Supreme Court to Review Apportionment of Liability Under CERCLA

Earlier this month, the United States Supreme Court agreed to hear arguments in a California environmental clean-up case to decide whether the Ninth Circuit's rejection of the district court's apportionment of liability under the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) was appropriate.

The case involves an agricultural chemical distribution facility owned and operated by a now-defunct company, Brown & Bryant, Inc. (B & B). The United States Environmental Protection Agency (EPA) and California's Department of Toxic Substances Control (DTSC) cleaned up the hazardous substances on the site and sought to recover their response costs under CERCLA from Shell Oil Company and Burlington Northern & Santa Fe Railway Company and Union Pacific Railroad Company (collectively, Burlington).  Burlington owned and leased a small portion of the site to B&B, and Shell supplied and delivered some of the chemicals stored on-site. The district court held Burlington liable as an owner and Shell liable as an "arranger" but held that the harm was capable of apportionment and allocated Burlington and Shell a minor portion of the clean-up costs based on a number of factors including, the percentages of land area owned by Burlington, years of ownership and types of hazardous products stored at the site.

The agencies appealed to the Ninth Circuit, which, while acknowledging a defendant's conceptual right to raise divisibility as a "defense" in the liability phase of a CERCLA case, concluded that "[a]pportionment is the exception available only in those circumstances in which adequate records were kept and the harm is meaningfully divisible.”  Id. at 945-46 (emphasis in original). The Ninth Circuit noted that the evidence was not "sufficiently clear" to permit apportionment, and as such, held Burlington and Shell jointly and severally liable for the harm at the site, with the exception of the clean-up costs for a discrete area contaminated by a Dow product.

Shell and Burlington filed petitions for writs of certiorari, challenging the Ninth Circuit’s decision. Shell contended that, contrary to the Ninth Circuit's finding, it was not liable as an "arranger," and that the Ninth Circuit erred by imposing joint and several liability on several potentially responsible parties when the district court found a reasonable basis for divisibility. Burlington challenged the Ninth Circuit's imposition of joint and several liability for the entire cost of the site's cleanup, even though Burlington owned only a portion of the site for a fraction of its entire operation.

Buchanan Ingersoll & Rooney will continue to monitor this case and inform you of any developments.