R.I.P. Superfund Arranger Liability: 1980 - 2010
It looks like the last vestiges of arranger liability under CERCLA are all but gone.
In a recent Fifth Circuit Court of Appeals decision, Celanese Corp. v. Martin 
Eby Construction Company, Inc., the Court addressed what would seem to be a fairly common set of facts. In 1979, the Coastal Water Authority of Texas hired Eby to install an underground water pipeline which was to cross several existing underground pipelines, including Celanese’s methanol pipeline. Eby did this by excavating an area to work which exposed the methanol pipeline. Eby then ran a section of the water pipeline below the methanol pipeline and backfilled that area. It then moved onto the next section and repeated the same process.
Not particularly surprisingly, at one point in the process an Eby employee struck and damaged the methanol pipeline with the backhoe. However, according to the recited facts, that employee did not know what he had struck and there was no contemporaneous report of the incident. According to the opinion, “neither Eby nor any of its employees knew that the work on the CWA pipeline had damaged the Celanese pipeline.”
The opinion does not go into a lengthy description of the damage to the pipeline. However, it does say that over the course of several years, the dented pipe deteriorated and eventually allowed methanol to leak from the pipe. The leaking was discovered in 2002 and by 2008, Celanese had removed and disposed of over 232,000 gallons of methanol.
Celanese sued Eby under CERCLA to recover its clean-up costs. An advisory jury found that the release at the site would not have occurred but for the 1979 damage to the methanol line. However, the Court also found that Eby did not intentionally damage the pipeline.
The Fifth Circuit reviewed the United States Supreme Court case of Burlington Northern v. United States and found that Eby could not be held liable as an arranger. The reasoning was that under Burlington Northern, Eby could be liable as an arranger “only if it took intentional steps or planned to release methanol from the Celanese pipeline.” Since Eby did not intentionally damage the pipeline and allegedly did not even know it had struck the pipeline, the intent element of arranger liability could not be satisfied.
On appeal, and for the first time, Celanese argued that the only reason that Eby did not know that it had struck the pipeline was it “consciously disregarded” its obligation to investigate what it had hit in the pipeline corridor and to rectify the damage. This concept, which will become very prevalent in future arranger-liability cases, is also known as “willful blindness.” The general concept is that the actor intentionally fails to investigate or to acquire information in order to avoid having the necessary knowledge that could satisfy the intent requirement of Burlington Northern.
As one would expect, the Fifth Circuit first said that the new claim could not be considered because it was untimely argued. However, the Court went on to say that even if it had been presented, it would be unsuccessful. The Fifth Circuit returned to the reasoning of Burlington Northern:
Celanese argues that Eby’s conscious disregard of its duty to investigate is tantamount to intentionally taking steps to dispose of methanol. Burlington, however, precludes liability under these circumstances. In Burlington, the Court declined to impose arranger liability for a defendant with more culpable mens rea. The defendant had actually arranged to ship hazardous chemicals under conditions that it knew would result in the spilling of a portion of the hazardous substance by the purchaser or common carrier . . . . Given that there was no arranger liability under those circumstances, we fail to see how we can impose such liability here when Eby did not even know that it had struck the Celanese pipeline. Therefore, we hold that Eby is not liable as an arranger under CERCLA.
This is a pretty remarkable holding. The Fifth Circuit is saying that even if Eby had chosen to avoid doing further investigation, it would not have arranger liability because it had not intended to dispose of a hazardous substance. It was, in essence, an accidental act that caused a release. And since no one intends an accident, there is no liability. (I remember making this argument to my parents many times in my formative years. It didn’t work. Though too late by forty years, it feels good to be vindicated by a federal court of appeals).
Stepping back and looking at the bigger picture (always a mistake in doing a legal analysis), it is undisputed that Eby caused damage to a pipeline that resulted in a massive release of a hazardous substance over the course of several years and, despite these facts, Eby cannot be held liable for the release as an arranger. How’s that “polluter pays" principle working for you?
Post Script: I wonder if Eby leased the backhoe? If so, perhaps Celanese can sue the backhoe owner under a theory that the leased equipment caused the release. Just a thought.
RELATED POSTS: Burlington Northern (Part 1): The Shell Game of Shipping
River? I would note that 
