Tuesday, May 5, 2009

High Court Rules 8-1 On Superfund Liability Issues

May 4: The U.S. Supreme Court decided the consolidated cases of Burlington No., & Santa Fe R. Co., v. United States, (Docket No. 07-1601); and Shell Oil Co., v. United States (Docket No. 07-1607) on appeal from the U.S. Court of Appeals, Ninth Circuit [See WIMS 2/25/089]. The 8-1 opinion was delivered by Justice Stevens and supported by Justices Roberts, Scalia, Kennedy, Souter, Thomas, Breyer and Alito. Justice Ginsburg filed a dissenting opinion. In these cases involving cleanups under the Comprehensive, Environmental, Response, Compensation, and Liability Act (CERCLA), the High Court explained that the cases "raise the questions whether and to what extent a party associated with a contaminated site may be held responsible for the full costs of remediation."

The law allows the government to obtain reimbursement for the costs of remediating hazardous waste sites from the owners and operators of land on which a disposal of hazardous substances has occurred. However, because even passive landowners may be subjected to CERCLA liability, Congress removed language from early CERCLA bills mandating joint and several liability for multiple defendants who own or operate a particular site. In the Burlington case, the Ninth Circuit nevertheless imposed joint and several liability for the entire cost of a facility's remediation on two landlords, even though they owned only a portion of the overall site for a fraction of its period of operation. In the Shell Oil case, the questions presented are whether liability for "arranging" for disposal of hazardous substances under CERCLA may be imposed upon a manufacturer who merely sells and ships, by common carrier, a commercially useful product, transferring ownership and control to a purchaser who then causes contamination involving that product.

In the Ninth Circuit, the final opinion concluded, "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."

The Supreme Court concluded, "that the Court of Appeals erred by holding Shell liable as an arranger under CERCLA for the costs of remediating environmental contamination at the Arvin, California facility. Furthermore, we conclude that the District Court reasonably apportioned the Railroads’ share of the site remediation costs at 9%. The judgment is reversed, and the cases are remanded for further proceedings consistent with this opinion." In her dissent, Justice Ginsburg said, "Although the question is close, I would uphold the determinations of the courts below that Shell qualifies as an arranger within the compass of the. . . CERCLA."

Access the complete 23-page majority opinion and dissent (
click here). Access the transcript of the oral arguments (click here). Access the Supreme Court docket for 07-1601 (click here). Access the Supreme Court docket for 07-1607 (click here). Access the various merit and amicus briefs filed by the parties (click here, scroll down to February 24). Access more information on the SCOTUS Wiki (click here). Access links to various media reports on the case (click here).