Amicus Curiae Brief — Shell Oil Co. v. United States (Nos. 07-1607, 07-1601)

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In The

Supreme Court of the Anited States

THE BURLINGTON NORTHERN AND SANTA FE RAILWAY

COMPANY AND UNION PACIFIC COMPANY, Petitioners

UNITED STATES OF AMERICA, ET AL., Respondent

SHELL OIL COMPANY, Petitioner

UNITED STATES OF AMERICA, ET AL., Respondent

On Writs of Certiorari to the United States

Court of Appeals for the Ninth Circuit

BRIEF FOR AMICUS CURIAE

GENERAL ELECTRIC COMPANY

IN SUPPORT OF PETITIONERS

Tom H. Hill

GENERAL ELECTRIC

3135 Easton Turnpike

Fairfield, CT 06825

Jonathan Massey

7504 Oldchester Road

Bethesda, MD 20817

Jeffrey R. Porter

Andrew N. Nathanson

MINTZ, LEVIN, COHN, FERRIS,

GLOVSKY & POPEO, P.C.

One Financial Center

Boston, MA 02111

—_—_

————

Laurence H. Tribe

(Counsel of Record)

Hauser Hall 420

1575 Massachusetts Avenue

Cambridge, MA 02138

(617) 495-4621

Thomas C. Goldstein

Michael C. Small

Won S. Shin

AKIN GUMP STRAUSS

HAUER & FELD, LLP

1333 New Hampshire Ave., NW

Washington, DC 20036

November 24, 2008

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TABLE OF CONTENTS

PPP PPO P EERE SEES PREP eee

Se Ge Gs BEI vn crscccscccccserecsescnresecsvess sence: ii

INTEREST OF AMICUS CURIAE

ARGUMENT

II.

MUST BE LIMITED BY THE “SOLE

PURPOSE” TEST

The Sole Purpose Standard Is

Consistent With The Ordinary Meaning

of The Term “Arranged For Disposal” In

CERCLA’s Arranger Liability Provision.....

. The Sole Purpose Standard Is

Consistent With CERCLA’s Strict

Liability Regime And Does Not Exempt

From Responsibility Owners And

Operators Of Facilities Or Persons Who

Retain Ownership And Control Of A

Product Following Shipment To A

a enepuoneee

EXPANSIVE ARRANGER LIABILITY

WOULD PRODUCE ABSURD AND

UNCONSTITUTIONAL RESULTS. ..............:008. 13

General Electric’s Fletcher Paint Case

Dlustrates the Potential For

Unreasonable Breadth of Arranger

Es sccicnstenticbusadusdpotabbieiintntenensorssseceveeses

. Fletcher Paint IWustrates That Mere

Reversal of the Ninth Circuit’s

Judgment, By Itself, Is Not Enough. ..........

Expansive Arranger Liability Raises

Serious Constitutional Questions. .......... di

CONCLUSION

eee ee eee

I. ARRANGER LIABILITY UNDER CERCLA

POR eee SUP OOOO COSTCO CeCe ee eee eee eee eee eee

eee eee ee ee eee ee ee eee eee eee ee eee ee eee ee eee eee eee eee

oo BE

oo On

TABLE OF AUTHORITIES

Cases

Amceast Indus. Corp. v. Detrex Corp.,

2 F.3d 746 (7th Cir. 1998)................0.ccccccoresees 6, 7,8

Asgrow Seed Co. v. Winterboer,

i seaentaaciinuniicipmanttinth 6

Ashwander v. TVA,

I esse 30

Asociacién De Subscripcién Conjunta Del

Seguro De Responsabilidad Obligatorio v.

Flores Galarza, 484 F.3d 1 (1st Cir. 2007)............ 27

Barnhart v. Peabody Coal Co.,

537 U.S. 149 (2003)... ieanionae iinet

Bray v. Alexandria Women’ s ; Health Clinic

506 U.S. 263 (1993)... i acai cddnpcthidaceebe

Commonwealth Edison Co. v. . United States,

271 F.3d 1327 (Fed. Cir. 2001)...........c.cccercessesseees 24

Eastern Enterprises v. Apfel,

Se E ccciseccensenineveveninvssoconsnsiueses passim

FDIC v. Meyer,

Ta ree ee 6

Florida Power & Light Co. v. Allis Chalmers

Corp., 893 F.2d 1313 (11th Cir. 1990).......00.00000...... 7

Franklin County Convention Facilities Authority

v. American Premier Underwriters, Inc.,

240 F.3d 534 (6th Cir. 2001).......0..... eee, 24

Freeman v. Glaxo Wellcome, Inc.,

189 F.3d 160 (24 Cir. 19098) ..............0...000..0....... 7,10

G.J. Leasing Co., Inc. v. Union Elec. Co.,

54 F.3d S79 (Tela Cir. 1995)..........scccssscrscosrrsesceseseres 9

Gencorp v. Olin Corp.,

SOO F.BE 4SS (GER Cir. BOOS).......0.cvccccccccccccccssccccsees ll

Giles v. California,

I scrip urneoanncetnn 22

Golan v. Ashcroft,

310 F. Supp.2d 1215 (D. Colo. 2004) ..0.....cccceeeee 27

Kelo v. City of New London,

I ca tens SOOO 27

Lingle v. Chevron U.S.A. Inc.,

dsr s sesnasiinnbsonnnnbaeneenninntl 27

Perrin v United States,

Ee ET 6

Purolator Prods. Corp. v. Allied-Signal, Inc.,

772 F. Supp. 124 (W.D.N.Y. 1991) ........................30

Sandstrom v. Montana,

i slnasensieenene 22

Tahoe-Sierra Preservation Council, Inc. v.

Tahoe Regional Planning Agency,

EE SE aa a 27

U.S. Fidelity & Guar. Co. v. McKeithen,

226 F.3d 412 (Sth Cir. JOOO)...........ccccccccccsccccsccceces 27

United States v. Alcan Aluminum Corp.,

SiS F.3eE 170 (Bad Cie. BOGS) .....0.ccccccccccccccccccscsccceces 23

United States v. Cello-Foil Prods. Inc.,

100 F.3d 1227 (Gtin Cir. 1906)..........cccccccscccscccccvcres 11

United States v. Dico, Inc.,

BOS FP. BES Goes GaP. BBD) on. ccs ccccccccescccccccccssecsess. 24

United States v. Marine Shale Processors,

ee BB} > F . fo’ Ae | ann 12

United States v. Olin,

107 F.3d 1506 (1ith Cir. 1907)........................ 11, 24

Statutes

I ae cenit 23

I ae ea dsesnndasamaneehe 23

Ee a sldedetasibiabl 23

a ices dcenstslinenbecnnicelil 8, 10

on ietciesdieainenininnianeasaihbidath &, 10

castle icicetnadaninhiiananiomn passim

Coal Industry Retiree Health Benefit Act of 1992,

ee ee ticinicteescicesinsccstcsrntesesacnnensse 24

Other Authorities

Stephen Breyer, BREAKING THE VICIOUS CYCLE:

TOWARD EFFECTIVE RISK REGULATION (1993)....... 24

Bruce Howard, “A New Justification for Retroactive

Liability in CERCLA: An Appreciation of the

Synergy Between Common and Statutory Law,” 42

OG 28

Jan G. Laitos, “The New Retroactivity Causation

Standard,” 51 ALA. L. Rev. 1123 (2000)................ 28

Daniel E. Troy, “Retroactive Legislation” (American

Enterprise Institute 1997) .............ccsesceseeeeneees 28

Webster’s II New College Dictionary (2001) ............. 6

Webster’s Third New International Dictionary (1993)

INTEREST OF AMICUS CURIAE

Amicus curiae General Electric Company (“GE”)

possesses an important interest in the first question

presented by these cases — namely, whether liability

for “arranging” for disposal of hazardous substances

under the Comprehensive Environmental Response,

Compensation and Liability Act (“CERCLA”), 42

U.S.C. § 9607(aX3), may be imposed for merely sell-

ing a commercially useful product and transferring

ownership and control to a purchaser who then

causes contamination involving that product.’ Such a

result, which is directly countenanced by the Ninth

Circuit’s judgment, cannot be squared with the statu-

tory text, structure, and purpose. The only permissi-

ble course is for this Court not only to reverse the

Ninth Circuit’s judgment, but also to adopt a “sole

purpose” or similarly restrictive test for imposing ar-

ranger liability under CERLCA.

GE's interest im the first question presented

stems from its present status as a defendant in a

CERCLA cost-recovery action arising from contami-

nation at the Fletcher Paint site in New Hampshire.

United States v. General Electric Co., No. 06-CV-354

(D.N.H.) (“Fletcher Paint”). In that proceeding, the

federal government seeks over $13 million in clean-

up costs on the theory that GE “arranged” for dis-

posal of hazardous waste merely by selling a product

to a customer in an arm’s-length commercial transac-

’ This bnef has been filed with the written consent of the

parties, which is on hile with the Clerk of Court. No counse! for

a party authored this bnef in whole or in part, nor did any per-

son or entity, other than a/nicus or its counsel, make a monetary

contmbution to the preparation or subm:ssion of this bnef

(1)

tion. Like Shell’s experience in the case at bar, GE’s

situation vividly illustrates the breathtaking scope of

an “arranger” liability standard that subjects sellers

of useful products to massive clean-up costs under

CERCLA, even if they never acted with the intent to

dispose of a hazardous substance.

CERCLA imposes on the plaintiff the burden of

establishing that a “person” arranged for the disposal

of hazardous substances. In Fletcher Paint, a federal

district court has approved EPA’s efforts to impose li-

ability on GE based on entirely lawful sales of a

product between 1953 and 1967 — long before the en-

actment of CERCLA in 1980 — even though the court

found that disposal was not the “objective of the ar-

rangement” between GE and its buyer and no evi-

dence was presented that GE was aware of the

buyer’s disposal of any of the product purchased from

GE.

GE never owned or controlled the Fletcher site.

Its sole contact with the site was the bona fide sale to

Fletcher of a PCB-containing substance called

Pyranol for use as a plasticizing ingredient in the

manufacture of paint and for other commercial pur-

poses. GE did not transport the product to Fletcher,

nor did GE have any control over what Fletcher did

with the Pyranol once it left GE. Rather, Fletcher

used its own employees and its own trucks to pick up

Pyranol drums from GE facilities in New York and

move them to the Fletcher plant in New Hampshire.

Fletcher bought similar products from two other

companies.

Fletcher stopped purchasing Pyranol from GE in

November 1967, but continued attempting to use it

for commercial purposes for nearly a decade. Over

time, the health of Fletcher’s owner declined, as did

its business. By the mid-1970s, Fletcher apparently

ended its efforts to resell its inventory of PCBs to

other companies and (unknown to GE) abandoned

any drums it owned in situ at the site. Although evi-

dence showed that drums were in good condition in

1975, Fletcher left them unmaintained and exposed

to the corrosive effects of the harsh New Hampshire

climate.

By 1987, when EPA came on site and inspected

Fletcher’s property, approximately twenty years had

passed since Fletcher’s last transaction with GE.

EPA found PCB-containing drums on the site, which

were unmarked and bore no GE logos or other identi-

fying information.

Nevertheless, on November 10, 2008, the Fletcher

Paint district court held that EPA was entitled to re-

cover cleanup costs from GE under CERCLA based

on an expansive theory of “arranger” liability. The

court acknowledged that there was no evidence in the

record that GE actually “desired” any disposal of

waste. Nevertheless, the court imposed lability on

the basis of a finding that GE understood that dis-

posal of waste was “substantially certain” to result

from its sale of Pyranol to Fletcher.

The Fletcher Paint decision makes clear that

CERCLA “arranger” liability has become unmoored

from any statutory bearings. If GE can be held liable

for the disposal of waste based on its sale of Pyranol

to Fletcher, then innumerable parties currently oper-

ating throughout the national economy may find

themselves hit with untold millions of dollars in

wholly unexpected CERCLA liability, based on en-

tirely proper commercial transactions that occurred

decades ago. Such enormous retroactive liability

runs flatly contrary to congressional intent and also

raises serious constitutional questions.

Fletcher Paint also makes clear that this Court

should not merely reverse the Ninth Circuit’s judg-

ment in the instant case and hold that “arranger” li-

ability embodies a showing of some sort of intent on

the part of the seller of a useful product. Rather than

leaving the intent requirement undefined, this Court

should prescribe the “sole purpose” test as the proper

basis for arranger liability in the context of the sale

of a useful product. That is, this Court should hoid

that responsibility for environmental clean-up under

CERCLA’s arranger liability provision may be im-

posed only if the sole purpose of the parties to the

transaction is to dispose of hazardous substances.

ARGUMENT

I. ARRANGER LIABILITY UNDER CERCLA

MUST BE LIMITED BY THE “SOLE PUR-

POSE” TEST.

CERCLA imposes liability for the costs of haz-

ardous waste clean-up on four categories of poten-

tially responsible parties (“PRPs”). 42 U.S.C.

§ 9607(a). See United States v. Atlantic Research

Corp., 127 S. Ct. 2331, 2334 (2007). Among CER-

CLA’s categories of PRPs are persons who “arranged

for disposal .. . of hazardous substances.” 42 U.S.C.

§ 9607(aX3) (emphasis added).’

“In full, the “arranger” Labaility provision imposes habiity

on “any person who by contract, agreement or otherwise ar-

This Court has never addressed the meaning of

CERCLA’s “arranger” lability provision. In the ab-

sence of guidance from this Court, the courts of ap-

peals have split in delineating the paramcters of the

provision. This circuit conflict has centered largely

on whether the intent of the parties must be to dis-

pose of hazardous substances in order for the sale

and shipment of hazardous substances to constitute

an arrangement for disposal under CERCLA’s “ar-

ranger” liability provision, and in particular on the

degree of requisite intent. In GE’s view, the better

reasoned decisions in the courts of appeals interpret

the provision to contain an intent requirement and to

provide that “arranger” liability under CERCLA at-

taches only when two parties enter a transaction for

the sole purpose of disposing of a hazardous sub-

stance. This standard best comports with the text of

the “arranger” liability provision. It excludes from

the ambit of CERCLA hability parties who intend

merely to scll and transport useful products to their

customers and who surrender both ownership and

control of the products upon delivery to the custom-

ers. .

ranged for disposal or treatment or arranged with a transperter

for disposal or treatment of hazardous substances owned or pos-

sessed by such person, by any other party or entity, at any facil-

ity or incineration vessel owned or operated by another party or

entity and contaimmng hazardous substances” 42 USC.

§ 9607(a)(3).

A. The Sole Purpose Standard Is Consistent

With The Ordinary Meaning of The Term

“Arranged For Disposal” In CERCLA’s

Arranger Liability Provision.

CERCLA does not define the term “arranged for”

in the context of disposal. Under basic principles of

statutory construction, the term therefore must be

given its ordinary meaning, in accordance with the

dictionary definition of the term. See, e.g., Asgrow

Seed Co. v. Winterboer, 513 U.S. 179, 187 (1995);

FDIC v. Meyer, 510 U.S. 471, 476 (1994); Perrin v

United States, 444 U.S. 37, 42 (1979).

The ordinary meaning of the word “arrange” is

“to make preparations for,” Webster’s Third New In-

ternational Dictionary 120 (1993), or to “plan for,”

Webster’s IT New College Dictionary 62 (2001). Both

of these definitions plainly “connote[) an intentional

action toward achieving [a] purpose.” Pet. App. 70a

(dissenting opinion).*

Applying this ordinary meaning of “arrange for,”

the Burlington Northern dissenters expressly recog-

nized that a person must have acted with the specific

purpose of disposing of hazardous substances in order

to be considered a PRP under CERCLA’s arranger li-

ability provision. Jd. The Seventh Circuit has

adopted the same view. Amcast Indus. Corp. v. De-

trex Corp., 2 F.3d 746, 751 (7th Cir. 1993). Under

this standard, a party whose sole purpose is to sell a

useful product cannot be deemed an “arranger” for

the disposal of substances within the meaning of

' All citations to “Pet. App.” refer to the Pet:tion Appendix

filed in No. 07-1607

CERCLA, even if the purchaser subsequently mis-

handles the product and creates environmental con-

tamination.‘

Judge Posner’s statutory analysis in his opinion

for the Seventh Circuit in Amcast demonstrates that

the “sole purpose” standard is compelled by the text

of the arranger liability provision. Focusing first on

the ordinary meaning of “arrange for,” Judge Posner

observed that “[those] words imply intentional ac-

tion.” Amcast, 2 F.3d at 751. Applying an intent re-

quirement, Judge Posner reasoned that the defen-

dant in Amcast was not liable to the plaintiff-buyer

under CERCLA as an “arranger for disposal. . . of

hazardous substances” because the defendant’s pur-

pose was to sell and deliver its product to the buyer

4 Although they do not explicitly apply the purpose-centnc,

ordinary meaning of “arrange for.” decisions in the Second and

Eleventh Circuits also recogmze the statutory imperative to di-

vine the parties’ intent. These circuits have held that the mere

sale of a product cannot trigger CERCLA arranger halnlity. ab-

sent “additional evidence the transaction include[{d} an ‘ar-

rangement’ for the ultimate disposal of a hazardous substance.”

Florida Power & Light Co. v. Allis Chalmers Corp., 893 F.2d

1313, 1319 (11th Cir. 1990); Freeman v. Glaxo Wellcome, Inc.,

189 F.3d 160, 164 (2d C:r. 1999) And both circuits have indi-

cated that evidence of an intent to dispose is central to the “ar-

rangeinent” inquiry. See Florida Power, 893 F 2a at 1319 (seller

not hable as “arranger” because there was no evidence that it

“antended to _. dispose of hazardous waste by selling [its prod-

uct]"), Freeman, 189 F.3d at 164 tholding that there was no evi-

dence in record of an arrangement to dispose and citing compa-

rable cases rejecting arranger hability theery on grounds that

parties merely “intended” a product to be used im a particular

manner and that their “motivation’ in entenng the transaction

was not disposal of the product) (citations omitted)

for the buyer’s use, not for the buyer to dispose of it.

Id.

Judge Posner next addressed the significance

that the plaintiff in Amcast attached to evidence that

drivers employed by a common carrier with which the

defendant arranged to make dcliveries to the buyer

inadvertently spilled the product when unloading it

into the buyer’s storage tanks. Jd. at 748. The buyer

seized on this evidence because CERCLA defines

“disposal” to include accidental spills. 42 U.S.C.

§§ 6903(3), 9601(29). Thus, the buyer argued, the de-

fendant qualified as an “arranger for disposal” by vir-

tue of its use of a common carrier that spilled the

product when making deliverics. This same thesis

animated the Ninth Circuit in Burlington Northern,

leading it to surmise that “disposal’ need not be pur-

poseful” in order for arranger liability to attach. Pet.

App. 44a. The Seventh Circuit in Amcast rejected

this supposition on the ground that it was foreclosed

by the text of the arranger liability provision.

In reaching that conclusion, Judge Posner’s opin-

ion carefully compared the arranger liability provi-

sion with the quite different portion of CERCLA that

treats as PRPs past and present owners or operators

of facilities at which disposal of hazardous substances

takes place. 42 U.S.C. §§ 9607(a)(1)(2). As Judge

Posner explained, it is entirely consistent with the

text of the latter provisions to interpret CERCLA as

imposing liability on owners and operators even for

entirely accidental disposals at their facilities be-

cause the language of the owner and operator provi

sions does not speak in terms of purposcful disposal —

unhke the term “arrange for” in the arranger liability

provision. Amcast, 2 F.3d at 751.° By contrast, it de-

fies the ordinary meaning of the term “arrange for” to

interpret the arranger liability provision as imposing

liability for accidental disposals on a party that in-

tends merely to sell its product because, as Judge

Posner correctly reasoned, no one purposefully plans

\i.e., arranges for) an accident. After all, under the

ordinary meaning of the term, an “accident” necessar-

ily is an unintentional event. /d. Accidents may, of

course, be foreseeable. But mere knowledge by a

seller that inadvertent spills are substantially certain

to occur does not mean that the seller intended for an

accident to happen. That is precisely the theory of

arranger liability adopted by the Ninth Circuit in the

instant case and the district court in GE’s Fletcher

Paint case. As shown by Judge Posner’s opinion in

Amcast, that theory has no foundation in the statu-

tory text.®

In the end, the sole purpose standard encapsu-

lates what Judge Posner described as the archetypal

case “contemplated” by the text of CERCLA’s ar-

ranger liability provision: a party that makes an

agreement with a waste hauler or similar person

5% CERCLA’s owner and operator provisions impose respon-

sibility for environmental clean-up costs on “(1) the owner and

operator of... a facihty [and] (2) any person who at the time of

disposal of any hazardous substance owned or operated any fa-

etlity at which... hazardous substances were disposed of.” 42

U.S.C. § 9607(a)(1),(2)

other CERLCA case, “[i]t seems to us very odd, even in Super-

fund Cloudcuckooland, to attmbute the neghgent, unforesecable

conduct of the buyer's agents to the seller.” G../. Leasing Go,

Inc. v. Union Elec. Co., 54 F.3d 379, 385 (7th Cir. 1995).

with the sole purpose of conveying material contain-

ing hazardous substances to a treatment or disposal

facility. Judge Posner had in mind “a person or insti-

tution that wants to get rid of its hazardous wastes

[and] hires a transportation company to carry them

to a disposal site. If the wastes spill en route, then

such spillage is disposal and the shipper had ar-

ranged for disposal — though not in that form —- the

shipper is a responsible party.” Jd. In such cases,

there is direct evidence that the shipper’s purpose

was disposal and arranger liability attaches. But the

arranger liability provision simply docs not encom-

pass situations (such as GE’s Fletcher Paint case)

where “the shipper is not trying to arrange for the

disposal of hazardous wastes, but [rather] is arrang-

ing for the delivery of a useful product... .” Jd. In

such cases, circumstantial evidence that the shipper

knew that disposal could occur by dint of what the

buyer subsequently might do or not do with the prod-

uct cannot be the basis of arranger liability because

the shipper itself lacked the requisite purpose to dis-

pose of a hazardous substance: its purpose was to sell

the product.

Interpreting the term “arrange for disposal” as

requiring direct evidence that disposal was a seller's

sole purpose is bolstered by the meaning of the word

“disposal” in CERCLA’s arranger liability provision.

CERCLA incorporates the definition of “disposal” in

the Solid Waste Disposal Act, 42 U.S.C. § 9601(29).

Under the SWDA, “disposal” means “the discharge,

deposit, injection, dumping, spilling, leaking, or plac-

ing of any... hazardous waste into or on any land...

so that [it] may enter the environment.” 42 U.S.C.

§ 6903(3) (emphasis added). As the Second Circuit

correctly observed, a product sold to a buyer is not

“hazardous waste” within the meaning of the term

“disposal.” Freeman v. Glaxo Wellcome, Inc., 189

F.3d 160, 164 (2d Cir. 1999).

Thus, a person who sells a product to a buyer

cannot be deemed an “arrangler! for disposal.” That

calculus does not change if the buyer fails to use all of

the product and later discards or abandons portions

of it. It is the seller’s and buyer’s collective intent at

the time of the alleged arrangement that counts.

And if the seller’s purpose was not to have hazardous

substances discharged, deposited, or otherwise placed

into the land so that they may enter the environ-

ment, then the seller cannot be held liable as an ar-

ranger for disposal of hazardous waste. The buyer's

subsequent actions with the product cannot alter that

fact.

B. The Sole Purpose Standard Is Consistent

With CERCLA’s Strict Liability Regime

And Does Not Exempt From Responsibil-

ity Owners And Operators Of Facilities

Or Persons Who Retain Ownership And

Control Of A Product Following Shipment

To A Customer.

jaterpreting the arranger liability provision to

require a showing of purposeful disposal is not at

odds with CERCI.A’s “system of strict liability.” Pet.

App 9a_ As the Sixth Circuit correctly pointed out in

construing the “arranger” provision to contain an in-

tent requirement: “The intent inquiry is geared only

towards determining whether the party in question is

a potentially liable party. Once a party is determined

to have the requisite intent to be an arranger, then

strict liability takes effect. If an arrangement has

been made, that party is liable for damages caused by

the disposal regardless of the party’s intent that the

damages not occur.” United States v. Cello-Foil

Prods. Inc., 100 F.3d 1227, 1232 (6th Cir. 1996); see

also Gencorp v. Olin Corp., 390 F.3d 433, 446 (6th

Cir. 2004). In short, if a person arranges for the dis-

posal of hazardous substances —~ 7.e., if disposal is the

purpose of the transaction — then the person may be

strictly liable for any spills that occur in connection

with sale or transfer of the substances. But the con-

verse is not true — the strict liability imposed by

CERCLA does not govern who may be deemed an

“arranger” in the first place.

Nor will adoption of the sole purpose standard af-

fect the imposition of liability on parties that directly

dispose of hazardous waste, or on parties that “owned

or operated any facility at which such hazardous sub-

stances were disposed of.” 42 U.S.C. § 9607(a)(2).

The “sole purpose” standard affects only arranger li-

ability. The two issues are apples and oranges.

Moreover, the sole purpose standard will not en-

able a seller to evade responsibility for “sham” sales’

or for environmental clean-up when it professes an

intent to transfer its product for use by another

party, but retains ownership and control of the prod-

uct at the time of disposal. In such situations, the ar-

ranger liability provision would continue to apply.

By its terms, the arranger lability provision imposes

* See United States v. Marine Shale Processcrs, 81 F.3d

1361, 1365 (5th Cir 1996) (sham recycling)

responsibility for clean-up custs on persons who ar-

range for the disposal of hazardous substances

“owned or possesseti_by Ithose! person[s}.” 42 U.S.C.

§ 9607(aX3). Thus, a seller who never relinquishes

title or dominion over its product, even after transfer

for use by another party, is responsible for the prod-

uct at the time of its disposal. Put another way, in

such cases, whatever the seller’s purpose in transfer-

ring the product, it cannot be divorced from disposal

of the product when the seller maintains an owner-

ship responsibility for the handling of the product.

See Pet. App. 70a-73a (dissenting opinion). But the

seller cannot be held liable as an arranger for dis-

posal when it surrenders ownership and control upon

delivery of the product, such that the act of disposal

of the product is completely divorced from the seller’s

and buyer’s purpose in entering the transaction.

Hence, the “sole purpose” test is entirely consis-

tent with any legitimate statutory goal of ensuring

that the parties responsible for the disposal of haz-

ardous waste bear the financial costs attributable to

its clean-up.

Il. EXPANSIVE ARRANGER LIABILITY

WOULD PRODUCE ABSURD AND UNCON-

STITUTIONAL RESULTS.

Unless arranger liability is properly limited to

the “sole purpose” test, it will produce unreasonable —

indeed, even patently absurd — results that violate

congressional intent and raise serious constitutional

qucstions.

A. General Electric’s Fletcher Paint Case Il-

lustrates the Potential For Unreasonable

Breadth of Arranger Liability.

GF’s own experience at the Fletcher Paint site il-

lustrates the dangers of an expansive interpretation

of CERCLA’s arranger liability provision. EPA's ac-

tion against GE stems from sales that occurred be-

tween 1953 and 1967.* During that period, Monsanto

Company manufactured Aroclor, a chemical product

containing polychlorinated biphenyls (“PCBs”). GE

purchased Aroclor from Monsanto and processed it to

create Pyranol, the trade name for a mixture that GE

used as a dielectric fluid in its capacitor manufactur-

ing operations in New York. GE's technical specifica-

tions for its sensitive capacitor operations were ex-

traordinarily exacting. Even trace amounts of free

chlorides, water, or other impurities caused GE to re-

ject a particular batch of Pyranol for capacitor manu-

facturing and to designate that batch as “scrap,” al-

though it could be used for other less-demanding

purposes.

As a result of scrap Pyranol’s usefulness, GE was

able to sell some of it to Fletcher Paint Works

(“FPW”), an independent paint manufacturing busi-

ness in New Hampshire that GE neither owned nor

operated. FPW used Pyranol in its paint manufac-

turing operations as a plasticizer of rubber-based

paint and for other experimental applications. FPW

also purchased similar PCB-containing products from

other vendors for similar purposes. Pyranol was par-

* The history presented here is arawn from GEs factual

subrnussions in the Fletche: Paint higation

ticularly useful to FPW because it was a more cost-

effective ingredient than alternative PCB products.

Although GE sold Pyranol to FPW between 1953

and 1967, it did not deliver or arrange for the deliv-

ery of the product to FPW. Indeed, FPW or its agents

took possession of the Pyranol before it even left GE’s

plants. FPW used its own employees and trucks (or,

on a few occasions, hired a third party) to transport

Pyranol, at its own expense, from GE’s plants in New

York to FPW’s plant in New Hampshire. Prior to

loading the Pyranol into their trucks and leaving

GF’s facilities, FPW’s drivers or agents had the op-

portunity to (and routinely did) test the Pyranol’s

quality, check the drums for leakage, and perform

any needed drum repairs at the GE facilities, using

tools that they brought with them specifically for that

purpose. In light of the secure state of the drums at

the time they left the GE facilities, and the inspec-

tions performed by FPW drivers, GE had no reason to

expect any releases or spillage from the drums that

FPW picked up from GE.

FPW controlled the Pyranol from the moment of

pick up at GE. Thus, in addition to using Pyranol in

its own operations, and unbeknownst to GE, FPW re-

sold some of it to other companies. In some cases,

FPW processed the Pyranol before reselling it, while

in other cases FPW resold the product in the same

condition as when it had been transported from GE.

FPW’'s customers ther put Pyranol to their own pro-

ductive uses. FPW’s ssomary Pyranol customer, W.F.

Webster Cement (“Webster”), used the product in the

manufacture of roof coating products.

In late 1967, Webster was acquired by another

company and soon stopped purchasing Pyranol from

FPW. This unexpected development left FPW with a

surplus inventory of Pyranol that had been ear-

marked for sale to Webster. As a result of these

changed circumstances, FPW ceased buying Pyranol

from GE in 1967 and in fact refused to pay its last in-

voice of nearly $7,000. After attempting to recover

the outstanding balance, GE was forced to write off

the amount in 1968, and the two companies had no

contact at all after the early 1970s.

FPW continued to operate an active business on

the property long after its relationship ended with

GE. In 1987, some twenty years after GE’s Jast sale

of scrap Pyranol to FPW, EPA discovered approxi-

mately 800 drums containing hazardous substances

at the FPW site. The drums had apparently been

stored outdoors, exposed to the elements of the New

Hampshire weather. All of the drums were either

unmarked or bore no obvious indicia of their source.

There was no evidence to link any of the drums —

even those containing PCBs — to GE.

Nevertheless, EPA issued administrative orders

to GE in 1995 and 2001, charging GE with responsi-

bility for the release of PCBs at the Fletcher Paint

site without ever having established that GE ar-

ranged for disposal. Pursuant to these orders, GE

has undertaken and is continuing to undertake mas-

sive efforts to clean up the site, at a cost of over $7

million to date. Despite these efforts, the federal

government filed a separate CERCLA suit against

GE to recover an additional amount (over $13 mil-

lion) in response costs. United States v. General Elec-

tric Co., No. 06-CV-354 (D.N.H. filed Sept. 20, 2006)

(hereinafter Fletcher Paint). Moreover, the govern-

ment has indicated that it will seek an estimated $34

million in future costs from GE, bringing the total to

over $54 million.

On November 10, 2008, the district court ruled

after a bench trial that GE could be held liable under

CERCLA for EPA’s response costs on the theory that

GE “otherwise arranged for disposal” of PCBs at the

Fletcher Paint site. The court held that such “ar-

ranger liability” extends to parties who enter an ar-

rangement “know(ing] that disposal is substantially

certain to result.” Tr. at 135 (emphasis added).? The

court found that “GE understood that while Mr.

Fletcher hoped to make productive use of some of the

Pyranol, he clearly could not make productive use of

much of it.” Tr. at 152. As a result, the court con-

cluded, “GE understood that this was an arrange-

ment with Mr. Fletcher that would result in Mr.

Fletcher disposing of substantial quantities of the

scrap Pyranol at the site.” 7d. at 154.

The court held GE responsible for the clean-up at

the FPW site on an arranger liability theory despite

acknowledging that disposal of the Pyranol was not

GE’s “desired outcome.” /d. at 135. In canvassing

the record in the case, the district court stated un-

equivocally that “GE did not in entering into the ar-

rangement desire that the barrels be disposed of.

That was not the objective of the arrangement.” 7d.

at 152. For good measure, the court observed that

* All citations to “Tr.” refer to the transcript of the heanng

before the district court held on November 10, 2008

there was absolutely no evidence in the record that

GE actually “desired this disposal.” Jd. at 63. “It’s

undisputed that GE’s principal objective was to be rid

of the scrap Pyranol. ... GE was indifferent to

whether it would be used in a product or released

into the environment.” Jd. Although GE may have

wanted “to be rid of what it believed was a waste

product and to do it in the most economically viable

way,” the company was at worst “indifferent to what

happened to it after it got to the Fletcher's property.”

Id. at 148. There was simply no evidence that GE

“desired that [the scrap Pyranol] be released into the

environment.” Jd.

The district court’s decision in GE’s Fletcher

Paint case illustrates the abusive potential of “ar-

ranger” liability under CERCLA. Whatever the

source of the PCB-contaminated drums found by EPA

at the FPW site in 1987, any “disposal” of that waste

did not stem from GE’s conduct during its commercial

relationship with FPW in the 1950s and 1960s. Any

leakage or release occurred solely because of what

Fietcher did with the drums later, long after GE

ceased to exercise any ownership, possession, or con-

trol over the material in question.

To impose “arranger” hability in such circum-

stances would shatter any statutory boundaries. The

text of the statute, as addressed in Part I, supra,

forecloses the district court’s view that a company

somehow “arranges” for disposal by selling more of a

product than (it turns out, in retrospect) the buyer

can use. Such a situation bears no resemblance to

the example of hiring a waste hauler to transport

hazardous waste to a treatment or disposal facility,

which Judge Posner properly identified as the para-

digmatic instance of CERCLA “arranger” liability.

Indeed, under the district court’s construction, GE

would arguably be subject to “arranger” liability even

if Fletcher had not abandoned the site but instead

had shipped all the PCB-containing drums to a h-

censed treatment facility. Even in that situation, ac-

cording to the district court, GE would have been

“substantially certain” that disposal would occur.

The district court’s interpretation would result in

additional, equally unreasonable consequences, such

as authorizing the imposition of “arranger” liability

on Monsanto. For all relevant purposes, GE’s sales of

Pyranol to FPW were no different in intent from GF’s

purchases of Aroclor from its manufacturer (Mon-

santo) or from FPW’s own sales of Pyranol to its cus-

tomers. Like GE, Monsanto knew that FPW had an

excess supply of scrap Pyranol. (FPW approached

Monsanto in an attempt to sell some of it.) And like

GE, Monsanto knew nothing about how FPW stored

its inventory of scrap Pyranol at its plant.

The imposition of “arranger” liability in Fletcher

Paint would make every seller in a series of suppliers

a potential “arranger” of disposal, no matter how

temporally remote its sale from the eventual actual

release of hazardous substances. Such a theory has

no logical stopping point and would lead to the spec-

ter of an endless chain of CERCLA hability, running

through all sectors of the econumy, foisting responsi-

bility on cach company that in turn sold a useful

product at arm’s length to the next. Under the view

of the Ninth Circuit and the Fletcher Paint court, in-

terdependence and specialization of labor — the sine

qua non of economic efficiency — would allow EPA to

tap into whatever deep pockets it could find to subsi-

dize the government’s cleanup projects.

B. Fletcher Paint Illustrates That Mere Re-

versal of the Ninth Circuit’s Judgment,

By Itself, Is Not Enough.

The Fletcher Paint decision also makes clear that

this Court should not merely reverse the INinth Cir-

cuit’s judgment in the instant case and hold that “ar-

ranger” liability embodies some sort of undefined in-

tent requirement. Rather, this Court should pre-

scribe the “sole purpose” test or something similarly

restrictive as the proper predicate for CERCLA “ar-

ranger” liability in the context of the sale of a useful

product. Merely reversing the Ninth Circuit’s judg-

ment, by itself, would not be enough to produce the

necessary clarification and avoid the impermissible

expansion of “arranger” liability in the lower courts.

After all, the district court in Fletcher Paint was

able to impose unwarranted liability on GE even

while purporting to reject the Ninth Circuit’s inter-

pretation of the arranger liability provision in Bur-

lington Northern. See Tr. at 17-19 (opining that the

Ninth Circuit adopted “an overly expansive unrealis-

tic definition of the arranger liability standard” and

asserting that it was using “a different standard,”

such that “if Burlington Northern is reversed by the

Supreme Court, it does not necessarily follow that the

standard that I’m using is incorrect”).’?

least one important respect, even more expansive and unrea-

sonable than the Ninth Circuit's test in Burlington Northern

The district court imposed “arranger” liability by

ignoring the statutory text that defines such liability

and by placing an unrealistic burden on sellers of

products containing hazardous substances. Just as

the Ninth Circuit impermissibly deemed Shell liable

because “is “sale of a useful product necessarily and

immeciately resultled] in the leakage of hazardous

substances,” Pet. App. 45a, the district court in

Fletcher Paint held that GE was liable as an “ar-

ranger” because its sale of Pyranol was “substantially

certain” to result in disposal of PCBs. That an event

For all its flaws, the Ninth Circuit at least premised habilty on

a finding that Shell played some direct role in the disposal:

“Shell arranged for delivery of the substances to the site by its

subcontractors; was aware of, and to some degree dictated. the

transfer arrangements; knew that some leakage was likely in

the transfer process; and provided advice and supervision con-

cerning safe transfer and storage” Pet. App. 46a. (It is GE's

position that, despite those findings, Shell should not be subject

to “arranger” lability, as they do not change the fact that dis-

posa] was not Shell's sole purpose in selling a useful nematocide

to its customer.)

But the disposal at issue in Fletcher Paint was purely a

function of FPW's — and only FPW's — conduct, including leak-

age trom drums that FPW stored for decades outdoors at its site

GE did not “dictate[] the transfer arrangements” for delivering

scrap Pyranol tc FPW. Instead, FPW used its own employees

and trucks (or, on a few occasions, hired a third party) to trans

port scrap Pyranol at its own expense; and prior to loading the

scrap Pyranol into thei trucks and leaving GE's facilities,

FPW's drivers or agents had the opportunity to (and routinely

did) test the scrap Pyranol’s quality, check the drums for leak-

age, and perform any needed repairs. Nor did GE play any role

un how FPW decided to store drums at its plant: GE did not

“dictate” the improper storage conditions and m fact knew noth-

ing about them Indeed, GE surrendered all control of the

diums to FPW at the tame that FPW’'s drivers or agents picked

them up at GE s facilities.

is “substantially certain” to occur, given the inherent

limits of industrial hygiene and the vagaries of na-

ture, does not mean that it is intended to occur — i.e.,

that its occurrence was “arranged.” The presumption

that actors may be deemed to intend the natural con-

sequences of their actions is not to be blindly attrib-

uted to Congress, especially where it produces unrea-

sonable results or collides with other important val-

ues. See, e.g., Giles v. California, 128 S. Ct. 2678,

2684 (2008) (holding in context of Confrontation

Clause that knowledge that murdered witness would

be unavailable to testify at trial would be insufficient

to show that “the defendant intended to prevent a

witness from testifying”); Bray v. Alexandria

Women’s Health Clinic, 506 U.S. 263, 275-76 (1993)

(holding that antiabortion demonstration’s incidental

effect on women’s right to interstate travel did not

suffice to show intent to deprive those women of their

protected interstate travel right, even though burden

was foreseeable and natural consequence of the

blockades); Sandstrom v. Montana, 442 U.S. 510,

518-24 (1979) (invalidating instruction that the ac-

cused was presumed to intend the ordinary consc-

quences of his voluntary acts).

The Fletcher Paint decision demonstrates that

the “substantially certain” test does not impose an

adequate limit on CERCLA “arranger” liability. The

district court was able to conclude that the “substan-

tially certain” test was met, even though the court

did not find — nor could it have found — that GE knew

that FPW would lose its chief customer after the GE

sales had ended; that the health of FPW’s owner and

its business would decline; that FPW would ulti-

mately choose to abandon the site many years after

the GE sales ended; and that FPW would choose to

dispose of the product improperly, by storing the

drums outdoors and exposing them for years to the

elements of New Hampshire’s harsh climate. The

district court’s holding demonstrates that, in practice,

the “substantially certain” test is no limit on CER-

CLA “arranger” liability at all. If the test can be sat-

isfied in Fletcher Paint, it can be satisfied in virtually

any useful product case. The test would effectively

require each seller, in order to avoid liability under

the “arranger” test, to divine how every one of its cus-

tomers will store and handle the product, in perpetu-

ity.

In sum, cases like Fletcher Paint illustrate the

unreasonable breadth of a standard that holds sellers

of useful products liable as arrangers of disposal even

when it is undisputed that they did not intend for

disposal to occur. Such expansive liability was never

envisioned by Congress, which instead chose to tax

manufacturers of useful chemical products for contn-

bution. to the Hazardous Substance Superfund. See

26 U.S.C. §§ 4611, 4661, 4662. In keeping with the

text and structure of the statute, the proper standard

in holding a seller of a product liable as an arranger

of disposal is whether, in entering the sales arrange-

ment, the seller's sole purpose was to dispose of the

hazardous substance in question.

C. Expansive Arranger Liability Raises Se-

rious Constitutional Questions.

In the hands of the Ninth Circuit and the

Fletcher Paint court, “arranger” liability empowers

the government to impose severe, retroactive, multi-

million-dollar liability for commercially reasonable,

arm’s length transactions, based entirely on what the

buyer of a product chooses to do with it, completely

outside the seller’s control. Although the lower

courts have upheld CERCLA against facial constitu-

tional challenges,*’ the expansion of “arranger” liabil-

ity raises uniquely troubling questions under the

Fifth Amendment. Such untrammeled “arranger” li-

ability is constitutionally problematic precisely be-

cause CERCLA is such strong medicine and because

it operates with respect to waste disposal that oc-

curred prior to its enactment. See, e.g., Common-

wealth Edison Co. v. United States, 271 F.3d 1327,

1351 (Fed. Cir. 2001); United States v. Olin, 107 F.3d

1506, 1512-15 (11th Cir. 1997). CERCLA’s retroac-

tive application of strict, joint and several liability to

non-negligent activity is unique in American law and

has imposed massive economic costs. See Stephen

Breyer, BREAKING THE VICIOUS CYCLE: TOWARD EPF-

FECTIVE RISK REGULATION 18 (1993). CERCLA con-

tains ready ingredients for the unconstitutional im-

position of arbitrary liability. It is these very fea-

tures of CERCLA that militate against the willy-nilly

expansion of “arranger” liability to cover the sale of a

product to a buyer in a bona fide commercial rela-

tionship.

In other contexts, this Court has held that, even

where a party is causally responsible for a particular

'' See, e.g.. United States v. Alcan Aluminum Corp., 315

F.3d 179, 188-90 (2d Cur. 2003); United States vu. Dico, Inc., 266

F.3d 864, 879-80 (8th Cir 2001): Frankiin County Convention

Facilities Authority vu. American Premier Underwriters, Inc , 240

F.3d 534, 550-53 (6th Cw. 2001).

harm in a but-for sense, the Constitution imposes

limits on the imposition of retroactive liability, to en-

sure that the hability is reasonably foreseeable and

proportionate to the party’s conduct. Eastern Enter-

prises v. Apfel, 524 U.S. 498 (1998). In Eastern En-

terprises, the Court held that, under the Fifth

Amendment, the Coal Industry Retiree Health Bene-

fit Act of 1992, 26 U.S.C. §§ 9701-9722, could not be

applied retroactively to require a company that had

once owned a coal mining business to pay health care

benefits to over 1,000 former employees of that busi-

ness. Although there was no single opinion for the

Court, Justice O’Connor, writing for a plurality that

included Chief Justice Rehnquist, Justice Scalia, and

Justice Thomas, distilled from prior case law three

factors of “particular significance” to a Fifth Amend-

ment takings inquiry: “the economic impact of the

regulation, its interference with reasonable invest-

ment backed expectations, and the character of the

governmental action.” 524 U.S. at 523-24.

The remaining Justices applied similar reason-

ing, although they would have framed the inquiry in

terms of Fifth Amendment due process rather than

the Fifth Amendment’s Takings Clause. In the open-

ing paragraph of his separate opinion, Justice Ken-

nedy went out of his way to underscore that he was

“in full accord with many of the plurality’s conclu-

sions.” 524 U.S. at 539 (Kennedy, J., concurring in

the judgment and dissenting in part). He agreed that

“(thhe plurality’s careful assessment of the history

and purpose of the statute in question demonstrates

the necessity to hold it arbitrary and beyond the le-

gitimate authority of the Government to enact” ld

Even the dissenters agreed that retroactive liability

is constitutional only if the parties on whom costs are

imposed may reasonably be held responsible for the

expenses they are being asked to bear. See 524 U.S.

at 556-58 (Breyer, J., joined by Stevens, Souter, and

Ginsburg, JJ., dissenting). The dissenters explained

that, “like the plurality,” they “would inquire if the

law” as applied retroactively was “fundamentally un-

fair or unjust.” Jd. at 558. “(T]he Due Process Clause

can offer protection against legislation that is un-

fairly retroactive... for... a law that is fundamen-

tally unfair because of its retroactivity is basically

arbitrary.” Jd. at 557 (Breyer, J., dissenting).

Eastern Enterprises underscores that Fifth

Amendment takings and due process questions raised

by retroactive application of a statute are not coter-

minous with the issue of causation of the harms that

the statute is designed to redress. After all, Eastern

Enterprises itself was linked to the injury the Coal

Act sought to remedy: the company had employed the

miners involved, had benefited from their past labor,

and was at least partially responsible for their health

conditions. Yet retroactive application of the statute

to Eastern Enterprises was held unconstitutional.

Indeed, all nine Justices in Eastern Enterprises made

clear that the Fifth Amendment may sometimes pre-

clude the imposition of disproportionate retroactive

liability even if a party ts somehow causally responst-

ble for the harm in question. Eastern “could not have

contemplated lability” of the magnitude it faced. 524

U.S. at 531. Even though there was a causal link, it

was too “tenuous.” /d.; see also id. at 549-50 (opinion

of Kennedy, J.); i¢. at 558-59, 566-68 (Breyer, J., dis-

senting). All nine Justices concluded that a review-

ing court must engagc in a fact-intensive inquiry to

consider the particular facts and circumstances of in-

dividual statutory applications in determining

whether the retroactive imposition of liability vio-

lates the Fifth Amendment. See 524 U.S. at 523, 528-

29 (plurality); td. at 549-50 (opinion of Kennedy, J.);

id. at 559, 566-68 (Breyer, J., dissenting). See also

Kelo v. City of New London, 545 U.S. 469, 493 (2005)

(Kennedy, J., concurring) (citing separate opinion in

Eastern Enterprises as calling for “heightened scru-

tiny for retroactive legislation under the Due Process

Clause”); Lingle v. Chevron U.S.A. Inc., 544 U.S. 528,

548 (2005) (Kennedy, J., concurring) (citing Eastern

Enterprises concurrence for the proposition that “a

regulation might be so arbitrary or irrational as to

violate due process”); Tahoe-Sierra Preservation

Council, Inc. v. Tahoe Regional Planning Agency, 535

U.S. 302, 324 (2002) (citing Eastern Enterprises);

Barnhart v. Peabody Coal Co., 537 U.S. 149, 174

(2003) (Scalia, J., joined by O’Connor and Thomas,

JJ., dissenting) (“We have held that the Commis-

sioner’s use of this power [to require coal companics

to pay health benefits) violates the Constitution to

the extent it imposes severe retroactive liability on

certain coal companies.”) (citing Eastern Enter-

prises).

'2 The lower courts have read Eastern Enterprises in ths

fashion. See, eg., Asociacién De Subscriperén Conjunta Del

Seguro De Responsabilidad Obligatorw vu Flores Galarza, 484

F 3d 1, 20 (Ist Cor. 2007) (following Eastern Enterprises and ex-

planing. “(fjive members of the Court went on to conclude that

the Coal Act's apphcation to Eastern was unconstitutional, but

Justice Kennedy relied on due process, rather than takings,

Retroactive “arranger” liability for the sale of a

product — absent any showing that disposal was the

seller’s and buycr’s “sole purpose” - runs afoul of the

constitutional limits identified in Eastern Enter-

prises. First, at GE’s experience demonstrates, “the

economic impact of the regulation,” Eastern Enter-

prises, 524 U.S. at 523, can be severe. GE has al-

ready spent over $7 million to comply with EPA ad-

ministrative orders to clean up the FPW site, has

now been held liable for EPA response costs of over

$13 million, anu faces the prospect that the govern-

pmnciples”). U.S. Fidelity & Guar Co. v. McKeithen, 226 F.3d

412, 416-20 (5th Cir 2000) (applying the three Eastern Enter-

prises factors to hold that a state workers’ compensation statute

altering a funding formula violated the Fifth Amendment as ap-

pled to pre-enactment insurance contracts of insurers who had

withdrawn from the state market or had substantially reduced

their underwriting in the state}; Golan v. Ashcroft, 310 F. Supp.

2d 1215, 1220 (. Colo. 2004) (focusing on “Justice Kennedy's

concurrence in Eastern Enterprises for the proposition that ret-

roactive legislation that unfairly burdens individuals and dis-

rupts settled expectations is arbitrary and, thus, vivlates due

process,” in order to deny motion to dismiss due process claim)

Commentators have expressed the same view. See, eg, Bruce

Howard, ‘A New Jusnficanon for Retroactive Liabihty in CER-

CLA: An Appreciatnon of the Synergy Between Common and

Statutory Law,” 42 St. Louts U. L.J. 847, 847 nal (1998) ([T]he

decision un Eastern Enterprises makes it clear that courts must

be prepared to find that in any given case the particular facts of

CERCLA hahility, af enforced against an unfortunate party to

the limits of the strict, jot, several and retroactive law, will

run afoul of the takings and duc process clauses of the Constitu-

tion}, Jan G. Lantos, “The New Retreactivity Causation Stan-

dard,” 51 ALA L Rev 1123, 1129 1.35 (2000) (“The Eastern En.

terprises result raises questions about the constitutional validity

of CERCLA’), Damel E. Troy, ‘Retroactive Legslation 85

(Amencan Enterprise Institute 1997) (arguing that retroactive

appbheation of CERCLA may be unconstitutional)

ment will seek an additional $34 million in future

costs from GE. These costs far exceed the revenues

generated by GE’s sales of Pyranol to FPW, which

never surpassed $4.00 per 55-gaJlon drum. In East-

ern Enterprises, by contrast, the coal company had

earned substantial profits from mining from 1947-

1964 and from its subsidiary thereafter, which more

than offset the retroactive liability imposed by the

government. See 524 U.S. at 516.

Second, the imposition of “arranger” liability in

cases like Fletcher Paint will “interfere[) with rea-

sonable investment backed expectations.” EZastern

Enterprises, 524 U.S. at 523-24. GE never owned or

controlled the Fletcher site. Its sale of a product to

FPW was entirely lawful and reasonable at the time

it occurred. The sales ended in 1967, long before

CERCLA was enacted, and long before FPW ceased

its own commercial operations or stopped reselling

Pyranol to other parties. There was no way GE could

have known that FPW would ultimately be left with

unsold inventory or that it would choose to mishandle

drums of PCB material. The rationale of the Fletcher

Paint decision threatens to upset the settled expecta-

tions of sellers that will be shocked to discover that

CERCLA liability may arise from entirely lawful

sales of useful products, based entirely on the unfore-

seeable misconduct of buyers occurring years after

the commercial relationship has ended.

The imposition of liability in Fletcher Paint also

contravenes the third Eastern Enterprises factor -

“the character of the governmental action.” 524 U.S.

at 524. In Eastern Enterprises, the statute’s remedial

payment scheme was neither wholly unfamiliar to,

nor unforeseeable by, Eastern, which had operated

its former coal mining business against the back-

ground understanding of a 1946 labor agreement, a

1947 retirement fund, and a 1950 benefit plan — all of

which contained health care provisions for miners.

See 524 U.S. at 505-08. Here, by contrast, the char-

acter of the governmental action is extraordinary.

“(Plarties could not be expected to have forescen

CERCLA before it was enacted.” Purolator Prods.

Corp. v. Allied-Signal, Inc., 772 F. Supp. 124, 132

(W.D.N.Y. 1991). There is no way that GE could

have foreseen that it could one day be held liable for

over $54 million in costs to clean up waste disposed of

by FPW when that company abandoned its site.

Even under the dissenting opinion in Eastern Enter-

prise, the imposition of CERCLA response costs pur-

suant to an expansive theory of “arranger” liability

would be unconstitutional as applied in the Fletcher

Paint case because GE is simply not responsible in

any real sense for the expenses which it is being

forced to bear. See 524 U.S. at 556-58, 566-68

(Breyer, J., joined by Stevens, Souter, and Ginsburg,

JJ., dissenting).

At the very least, this Court should avoid an in-

terpretation of CERCLA arranger liability that raises

such serious constitutional questions. See Ashwan-

der v. TVA, 297 U.S. 288, 348 (1936) (Brandeis, J.,

concurring).

CONCLUSION

The Ninth Circuit’s judgment should be reversed,

and this Court should prescribe the “sole purpose”

test or a similarly restrictive standard for the imposi-

tion of “arranger” liability in the context of the sale of

a useful product.

Respectfully submitted,

Tom H. Hill

GENERAL ELECTRIC

3135 Easton Turnpike

Fairfield, CT 06825

Jonathan Massey

7504 Oldchester Road

Bethesda, MD 20817

Jeffrey R. Porter

Andrew N. Nathanson

MINTZ, LEVIN, COHN, FERRIS,

GLOVSKY & POPEO, P.C.

One Financial Center

Boston, MA 02111

Laurence H. Tribe

(Counse] of Record)

Hauser Hall 420

1575 Marsachusetts Avenue

Cambridge, MA 02138

(617) 495-4621

Thomas C. Goldstein

Michael C. Small

Won S. Shin

AKIN GUMP STRAUSS

HAUFR & FELD, LLP

1333 New Hampshire Ave., NW

Washington, DC 20036

November 24, 2008

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.