District Court in Maine Applies Supreme Court’s BNSF Decision on “Arranger” LiabilityBy Meline MacCurdy
A federal district court in Maine appears to have earned the distinction of being the first to address the “arranger liability” portion of the Supreme Court’s opinion in Burlington Northern and Santa Fe Railway Co. v. United States (“BNSF”) under CERCLA. On a motion to dismiss filed in Frontier Communications Corp. v. Barrett Paving Materials, the court held that plaintiffs had alleged facts that were sufficient to raise a material issue as to whether an operator of a rail yard “intended” to dispose of waste down a sewer which reached an adjacent waterway. It therefore denied the defendants’ motion.
The case involves contamination of a portion of the Penobscot River known as “Dunnett’s Cove” in Bangor, Maine. Plaintiff Frontier Communications Corporation (Frontier) allegedly incurred costs associated with the cleanup of tar and polyaromatic hydrocarbons (PAHs) in Dunnett’s Cove. Frontier brought CERCLA claims against the Maine Central Railroad Company (Maine Central) and Guilford Transportation Industries, Inc. (Guilford), which acquired Maine Central in 1981 and took over its operations.
Since approximately 1862, Maine Central operated a rail yard along the banks of Dunnett’s Cove. Various cargo, including wood and paper pulp, coal, oil and tar was loaded and unloaded at the rail yard, coal was stored on the banks of Dunnett’s Cove, and, until approximately the 1960s, sewers from the rail yard drained directly into the Penobscot River. According to Frontier, “numerous spills of tar and other PAH-containing materials occurred – either accidentally or through the negligence, apathy and inappropriate testing of equipment … and drained into Dunnett’s Cove through sewers, groundwater and/or by overland flow.”
The Parties’ Briefing on “Arranger” Liability
The defendants sought dismissal of the claims, arguing that they were not liable under CERCLA because they had not “arranged for the disposal” of a hazardous substance. The defendants argued that Frontier’s CERCLA claim failed because Frontier had not alleged that the disposal of wastes “was performed by a third party.” The defendants argued that, “for liability to attach, the disposal or treatment must be performed by another party or entity.”
About a week after the Supreme Court handed down its Burlington Northern decision, the defendants refined their argument in their reply brief, arguing that, “under the plain language of the statute, an entity may [only] qualify as an arranger under § 9607(a)(3) when it takes intentional steps to dispose of a hazardous substance.” The defendants argued that Frontier’s complaint failed to meet this standard, and “[a]t most [alleged] that releases occurred ‘accidentally or through the negligence, apathy, or inappropriate testing of equipment.’”
In its surreply, Frontier argued that whether § 9607(a)(3) liability attaches is fact intensive and case specific,” which, according to the defendants, was sufficient on its own to deny the defendants’ motion to dismiss. Frontier argued in its brief that Burlington Northern “made absolutely clear that ‘in some instances, an entity’s knowledge that its product will be leaked, spilled, dumped or otherwise discarded may provide evidence of the entity’s intent to dispose of its hazardous waste.’” Frontier acknowledged that “[t]he evidence may or may not show that the ‘spills’ by the [defendants] were intentional,” but argued that it was “enough that the [defendants] knew or should have known that such spills were occurring.” Frontier distinguished the facts at issue in Burlington Northern, where the defendant “escaped arranger liability because the disposal … ‘occur[red] as a peripheral result of the legitimate sale of an unused, useful product,” whereas in this case the defendants’ spills allegedly “resulted from an effort to get rid of wastes or merely sloppy practices.”
The District Court Opinion
The district court agreed with the defendants that the issue to be decided was “fact intensive and case specific.” It sidestepped the issue of spills altogether, and instead focused on the alleged disposal of waste into the sewer lines located on the property. According to the district court, “the Railroad’s disposal of tar or other PAH-containing materials via the sewer would fall well within the confines of arranger liability – even after Burlington.” Accordingly, the district court held that the factual allegations in the complaint were sufficient to defeat the defendants’ motion to dismiss.
The decision is significant as an early example of how litigants and courts may apply and interpret the “arranger” liability portion of the Burlington Northern decision. Given the procedural posture of this decision and limited briefing that addressed Burlington Northern, it is difficult to draw conclusions regarding the appropriate legal standard for assessing “arranger” liability or, moreover, the factual scenarios that will meet this standard in light of the Supreme Court’s statement that arranger liability is “fact intensive and case specific.” However, the district court’s focus on the defendants’ alleged disposal via sewer lines – as opposed to the spills that allegedly occurred through sloppy practices – suggests that the court may have been persuaded that something more than unintended spills may now be necessary to hold a party liable under an arranger liability theory. The distinction between a subjective intent to dispose and an objective intent to dispose, based on the defendants’ alleged knowledge, is likely to become the paramount issue as courts continue to grapple with “arranger” liability in light of the Burlington Northern decision.
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