Burlington N. & Santa Fe Ry. Co. v. United States

• Decision Date: 04 May 2009
• Docket Number: Nos. 07–1601,07–1607.,s. 07–1601
• Citation: 77 USLW 4366,129 S.Ct. 1870,173 L.Ed.2d 812,556 U.S. 599
• Parties: BURLINGTON NORTHERN AND SANTA FE RAILWAY COMPANY, et al., Petitioners, v. UNITED STATES et al. Shell Oil Company, Petitioner, v. United States et al.
• Court: U.S. Supreme Court

556 U.S. 599

129 S.Ct. 1870

173 L.Ed.2d 812

77 USLW 4366

BURLINGTON NORTHERN AND SANTA FE RAILWAY COMPANY, et al., Petitioners,

v.UNITED STATES et al.

Shell Oil Company, Petitioner,

v.United States et al.

Nos. 07–1601, 07–1607.

Supreme Court of the United States

Argued Feb. 24, 2009.

Decided May 4, 2009.

Syllabus^*

The Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) is designed to promote the cleanup of hazardous waste sites and to ensure that cleanup costs are borne by those responsible for the contamination. In 1960, Brown & Bryant, Inc. (B & B), an agricultural chemical distributor, began operating on a parcel of land located in Arvin, California. B & B later expanded onto an adjacent parcel owned by petitioners Burlington Northern and Santa Fe Railway Company and Union Pacific Railroad Company (Railroads). As part of its business, B & B purchased and stored various hazardous chemicals, including the pesticide D–D, which it bought from petitioner Shell Oil Company (Shell). Over time, many of these chemicals spilled during transfers and deliveries, and as a result of equipment failures.

Investigations of B & B by the California Department of Toxic Substances Control and the federal Environmental Protection Agency (Governments) revealed significant soil and ground water contamination and in 1989, the Governments exercised their CERCLA authority to clean up the Arvin site, spending over $8 million by 1998. Seeking to recover their costs, the Governments initiated legal action against Shell and the Railroads. The District Court ruled in favor of the Governments, finding that both the Railroads and Shell were potentially responsible parties under CERCLA—the Railroads because they owned part of the facility and Shell because it had “arranged for disposal ... of hazardous substances,” 42 U.S.C. § 9607(a)(3), through D–D's sale and delivery. The District Court apportioned liability, holding the Railroads liable for 9% of the Governments' total response costs, and Shell liable for 6%. On appeal, the Ninth Circuit agreed that Shell could be held liable as an arranger under § 9607(a)(3) and affirmed the District Court's decision in that respect. Although the Court of Appeals agreed that the harm in this case was theoretically capable of apportionment, it found the facts present in the record insufficient to support apportionment, and therefore held Shell and the Railroads jointly and severally liable for the Governments' response costs.

Held:

1. Shell is not liable as an arranger for the contamination at the Arvin facility. Section § 9607(a)(3) liability may not extend beyond the limits of the statute itself. Because CERCLA does not specifically define what it means to “arrang[e] for” disposal of a hazardous substance, the phrase should be given its ordinary meaning. In common parlance, “arrange” implies action directed to a specific purpose. Thus, under § 9607(a)(3)'s plain language, an entity may qualify as an arranger when it takes intentional steps to dispose of a hazardous substance. To qualify as an arranger, Shell must have entered into D–D sales with the intent that at least a portion of the product be disposed of during the transfer process by one or more of § 6903(3)'s methods. The facts found by the District Court do not support such a conclusion. The evidence shows that Shell was aware that minor, accidental spills occurred during D–D's transfer from the common carrier to B & B's storage tanks after the product had come under B & B's stewardship; however, it also reveals that Shell took numerous steps to encourage its distributors to reduce the likelihood of spills. Thus, Shell's mere knowledge of continuing spills and leaks is insufficient grounds for concluding that it “arranged for” D–D's disposal. Pp. 1878 – 1880.

2. The District Court reasonably apportioned the Railroads' share of the site remediation costs at 9%. Calculating liability based on three figures—the percentage of the total area of the facility that was owned by the Railroads, the duration of B & B's business divided by the term of the Railroads' lease, and the court's determination that only two polluting chemicals (not D–D) spilled on the leased parcel required remediation and that those chemicals were responsible for roughly two-thirds of the remediable site contamination—the District Court ultimately determined that the Railroads were responsible for 9% of the remediation costs. The District Court's detailed findings show that the primary pollution at the site was on a portion of the facility most distant from the Railroad parcel and that the hazardous-chemical spills on the Railroad parcel contributed to no more than 10% of the total site contamination, some of which did not require remediation. Moreover, although the evidence adduced by the parties did not allow the District Court to calculate precisely the amount of hazardous chemicals contributed by the Railroad parcel to the total site contamination or the exact percentage of harm caused by each chemical, the evidence showed that fewer spills occurred on the Railroad parcel and that not all of them crossed to the B & B site, where most of the contamination originated, thus supportingthe conclusion that the parcel contributed only two chemicals in quantities requiring remediation. Pp. 1880 – 1884.

520 F.3d 918, reversed and remanded.

STEVENS, J., delivered the opinion of the Court, in which ROBERTS, C.J., and SCALIA, KENNEDY, SOUTER, THOMAS, BREYER, and ALITO, JJ., joined. GINSBURG, J., filed a dissenting opinion.

CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT

Charles G. Cole, Bennett Evan Cooper Steptoe & Johnson LLP, Washington, DC, Maureen E. Mahoney, J. Scott Ballenger, Jeffrey A. Pojanowski, Derek D. Smith, Latham & Watkins LLP, Washington, DC, Roger Nober, Orest B. Dachniwsky, Fort Worth, TX, J. Michael Hemmer, David P. Young, Robert C. Bylsma, Omaha, NE, Kathleen M. Sullivan, Quinn, Emanuel, Urquhart, Oliver & Hedges, New York, NY, for Petitioners.

Edmund G. Brown Jr., Attorney General of the State of California, James Humes, Chief Assistant Attorney General, Manuel M. Medeiros, State Solicitor General, Gordon Burns, Deputy Solicitor General, Ken Alex, Senior Assistant Attorney General, Donald A. Robinson, Supervising Deputy Attorney General, Ann Rushton, Janill L. Richards, Deputy Attorneys General, Oakland, CA, for the State of California, Department of Toxic Substances Control.

Patricia K. Hirsch, Acting General Counsel, Washington, D.C, Gregory G. Garre, Solicitor General, Michael J. Guzman, Acting Assistant Attorney General, Malcolm L. Stewart, Deputy Solicitor General, Pratik A. Shah, Assistant to the Solicitor General, Lisa E. Jones, James R. MacAyeal, Aaron P. Avila, Washington, D.C., for United States.

Justice STEVENS delivered the opinion of the Court.

In 1980, Congress enacted the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), 94 Stat. 2767, as amended, 42 U.S.C. §§ 9601–9675, in response to the serious environmental and health risks posed by industrial pollution. See United States v. Bestfoods, 524 U.S. 51, 55, 118 S.Ct. 1876, 141 L.Ed.2d 43 (1998). The Act was designed to promote the “ ‘timely cleanup of hazardous waste sites' ” and to ensure that the costs of such cleanup efforts were borne by those responsible for the contamination. Consolidated Edison Co. of N.Y. v. UGI Util., Inc., 423 F.3d 90, 94 (C.A.2 2005); see also Meghrig v. KFC Western, Inc., 516 U.S. 479, 483, 116 S.Ct. 1251, 134 L.Ed.2d 121 (1996); Dedham Water Co. v. Cumberland Farms Dairy, Inc., 805 F.2d 1074, 1081 (C.A.1 1986). These cases raise the questions whether and to what extent a party associated with a contaminated site may be held responsible for the full costs of remediation.

I

In 1960, Brown & Bryant, Inc. (B & B), began operating an agricultural chemical distribution business, purchasing pesticides and other chemical products from suppliers such as Shell Oil Company (Shell). Using its own equipment, B & B applied its products to customers' farms. B & B opened its business on a 3.8 acre parcel of former farmland in Arvin, California, and in 1975, expanded operations onto an adjacent .9 acre parcel of land owned jointly by the Atchison, Topeka & Santa Fe Railway Company, and the Southern Pacific Transportation Company (now known respectively as the Burlington Northern and Santa Fe Railway Company and Union Pacific Railroad Company) (Railroads). Both parcels of the Arvin facility were graded toward a sump and drainage pond located on the southeast corner of the primary parcel. See Appendix, infra. Neither the sump nor the drainage pond was lined until 1979, allowing waste water and chemical runoff from the facility to seep into the ground water below.

During its years of operation, B & B stored and distributed various hazardous chemicals on its property. Among these were the herbicide dinoseb, sold by Dow Chemicals, and the pesticides D–D and Nemagon, both sold by Shell. Dinoseb was stored in 55–gallon drums and 5–gallon containers on a concrete slab outside B & B's warehouse. Nemagon was stored in 30–gallon drums and 5–gallon containers inside the warehouse. Originally, B & B purchased D–D in 55–gallon drums; beginning in the mid–1960's, however, Shell began requiring its distributors to maintain bulk storage facilities for D–D. From that time onward, B & B purchased D–D in bulk.¹

When B & B purchased D–D, Shell would arrange for delivery by common carrier, f.o.b. destination.² When the product arrived, it was transferred from tanker trucks to a bulk storage tank located on B & B's primary parcel. From there, the chemical was transferred to bobtail trucks, nurse tanks, and pull rigs. During each of these transfers leaks and spills could—and often did—occur. Although the common carrier and B & B used buckets to catch spills from hoses and gaskets connecting the tanker trucks to its bulk...