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Supreme Court Restricts “Arranger” Liability; Lower Courts Fall in Line

Thanks to a seminal 2008 decision by the United States Supreme Court in Burlington Northern and Santa Fe Ry. v. U.S. Railroad 129 S. Ct. 1870 (2009), federal courts have begun restricting the concept of “arranger liability” under the Superfund Law. 

Superfund, or CERCLA, is the 1980 federal statute that potentially imposes clean-up liability on virtually every party involved in the chain of generation and disposal of hazardous waste, including anyone who “arranged” for waste disposal.  Until 2008 courts had applied a broad interpretation to the phrase “arranged for disposal,” to the point that a seller of hazardous materials could be held liable for cleaning up spills or leaks on its customer’s property simply because spills or leaks often occurred during the unloading process (e.g., U.S. v. Atchison, Topeka & Santa Fe Ry Co.,  2003 WL 25518047 (ED Cal)), or a redevelopment contractor could be held liable for bulldozing hazardous waste around from one place to another on a contaminated site. (e.g., Kaiser Aluminum v. Catellus 976 F.2d 1338 (Ninth Cir. 1992))

In Burlington Northern, EPA sued Shell as an “arranger” because pesticide sold by Shell often spilled or leaked during transfer from common carrier to the buyer’s bulk storage tanks.  Groundwater beneath the buyer’s facility became contaminated.  EPA cleaned up the site pursuant  to Superfund authority and sought reimbursement from Shell, among others.  The Supreme Court, however, dismissed the “arranger liability” claim against Shell, ruling that, “In common parlance, the word ‘arrange’ implies action directed to a specific purpose.”   Because there was no proof that Shell intended to dispose of its pesticide in this manner, Shell did not “arrange for disposal.”  With one stroke the Supreme Court thus rejected several decades of accumulated lower-court jurisprudence and established a new standard for “arranger” liability under CERCLA. 

Two recent examples of the impact on today’s federal courts of the Supreme Court’s arranger liability ruling in Burlington Northern are Celanese v. Martin Eby Construction 620 F3d 529 (Fifth Cir. 2010) and  Hobart Corporation  v. Waste Management of Ohio. (Case No. 3:10CV195, SD Ohio, Feb. 9, 2011) (not yet published, click case name for link to attached copy).

In Celanese, decided September 2010, the Fifth Circuit Court of Appeals held that a backhoe contractor that accidentally punctured a buried methanol pipeline did not “arrange” for disposal of the escaped methanol.  And in Hobart, decided February 9, 2011, an Ohio trial judge dismissed an “arranger” claim against a company that operated on land adjacent to a dump site, where the only “arrangement” was that hazardous substances released on the company’s own property had migrated unintentionally to the dump site next door. 

The pendulum of “arranger” liability appears to be swinging back, and the risk is much reduced that in the future a person or company will become defendants in a Superfund lawsuit merely because of an innocent act that indirectly contributes to the release of hazardous wastes.