Burlington Northern and Santa Fe Railway Company, et al. v. United States; Shell Oil Company v. United States

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Contents

[edit] Briefs and Documents

Docket: 07-1601; 07-1607

Issue: Whether the petitioners were incorrectly held jointly and severally liable for environmental cleanup costs under CERCLA.

Merit Briefs:

Amicus briefs

Oral Argument: Transcript

Decision: Reversed and Remanded in an opinion by Justice Stevens

[edit] Pre-Argument Articles

[edit] Argument Preview

[edit] Merits Briefs

In their merits briefs, both Shell and Burlington Northern attack the Ninth Circuit’s decision overturning the district court’s apportionment of liability. As Shell notes, Congress “expressly rejected mandatory joint and several liability” when enacting CERCLA, instead allowing apportioned liability “consistent with the common law . . . standards set forth in the Restatement (Second) of Torts.” The Ninth Circuit’s standards of proof go beyond the Restatement’s requirements of a “reasonable basis,” instead requiring a “precise calculation based on documentary support.” Thus, virtually no defendant could possibly expect to prove an apportionment of liability, essentially circumventing Congress’s intent in creating the statute.

Shell further argues that the Ninth Circuit erred in holding Shell liable as an “arranger” under CERCLA. Shell asserted three errors, any of which would be enough to reverse the lower court’s decision:

  • By disregarding the plain meaning of the phrase “arranged for,” the Ninth Circuit imposed liability on a company “that lacked any intent to make plans or preparation for the disposal of hazardous waste.”
  • The Ninth Circuit ignored that within CERCLA, the definition of “disposal” involved doing something with “waste.” In this case, liability was extended even though the pesticides in question were a useful product, not “waste.”
  • Finally, because the purchaser in this case, B&B, assumed full ownership of the pesticide once the delivery trucks entered its premises and before any transfer occurred (the transfer being when the “disposal” noted by the court occurred), the court ignored CERCLA’s ownership and possession requirements. As a result, Shell was liable “even though [it] had no control over, or involvement in, the transfer process.”

In its brief, the government emphasizes that courts of appeals have uniformly held that harm under CERCLA “is joint and several unless the defendant establishes a reasonable basis for apportioning the harm.” Because Burlington Northern and Shell “made a strategic choice to pursue a ‘scorched earth, all or nothing approach to liability,” the district court’s attempts to apportion liability were seriously flawed. While the court might have felt bound by equitable principles to apportion the liability—because of the insolvency of B&B—the Restatement actually holds that insolvency of a responsible party actually “weighs against rather that in favor of apportionment.” The government also notes that the district court’s analysis, while long, still relied on a number of unsubstantiated assumptions.

Finally, the government disputes each of the three arguments made by Shell regarding its arranger liability. First, because disposal under CERCLA includes accidental disposal, Shell is liable even if it “lacked the intent to make plans…for the disposal” of the materials, especially when – as the lower courts found – Shell was “an active participant in the delivery of its agricultural chemicals to B&B.” Also, Shell’s argument that it was providing B&B with a useful product, rather than “waste,” is irrelevant because an arranger can still be held liable when it “knows that disposal of a hazardous substance…will occur during the course of the transaction.” Also, CERCLA imposes liability not just for the disposal of “waste,” but also “hazardous substances.” Finally, Shell’s contention that it could not be an arranger because it did not have possession of the pesticides at the time of disposal is incorrect, because CERCLA refers to “ownership or possession at the time the arrangement is made.” Substituting Shell’s alternative definition, the government argues, would render CERCLA ineffectual.

[edit] Oral Argument Recap

[edit] Opinion Analysis

[edit] Links and further information

Akin Gump Client Alert: Supreme Court Significantly Limits CERCLA Liability

[edit] Press

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