for only a minor portion of the total cleanup costs. B&B was defunct by that time, and so could not contribute to the cleanup costs. The agencies were thus "left holding the bag for a great deal of money." Seeking to hold the Railroads and Shell jointly and severally liable for the entire judgment, the agencies appealed. Shell cross-appealed, claiming that it was not an “arranger” under CERCLA, § 9607(a)(3), and therefore is not a party on whom any cleanup liability can be imposed.

In the latest action, the Ninth Circuit issued an order stating, "The full court has been advised of the petitions for rehearing en banc. A judge of the court requested a vote on en banc rehearing. The majority of the active judges have voted to deny rehearing the matter en banc. . . The panel has voted to amend its opinion and to deny appellees’ petitions for rehearing with the following amendments. The opinion filed March 16, 2007 [See WIMS 3/19/07] and amended September 4, 2007, published at 502 F.3d 781 (9th Cir. 2007), is further amended. . . [with 21 specific amendments] No further petitions for rehearing or rehearing en banc will be entertained."

The final opinion concludes, "The district court erred in determining that the harm in this case could be apportioned on this record. Given the district court’s erroneous approach and the paucity of record evidence, there is no reasonable basis for apportioning the damages attributable to the Railroads’ activity. Shell’s liability is a closer call, but the evidence on the record in that regard is also insufficient to support apportionment.
"The district court followed the proper analysis in finding that Shell is liable as an arranger. Shell arranged for the sale and transfer of chemicals under circumstances in which a known, inherent part of that transfer was the leakage, and so the disposal, of those chemicals.

"We therefore reverse as to the district court’s finding on apportionment. We affirm the district court’s findings regarding both the Railroads’ and Shell’s liability. The Railroads and Shell are jointly and severally liable for the harm at the Arvin site, except with regard to the so-called 'Dinoseb hot spot.' We remand for further proceedings not inconsistent with this opinion."

A strong dissent from the order denying the petition for rehearing en banc joined by seven justices indicates, "The panel applies CERCLA in a novel and unprecedented way to impose impossible-to-satisfy burdens on CERCLA defendants. The panel’s interpretation of CERCLA 'arranger' liability creates intra- and inter-circuit conflicts in an area of the law where uniformity among circuits is of paramount importance. . . Further, the panel’s unreasonable application of CERCLA apportionment law imposes joint and several liability on CERCLA defendants where Congress did not so intend. . . The panel’s recent amendments to its opinion do take a step in the right direction by aligning the Ninth Circuit with our sister circuits on CERCLA apportionment law. . . But although the panel’s amended opinion pays lip-service to the Restatement test, the panel then proceeds effectively to disregard it. . .

"True, the land on which the facility operator spilled the toxic fluids encompassed only 4.7 acres. But the panel’s legal errors will spread over this Circuit’s nine states and 1.3 million square miles, to lots large and small. I respectfully dissent from our decision not to rehear this case en banc."

Access the complete order, opinion and dissent (click here).