6/16/2009
A May 4, 2009, decision by the United States Supreme Court has altered the landscape of liability under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA). In Burlington Northern & Santa Fe Railway Company v. United States, the Court raised the bar on the amount of evidence necessary to establish that a party is an arranger under CERCLA, and the Court simultaneously lowered the bar on the amount of evidence necessary to establish a reasonable basis for apportioning harm in order to avoid joint and several liability.
In Burlington Northern, the Supreme Court appears to have significantly narrowed the scope of arranger liability under CERCLA. Before Burlington Northern, a person could be subject to arranger liability merely by arranging a transaction in which the person knew that hazardous substances might, even accidentally, leak or spill onto or into the land or water. But in Burlington Northern, the Court held that "knowledge that spills and leaks [occurred] is insufficient to make a party an arranger."
The Court explained that in order to qualify as an arranger, a party must make the arrangement with the intention that some of the product be disposed of during the process. Intent to dispose is key. It is not enough to know that spills and leaks are “inherent in the process.” And it is not enough to intend to arrange a transaction that happens to result in disposal. To be liable as an arranger under Burlington Northern, there must be sufficient evidence to support the inference that a person "intended such spills to occur."
Burlington Northern's intent-focused arranger test presents at least as many questions as it does answers. For example, while it is clear that knowledge of accidental spills is insufficient to classify a party as an arranger, it is unclear exactly what actions are sufficient to demonstrate intent to dispose of hazardous substances. And it is impossible to know at this point how broadly district courts will apply the "new" test. The Court paid special attention to the unique facts in the case (e.g., the leaks were accidental, and the potential arranger took numerous steps to reduce the likelihood of the spills), and as a result district courts may interpret the decision very narrowly based on its unique facts.
In addition to narrowing arranger liability, the Court also appears to have significantly lowered the threshold necessary to avoid joint and several liability under CERCLA. Prior to Burlington Northern, courts rarely apportioned liability. When they did, it was only after being presented with an unusual amount of detailed information that painted a precise picture of the nature and extent of contamination at a facility. As a result, although liability under CERCLA was technically capable of apportionment, it was often said that CERCLA generally imposed joint and several liability; apportionment was an extraordinarily rare exception to the joint-and-several-liability general rule.
But in Burlington Northern, the Court upset that scheme by upholding a relatively "rough and ready" apportionment of damages. Thus, where precision and detailed information were once required to support apportionment, it now appears that district courts may be able to rely on relatively inexact information and “best guess” estimates that allow for "calculation errors" in order to determine a reasonable basis for apportionment. In other words, it may have become much easier for potentially responsible parties to avoid joint and several liability under CERCLA.
If you have questions about this ruling or matters pertaining to CERCLA or other environmental laws, contact any member of Warner Norcross & Judd's Environmental Practice Group.
