5th Circuit Finds Company Not Responsible for CERCLA Cleanup Costs ~ No “Arranger Liability”

On January 14, 2015, the U.S. Court of Appeals for the Fifth Circuit decided an important Comprehensive Environmental Response, Compensation, and Liability Act of 1980, 42 U.S.C. § 9607(a)(3)(“CERCLA”), liability case: Vine Street LLC v. Borg Warner Corporation. The Court of Appeals held that as a result of a 2009 decision of the U.S. Supreme Court, Burlington Northern & Sante Fe Railway Co., et al., v. United States, 556 U. S. 599 (2009), Borg Warner was not liable to Vine Street for CERCLA cleanup costs under a theory of “arranger liability” or for cleanup costs under the Texas Solid Waste Disposal Act (“TSWDA”).

Vine Street is the current owner of property in Tyler, Texas that once had been home to a dry cleaning enterprise that used the chemical perchloroethylene, or “PERC,” in its day-to-day operations, and some quantities of PERC were released by the dry cleaner’s facilities, contaminating local soil and groundwater, which has necessitated an expensive cleanup. A former subsidiary of Borg Warner, Norge, provided an initial supply of PERC to the dry cleaner, and also furnished dry cleaning equipment and design assistance. Before the Burlington Northern case was decided, these facts could have made Borg Warner a “responsible party” under CERCLA. However, since Norge never intended to dispose of any hazardous substances in these business transactions, under Burlington Northern precedent, Norge was not a responsible party and neither is Borg Warner.

Finally, the Court of Appeals held that Vine Street ‘s claims under the TSWDA also fail, because the Fifth Circuit earlier decided that the Burlington Northern case applies as well to the use of the TSWDA to establish cleanup liability.