1. Where do you think the term “arranger” fits in the categories of those who are responsible for cleanup costs under CERCLA?

2. What do you think the practical effect of this decision will be on companies who own Superfund sites? Does the complexity of analysis for liability help companies in clean-up cases?

3. What do you think will happen to government agencies in their efforts to seek reimbursement for their cleanup efforts?

In 1960, Brown & Bryant, Inc. (B & B), began operating an agricultural chemical distribution business. Using its own equipment, B & B applied its products to customers’ farms. B & B opened its business on a 3.8 acre parcel of former farmland in Arvin, California, and in 1975, expanded operations onto an adjacent .9 acre parcel of land owned jointly by the Atchison, Topeka & Santa Fe Railway Company, and the Southern Pacific Transportation Company (Railroads). Waste water and chemical runoff from the facility was allowed to seep into the ground water below.

During its years of operation, B & B stored and distributed various hazardous chemicals (D-D) on its property sold by Shell Oil Company (Shell). When B & B purchased chemicals from Shell, Shell would arrange for delivery by common carrier, f.o.b. destination. When the product arrived, it was transferred from tanker trucks to a bulk storage tank located on B & B’s primary parcel. During each of these transfers leaks and spills could—and often did—occur. Although the common carrier and B & B used buckets to catch spills from hoses and gaskets connecting the tanker trucks to its bulk storage tank, the buckets sometimes overflowed or were knocked over, causing chemical spills onto the ground during the transfer process.

In the late 1970s Shell took several steps to encourage the safe handling of its products. Shell provided distributors with detailed safety manuals and instituted a voluntary discount program for distributors that made improvements in their bulk handling and safety facilities. Later, Shell required distributors to obtain an inspection by a qualified engineer and provide self-certification of compliance with applicable laws and regulations. B & B’s Arvin facility was inspected twice and B & B had made a number of recommended improvements to its facilities. Despite these improvements, B & B remained a “[s]loppy [o]perator.” The EPA soon discovered significant contamination of soil and ground water.

By 1989, B & B was insolvent and ceased all operations, and the Arvin facility was designated as a Superfund site. By 1998, the Governments had spent more than $8 million in cleanup costs.

In 1991, EPA (Governments) ordered the Railroads to conduct certain cleanup processes. The Railroads did so, incurring expenses of more than $3 million in the process. Seeking to recover at least a portion of these costs, the Railroads brought suit against B & B.

The District Court held that both the Railroads and Shell were PRPs under CERCLA—the Railroads because they were owners of a portion of the facility, and Shell because it had “arranged for” the disposal of hazardous substances through its sale and delivery of chemicals.

Although the court found the parties liable, it did not impose joint and several liability on Shell and the Railroads for the entire cleanup cost. The court apportioned the Railroads’ liability as 9% of the Governments’ total response cost. Based on estimations of chemicals spills of Shell products, the court held Shell liable for 6% of the total site response cost.

The state and local governments appealed the District Court’s apportionment, and Shell cross-appealed the court’s finding of liability. Applying a theory of arranger liability, the Ninth Circuit held that Shell arranged for the disposal of a hazardous substance.

The Court of Appeals held Shell and the Railroads jointly and severally liable for the Governments’ cost of responding to the contamination of the Arvin facility. The Railroads and Shell appealed.

JUDICIAL OPINION

STEVENS, Justice … To determine whether Shell may be held liable as an arranger, we begin with the language of the statute. As relevant here, § 9607(a)(3) applies to an entity that “arrange[s] for disposal…of hazardous substances.” It is plain from the language of the statute that CERCLA liability would attach under § 9607(a)(3) if an entity were to enter into a transaction for the sole purpose of discarding a used and no longer useful hazardous substance. It is similarly clear that an entity could not be held liable as an arranger merely ……………………