Supreme Court Asked to Review CERCLA Apportionment Decision

August 16, 2008
Client Alert Newsletter August 2008

The June 23, 2008, petitions for certiorari filed by Shell Oil Co., along with railroads Burlington Northern & Santa Fe Railway Co. and Union Pacific Railroad Co., ask the U.S. Supreme Court to consider issues concerning joint and several liability under the Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA"). The actions in Burlington Northern & Santa Fe Railway Co. v. United States and Shell Oil Co. v. United States arose out of a cleanup project at a California chemical facility after discovery, in the early 1980s, of soil and groundwater contamination resulting primarily from years of pesticide use. Following a trial in 1999, the district court determined that three potentially responsible parties ("PRPs") were liable under CERCLA for the almost $8 million in cleanup and response costs to address contamination at the site from the storage and distribution of chemicals, but found reasonable grounds to divide liability, apportioning it based on each party's contribution to the environmental harm. The U.S. Environmental Protection Agency ("EPA") appealed the ruling, arguing that the district court lacked a reasonable basis to apportion liability.

In 2007, siding with EPA, the Ninth Circuit Court of Appeals reversed, finding that while harm may be "apportionable" in some circumstances, in this instance there was insufficient evidence to support the division and apportionment of liability, and instead imposed joint and several liability under CERCLA on each of the three PRPs. In their petitions for certiorari, petitioners argue that the Ninth Circuit erred, and departed from decisions of its sister circuit courts, by reversing the district court's divisibility analysis approximating the CERCLA responsibility of each. Shell further argued that the Ninth Circuit erroneously imposed liability against it for selling a fumigant that was placed in soil to safeguard crop roots, contending the Ninth Circuit stood alone in finding CERCLA liability against a manufacturer as an "arranger of hazardous substance disposal" based only on its sale of a "commercially useful product." If the Supreme Court accepts this action for review, it will be considered during the Court's 2008 Term.