Certiorari granted in Shell Oil

The Supreme Court granted certiorari in two CERCLA cases today which may speak to the issue of manufacturer liability for environmental contamination when a manufacturer has sold a product which the purchaser then spills, causing the contamination.  Burlington Northern v. U.S., Docket No. 07-1601, and Shell Oil v. U.S., Docket, No. 07-1607.  The decision below (en banc, with 8 dissenters) is at 520 F.3d 918 (9^th Cir.).

B&B, a defunct entity, owned an agricultural chemical storage, sale and application facility, from which various hazardous substances leaked into groundwater.  B&B leased a small portion of its site for a portion of the time it operated from the railroads.  It purchased a soil fumigant from Shell called D-D.  Shell sold D-D to B&B in final form, and B&B either sold the D-D to its customers or applied it to farmland for them.  Delivery of D-D from Shell was in bulk, via common carrier tank trucks, FOB Destination, i.e. title, ownership and control passed to B&B when the tanks arrived at the facility.  B&B spilled some of the product in the process of unloading and transferring the product to its own tanks.

The district court found that Shell was liable as an "arranger" of disposal under CERCLA.  The trial court apportioned liability based on temporal and geographical factors, 9% to the railroads and 6% to Shell.  On appeal, the Ninth Circuit agreed that Shell was liable, but rejected the lower court's apportionment and imposed joint and several liability on it and the railroads.

The cases present two issues:  (1) can Shell be liable as an "arranger" under CERCLA when it sold a useful product over which it lost control before any disposal; and (2) how much proof is needed to apportion instead of imposing joint and several liability, under CERCLA. 

On the first issue, most circuits reject CERCLA liability for the sale of a useful product.  The Ninth Circuit attempted to distinguish these cases by ruling that liability can nevertheless be imposed no matter if the manufacturer had no intent to dispose of any waste product and no longer had control over its product at the time of the disposal, if that disposal (the leakage) was foreseeable to occur when it was delivered.

Resolution of this case will logically focus on the CERCLA's language.  Nevertheless, it is notable that the Supreme Court granted certiorari, even in this statutory context in which liability is imposed in the absence of many common law requirements on many defendants beyond the actual party causing the contamination, to review whether that broad liability was intended to extend to manufacturers of useful products.  As the amici Product Liability Advisory Council, Inc. noted, Shell would not be liable under common law nuisance, given its lack of control over the product at the time of the harm (citing Rhode Island v. Lead Indus. Ass'n, Inc., -- A.2d - (R.I. July 1, 2008).  The Supreme Court's analysis of this control issue, even in the statutory context, may be of general interest.

On the second issue, CERCLA generally adopts the apportionment rule set out in Section 433A of the Second Restatement of Torts.  Hence, the Court's conclusions as to burdens of proof to avoid joint and several liability may also have relevance beyond the specific CERCLA context.