On May 4, 2009, the U.S. Supreme Court rendered its decision in Burlington Northern & Santa Fe Railway Co. v. United States. In this case, Brown & Bryant, Inc. (B&B) used a parcel of land for an agricultural chemicals business. The chemicals were purchased from Shell Oil Company, and a significant amount of pollution occurred during Shell’s delivery and transfer of the chemicals to lands used by B&B, including to lands used by B&B but owned by Burlington Northern and Santa Fe Railway Company and Union Pacific Railroad Company (the Railroads). After spending over $8 million to clean up the lands, the federal government then applied to recover some of those costs from Shell and the Railroads under the U.S. Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA). The lower courts determined that Shell was liable for 6% of the remediation costs while the Railroads were liable for 9%. The U.S. Court of Appeals held that an apportionment of the costs in this manner was possible, but the facts did not support apportionment; instead, the Court of Appeals held that Shell and the Railroads were jointly and severally liable for all of the cleanup costs – meaning that either party could be held liable for the entire cleanup cost, regardless of its individual contribution to the overall contamination.
The Supreme Court held that Shell was not liable under CERCLA, which imposes liability on those parties, among others, that arranged for the disposal of hazardous substances. Although Shell was indirectly involved in the polluting activity, the Supreme Court found that Shell had not intended that the pollutants be disposed of on the lands; therefore, according to the Court, Shell had not “arranged” for disposal of hazardous substances.
With respect to the Railroads, the Supreme Court generally agreed with the apportionment calculations of the lower court. According to the Supreme Court, although CERCLA allows for the imposition of joint and several liability, apportionment is proper when there is a reasonable basis for determining each party’s contribution to the contamination. The Supreme Court felt that the Railroads’ contribution to the contamination could be reasonably determined and found that the chemical spills on the land owned by the Railroads contributed no more than 10% of the total contamination.
For further information, please see www.supremecourtus.gov/opinions/08pdf/07-1601.pdf