Reducing Environmental Risk

The District of Maine cites to the Supreme Court’s recent decision in Burlington Northern in an Arranger Liability Case

The District Court for the District of Maine relied on the Supreme Court’s recent decision in Burlington Northern & Santa Fe Railway Co. v. United States, No. 07-1601, -U.S.- (U.S. May 4, 2009) (“BNSF”), in denying a motion to dismiss asserting that a CERCLA complaint failed to state a cause of action based on arranger liability. Frontier Communications. Corp. v. Barrett Paving Materials, 631 F.Supp.2d 110 (D. Me. 2009)

This case arose out of Frontier Communications Corporation’s (“Frontier’s”) cleanup of tar and polycyclic aromatic hydrocarbon (“PAH”) contamination in a portion of the Penobscot River in Maine known as Dunnett’s Cove. From 1862 to 1981, Defendant Maine Central Railroad (“MCR”) operated a rail yard on approximately 30 acres of property along the banks of Dunnett’s Cove. In 1982, Defendant Guilford Transportation Industries, Inc. (“Guilford”) took over the MCR operation at the Dunnett’s Cove site. Frontier’s complaint against MCR and Guilford (collectively, the “Railroads”) alleges that the Railroads used Dunnett’s Cove to store large amounts of coal and, during the Railroads’ operations, a number of spills of PAH-containing materials occurred on the banks for Dunnett’s Cove. The complaint further alleged that PAH-containing materials drained into Dunnett’s Cove though sewers, groundwater and/or by overland flow.

The issue before the court involved Frontier’s seeking contribution, indemnity and recovery of costs incurred in connection with its cleanup of Dunnett’s Cove. Frontier argued that the Railroad Defendants were liable under CERCLA § 107(a)(2) as owners and operators at the time of disposal and under CERCLA § 107(a)(3) as “persons who arranged for the transport of hazardous materials to the facility for disposal or treatment.” The Railroads moved to dismiss Frontier’s complaint arguing that there was no basis for owner/operator or arranger liability under CERCLA.

On the issue of owner/operator liability, the District Court held that the complaint made out a plausible claim that the Railroad defendants were operators at the site at the time of disposal (and possibly owners – depending on the official boundary lines of the facility). The motion was denied on this ground.

As for the Railroads’ alleged arranger liability – our primary concern for purposes of this post – the District Court also denied defendants’ motion.

In its reply papers on the motion, the Railroad cited to the BNSF case arguing that the scope of arranger liability was narrowed and that deciding the issue is, according to the Supreme Court, “fact intensive and case specific.” It is puzzling why, when trying to win a motion to dismiss, defendants would argue fact-specific nature of an issue and easily allow a court to determine that discovery is needed. Here, the District Court agreed that the issue of whether a party is an “arranger” is fact specific and held that Frontier’s complaint alleges enough facts to make out a claim for “arranger” liability.

The Court cited the BNSF case for the proposition that the “mere knowledge that spills and leaks continued to occur” was an insufficient basis for arranger liability, and then noted that the allegations in the Complaint asserted that the Railroads disposed of tar and other PAH-containing materials via sewer lines on the property. Without explaining its reasoning, the Court held that, to the extent the sewer lines are owned by the City of Bangor, this alleged disposal is enough to fall within the confines of arranger liability.

The District Court’s reasoning – or lack thereof – in determining that the Railroads’ use of the City’s sewer lines leaves this commenter perplexed. Did the Court assume that the Railroads had the intent to dispose of the contaminants by using sewer lines they knew were owned by the City of Bangor and, therefore, “arranged” for disposal?



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