SW Legal studies in Business

Supreme Court Refines Terms of Possible Liability under Superfund
Description

The Supreme Court held that a company that sold a chemical to another company is not liable for contamination at the property of the buyer who spilled some of the chemical. Knowledge that accidental spills may occur does not mean the seller was arranging for disposal of the chemical.

Topic Intellectual Property
Key Words

CERCLA, Cleanup, Liability, Potentially Responsible Parties, Contribution

C A S E   S U M M A R Y
Facts

In 1960, B&B, an agricultural chemical distributor, began operations on a piece of land owned by the company in Arvin, California. It later expanded operations onto an adjacent piece of land owned by two railroad companies. B&B used hazardous chemicals, including a pesticide D-D purchased from Shell Oil. Over time, these chemicals were spilled and contaminated the ground. After an examination of the site, the EPA ordered a cleanup and spent $8 million. It then sued Shell and the railroads to recover the costs. The district court and court of appeals found defendants liable for the costs. The railroads and Shell appealed to the Supreme Court.

Decision

Reversed and remanded. Shell is not liable as an “arranger” of the disposal of hazardous substances the Arvin facility. While the statute does not define the term, plain language would imply that an arranger takes intentional steps to dispose of a hazardous substance. The facts do not support that. Shell sold the pesticide to B&B for its resale. No doubt Shell knew that B&B might accidentally spill some of the chemical on its property, but it was not arranging to have the chemical disposed of. Mere knowledge that spills can occur does not impose liability. Given the costs of the cleanup and where they occurred, it is reasonable to hold the railroads liable for nine percent of the cost. Only a small portion of the cleanup was on railroad land. The railroads cannot be held potentially liable for the entire cost of the cleanup.

Citation Burlington Northern and Santa Fe Railway v. U.S., 129 S.Ct. 1870 (Sup. Ct., 2009)

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