Burlington Northern and Santa Fe Railway Co. v. U.S.; Shell Oil Co. v. U.S.

The Supreme Court has agreed to hear an appeal from Shell Oil Co. and Burlington Northern Santa Fe Corp. about whether the U.S. Court of Appeals for the Ninth Circuit erred in finding the companies jointly responsible for Superfund cleanup costs at a chemical distribution plant near Bakersfield, Calif.

The EPA sued the defunct chemical distributor, Brown & Bryant Inc., along with Shell Oil, which made the two chemicals that contaminated the site, and the railroads, which leased the land to Brown & Bryant.

The government appealed, and the Ninth Circuit reversed, holding that Shell and the railroads may be held liable for up to the entire amount of the clean-up costs. According to the court, apportionment under the Superfund law “is the exception, available only in those circumstances in which adequate records were kept and the harm is meaningfully divisible.”

Acting U.S. Solicitor General Gregory Garre asked the court not to hear the case.

Meanwhile, the case has drawn the attention of the business community, including the U.S. Chamber of Commerce, the American Chemistry Council and the American Petroleum Institute, which filed friend friend-of-the-court briefs asking the justices to hear the case.

The appeals court ruling would “impose substantial and unwarranted burdens on manufacturers and suppliers of chemicals and other products and disrupt longstanding relationships between suppliers and the common carriers that deliver their goods,” the trade groups argued.

On Oct. 1, 2008, the court accepted the case for review.

Question presented: Whether the petitioners were incorrectly held jointly and severally liable for environmental cleanup costs under CERCLA.

The Supreme Court gave a win to Shell Oil Co. and Burlington Northern Santa Fe Corp. in an 8-1 ruling today, holding the U.S. Court of Appeals for the Ninth Circuit erred in finding the companies jointly responsible for Superfund cleanup costs at a chemical distribution plant near Bakersfield, Calif.

The EPA sued the defunct chemical distributor, Brown & Bryant Inc., along with Shell Oil, which made the two chemicals that contaminated the site, and the railroads, which leased the land to Brown & Bryant.

The government appealed, and the Ninth Circuit reversed, holding that Shell and the railroads may be held liable for up to the entire amount of the clean-up costs. According to the court, apportionment under the Superfund law “is the exception, available only in those circumstances in which adequate records were kept and the harm is meaningfully divisible.”

Then-acting U.S. Solicitor General Gregory Garre asked the court not to hear the case.

Meanwhile, the case has drawn the attention of the business community, including the U.S. Chamber of Commerce, the American Chemistry Council and the American Petroleum Institute, which filed friend friend-of-the-court briefs asking the justices to hear the case.

The appeals court ruling would “impose substantial and unwarranted burdens on manufacturers and suppliers of chemicals and other products and disrupt longstanding relationships between suppliers and the common carriers that deliver their goods,” the trade groups argued.

On May 4, 2009, the Supreme Court reversed and remanded the lower court decision, which held for the United States, in an 8-1 opinion by Justice John Paul Stevens:

“While it is true that in some instances an entity’s knowledge that its product will be leaked, spilled, dumped, or otherwise discarded may provide evidence of the entity’s intent to dispose of its hazardous wastes, knowledge alone is insufficient to prove that an entity ‘planned fo’ the disposal, particularly when the disposal occurs as a peripheral result of the legitimate sale of an unused, useful product.”

Justice Ruth Bader Ginsburg filed a dissenting opinion, in which she argued:

“Although the question is close, I would uphold the determinations of the courts below that Shell qualifies as an arranger within the compass of [CERCLA].” She added: “I would return these cases to the District Court to give all parties a fair opportunity to address that court’s endeavor to allocate costs.”

Question presented: Whether the petitioners were incorrectly held jointly and severally liable for environmental cleanup costs under CERCLA.