Burlington Northern – Has CERCLA Liability Changed ?

1. Mississippi College School of LawMississippi College School of Law
Environmental Law CLEEnvironmental Law CLE
Natural Resources, Energy and Environmental SectionNatural Resources, Energy and Environmental Section
Mississippi BarMississippi Bar
Burlington Northern – Has CERCLA LiabilityBurlington Northern – Has CERCLA Liability
Changed ?Changed ?
Keith TurnerKeith Turner
Watkins Ludlam Winter & StennisWatkins Ludlam Winter & Stennis
April 2010April 2010

2. Burlington Northern – Has CERCLA LiabilityBurlington Northern – Has CERCLA Liability
Changed ?Changed ?
 Short Answer – YesShort Answer – Yes
 Long Answer – Yes, but………Long Answer – Yes, but………

4. FactsFacts
 Brown & Bryant purchased agriculturalBrown & Bryant purchased agricultural
chemicals from several manufacturerschemicals from several manufacturers
including Shellincluding Shell
 From 1960’s through 1970’s, tanker trucksFrom 1960’s through 1970’s, tanker trucks
and rail cars were offloaded at the siteand rail cars were offloaded at the site
 Chemicals included pesticides – Dinoseb,Chemicals included pesticides – Dinoseb,
D-D, NemogonD-D, Nemogon

5. NUMEROUS SPILLS OCCURRED OVER THE
YEARS

6. FactsFacts
 Aware of the industry spillage problem ShellAware of the industry spillage problem Shell
provided safety manuals, discounts forprovided safety manuals, discounts for
improvements made to offloading facilities,improvements made to offloading facilities,
required PE certifications, specified types ofrequired PE certifications, specified types of
offloading equipmentoffloading equipment
 Spills continued at B & BSpills continued at B & B
 Sump and drainage pond unlined until 1979Sump and drainage pond unlined until 1979

9. Significant Aspects of theSignificant Aspects of the
Burlington DecisionBurlington Decision
 Narrowing of Arranger LiabilityNarrowing of Arranger Liability
 Further development of apportionmentFurther development of apportionment
methods ?methods ?

10. Arranger LiabilityArranger Liability
 When does the supplier of a usefulWhen does the supplier of a useful
product become responsible for resultingproduct become responsible for resulting
wastes ?wastes ?

11. Arranger LiabilityArranger Liability
 Spills occurred not just at originalSpills occurred not just at original
offloading but when product was movedoffloading but when product was moved
about on the property for storage andabout on the property for storage and
mixing - and when loaded for resalemixing - and when loaded for resale

12. Arranger LiabilityArranger Liability
 Government argued “arranger” liability forGovernment argued “arranger” liability for
ShellShell
 Was there “disposal” underWas there “disposal” under § 107 ?§ 107 ?
 CERCLACERCLA §§ 9607(a)(3) – “disposal”9607(a)(3) – “disposal”
 §§ 9601(29) - Disposal includes – spilling and9601(29) - Disposal includes – spilling and
leaking (referring to RCRA definition)leaking (referring to RCRA definition)

13. Arranger LiabilityArranger Liability
 Was Shell’s knowledge that spills wereWas Shell’s knowledge that spills were
occurring and would likely continue tooccurring and would likely continue to
some degree sufficient ?some degree sufficient ?

14. Arranger LiabilityArranger Liability
 ““knowledge alone is insufficient to proveknowledge alone is insufficient to prove
that an entity "planned for" the disposal,that an entity "planned for" the disposal,
particularly when the disposal occurs as aparticularly when the disposal occurs as a
peripheral result of the legitimate sale ofperipheral result of the legitimate sale of
an unused, useful product”an unused, useful product”
 Burlington Northern at 1880Burlington Northern at 1880
 There may be “some instances” that knowledge isThere may be “some instances” that knowledge is
evidence of intent to disposeevidence of intent to dispose

15. Arranger LiabilityArranger Liability
 The defendant “must have entered into theThe defendant “must have entered into the
sale of [the product] with the intention thatsale of [the product] with the intention that
at least a portion of the product beat least a portion of the product be
disposed during the transfer process.”disposed during the transfer process.”
 Burlington Northern at 1880Burlington Northern at 1880
 If Shell shipped product other than FOB – factor forIf Shell shipped product other than FOB – factor for
finding liability ?finding liability ?
 (FOB - buyer pays shipping cost, and takes responsibility for the(FOB - buyer pays shipping cost, and takes responsibility for the
goods when the goods leave the seller's premises)goods when the goods leave the seller's premises)

16. Arranger LiabilityArranger Liability
 For new useful products direct evidence ofFor new useful products direct evidence of
intent now required ? Likelyintent now required ? Likely
 What about used products -doesWhat about used products -does
knowledge become a factor in determiningknowledge become a factor in determining
liability ? Possiblyliability ? Possibly

17. ApportionmentApportionment
US
Government
Corporation A
Corporation B

18. ApportionmentApportionment
 Which is proper liability for the railroads –Which is proper liability for the railroads –
joint and several or apportionment ?joint and several or apportionment ?

19. ApportionmentApportionment
 Burlington court began with U.S. v. Chem-DyneBurlington court began with U.S. v. Chem-Dyne
Corp, 572 F.Supp. 802 (S.D. Ohio 1983)Corp, 572 F.Supp. 802 (S.D. Ohio 1983)
 ToTo §433A§433A Restatement (Second) of TortsRestatement (Second) of Torts
 ““when two or more persons acting independently caus[e] awhen two or more persons acting independently caus[e] a
distinct or single harm for which there is a reasonable basisdistinct or single harm for which there is a reasonable basis
for division according to the contribution of each, each isfor division according to the contribution of each, each is
subject to liability only for the portion of the total harm that hesubject to liability only for the portion of the total harm that he
has himself caused.has himself caused.

20. ApportionmentApportionment
 ““apportionment is proper when “there is aapportionment is proper when “there is a
reasonable basis for determining thereasonable basis for determining the
contribution of each cause to a singlecontribution of each cause to a single
harm.” (Restatement)harm.” (Restatement)

21. ApportionmentApportionment
 ““Equitable considerations play no role inEquitable considerations play no role in
the apportionment analysis”the apportionment analysis”
 Burlington Northern FN9Burlington Northern FN9

22. Burlington Northern Court FactorsBurlington Northern Court Factors
(District Court’s*)(District Court’s*)
 Area OwnershipArea Ownership
 Percentage of the sitePercentage of the site
 TimeTime
 Percentage of time property controlled compared to period ofPercentage of time property controlled compared to period of
time during operations resulting in spillstime during operations resulting in spills
 VolumeVolume
 Quantity of waste compared to main portion of siteQuantity of waste compared to main portion of site
 Court allowed for 50% margin of errorCourt allowed for 50% margin of error
 *District Court was required to create its own approach because the parties*District Court was required to create its own approach because the parties
refused to cooperaterefused to cooperate

24. Burlington Northern District CourtBurlington Northern District Court
Apportionment EquationApportionment Equation

..19 (% surface area) x .45 (% time operation) x .66 (2/3’s19 (% surface area) x .45 (% time operation) x .66 (2/3’s
contribution of volume) = % liabilitycontribution of volume) = % liability
 6% (+/-) x 50% errors = 9% liability6% (+/-) x 50% errors = 9% liability
 Remember – court did this without involvement of the PRP’sRemember – court did this without involvement of the PRP’s

25. ApportionmentApportionment
 Liability is Joint and Several unlessLiability is Joint and Several unless
apportionment by:apportionment by:
 Distinct harms (physical, chemical, geographic orDistinct harms (physical, chemical, geographic or
other)other)
 PRP’s argue there is a reasonable basis forPRP’s argue there is a reasonable basis for
determining the contributiondetermining the contribution
 How broad this will be has yet to be determinedHow broad this will be has yet to be determined

26. ProgenyProgeny
 Hinds Investments L.P. v. TeamHinds Investments L.P. v. Team
Investments, Inc. 2010 WL 922416 (E.D.Investments, Inc. 2010 WL 922416 (E.D.
Cal.)Cal.)
 PRP claimed dry cleaning machinePRP claimed dry cleaning machine
manufacturer arranged for waste disposalmanufacturer arranged for waste disposal
from its machine into drains – arranger liabilityfrom its machine into drains – arranger liability
 PRP claimed manufacturer manual directedPRP claimed manufacturer manual directed
wastewater flow to open drain – which iswastewater flow to open drain – which is
evidence of intentional step to dispose of PCEevidence of intentional step to dispose of PCE

27. Hinds Investments L.P. v. TeamHinds Investments L.P. v. Team
InvestmentsInvestments
 Manufacturer was not an “arranger” –Manufacturer was not an “arranger” –
 No ownership or possession of wasteNo ownership or possession of waste
 Knowledge alone not sufficientKnowledge alone not sufficient
 No involvement in installation or direction on disposalNo involvement in installation or direction on disposal
 Useful Product Defense the transaction at issue was the saleUseful Product Defense the transaction at issue was the sale
of the equipment – which did not create or involve hazardousof the equipment – which did not create or involve hazardous
wastewaste

28. Hinds Investments L.P. v. TeamHinds Investments L.P. v. Team
InvestmentsInvestments
 Hinds court - “Plaintiffs conveniently ignoreHinds court - “Plaintiffs conveniently ignore
the ownership/possession factor of arrangerthe ownership/possession factor of arranger
liability” ----------- following 3liability” ----------- following 3rdrd
Circuit whichCircuit which
states that 107(a)(3) requires suchstates that 107(a)(3) requires such
 The 3The 3rdrd
Circuit missed important languageCircuit missed important language
under 107 - “by any other party or entity”under 107 - “by any other party or entity”
 Arranger liability does not require ownershipArranger liability does not require ownership
or actual possession of the waste !or actual possession of the waste !

29. ProgenyProgeny
 Evansville Greenway and Remediation Trust v. SouthernEvansville Greenway and Remediation Trust v. Southern
Indiana Gas and Electric, 661 F. Supp. 2d 989, Sept. 29,Indiana Gas and Electric, 661 F. Supp. 2d 989, Sept. 29,
2009 (S.D. Ind)2009 (S.D. Ind)
 Scrap yard received batteries from SIGECO and othersScrap yard received batteries from SIGECO and others
 Is SIGECO jointly and severally liable or can thereIs SIGECO jointly and severally liable or can there
apportionment ?apportionment ?
 Yard records destroyed (contained quantities, types etc)Yard records destroyed (contained quantities, types etc)
 When “applicable law in flux” the best role the district court canWhen “applicable law in flux” the best role the district court can
play is hold a trial to make detailed findingsplay is hold a trial to make detailed findings
 Apportionment would have been impossible prior to BurlingtonApportionment would have been impossible prior to Burlington
but now court needs more facts to determine is appropriatebut now court needs more facts to determine is appropriate

30. ProgenyProgeny
 U.S. v. Washington State Department ofU.S. v. Washington State Department of
Transportation, 665 F. Supp. 1233, Sept.Transportation, 665 F. Supp. 1233, Sept.
15, 2009 (W.D. WA)15, 2009 (W.D. WA)
Thea Foss
Waterway

31. U.S. v. Washington StateU.S. v. Washington State
Department of TransportationDepartment of Transportation
 Claim that Corps of Engineers was arranger as aClaim that Corps of Engineers was arranger as a
result of prior cleanup activities (1902 – 1949) (1912-result of prior cleanup activities (1902 – 1949) (1912-
1915) (1975-1983) during dredging project1915) (1975-1983) during dredging project
 Was Corps just a permitting authority or more ?Was Corps just a permitting authority or more ?
 Corps claimed only issued permit for 1975-1983 workCorps claimed only issued permit for 1975-1983 work
 Did the Corps specify disposal locations ?Did the Corps specify disposal locations ?
 Because a “fact-intensive inquiry” is necessary theBecause a “fact-intensive inquiry” is necessary the
court could not find for summary judgmentcourt could not find for summary judgment

32. ProgenyProgeny
 U.S. v. Saporito, 2010 WL 489708 (N.D.U.S. v. Saporito, 2010 WL 489708 (N.D.
Ill.)Ill.)
 PRP owner of metal plating businessPRP owner of metal plating business
attempted to apportionment based uponattempted to apportionment based upon
period andperiod and typetype of equipment ownershipof equipment ownership
(purchased and leased back)(purchased and leased back)
 Court held him comparable to joint ventureCourt held him comparable to joint venture
which would not allow apportionmentwhich would not allow apportionment

33. ProgenyProgeny
 Halliburton Energy Services, Inc. v. NLHalliburton Energy Services, Inc. v. NL
Industries, 648 F. Supp. 2d 840 Aug. 18Industries, 648 F. Supp. 2d 840 Aug. 18
2009 (S.D. Texas)2009 (S.D. Texas)
 Former barite ore mining and milling siteFormer barite ore mining and milling site
 An attempt to use Burlington Northern by oneAn attempt to use Burlington Northern by one
PRP against another claiming arranger liabilityPRP against another claiming arranger liability
 Court dismissed discussion as irrelevantCourt dismissed discussion as irrelevant
because the liability issue was under otherbecause the liability issue was under other
CERCLA statute (113)CERCLA statute (113)

34. Future effects of BurlingtonFuture effects of Burlington
Northern ?Northern ?
 Will the courts be willing to embrace efforts toWill the courts be willing to embrace efforts to
find a basis for apportionment?find a basis for apportionment?
 Loss of Joint and Several Liability early settlingLoss of Joint and Several Liability early settling
incentive ?incentive ?
 Fewer PRP’s ?Fewer PRP’s ?
 More liability for owners and operators ?More liability for owners and operators ?

35. More ?More ?
 Is Intent always a threshold for arranger liability?Is Intent always a threshold for arranger liability?
 Litigation over “reasonable basis” ?Litigation over “reasonable basis” ?
 More time and costs developing facts ?More time and costs developing facts ?
 Shifting of remediation costs to government ?Shifting of remediation costs to government ?
More pressure for Superfund Tax ?More pressure for Superfund Tax ?