US Supreme Court Issues Seminal Decision in Superfund Case

The US Supreme Court recently issued a decision in Burlington Northern & Santa Fe Railroad v. United States, a case that will have important ramifications for Superfund practice in the US. A recent article by Bradley Marten does a great job explaining the decision, but for those of you not versed in Superfund, here's a short background.

Superfund is another name for the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) which has, as one of its primary purposes, the clean up of sites contaminated by hazardous substances. Remediation of contaminated property can be extremely expensive, and if the contamination occurred years ago, the people that were responsible for it may have been out of business for years. When no one can be found to pay for the clean up, the Superfund is tapped. However, there isn't nearly enough in that fund to pay for everything, so courts would stretch some in order to impose liability on existing corporations whenever possible. They did this by something called joint and several liability - if you were responsible for a small portion of the overall contamination, you were responsible for all of it, in conjunction with the other solvent defendants. In addition, courts ruled that companies that sent product, like insecticide, to a site, were responsible parties simply because a bag would occasionally break open and spill its contents on the ground, even though the seller had no way to control how its product was used or handled. The goal was to bring as many solvent companies to the table and force them to fund the clean up, even though they may have contributed to a very small portion of the site contamination. The result was a high stakes game where it was worth spending millions on lawyers and consultants to avoid liability at a site, or to be declared a de minimis contributor, because once in the mix, you could be liable for a large portion.

The Supreme Court changed this somewhat by limiting the when someone could be an arranger, and clarifying joint and several liability. Determining whether you are an arranger will be determined by whether the facts suggest you were transferring a product in the ordinary course of business, or whether you were were instead looking to discard a waste. Many transactions will fit somewhere between the two, but there is now a clearer defense for those that are merely sending product to a customer. As for joint and several liability, the Court approved an apportionment based on Shell's ability to demonstrate that its product could only have contaminated a limited area of the site, and therefore it should only be responsible for that portion, not a share of the entire remediation.

If you're interested in learning more about Superfund, Rob Lannan has done that type of practice for years, and can be reached at rel@ramlaw.com