Fifth Circuit Rules No CERCLA “Arranger Liability” Absent an Affirmative “Intent to Dispose”

Sidley Austin LLP
Marie L. Fiala, Samuel I. Gutter and Peter R. Steenland

January 15, 2015

In a case involving “arranger” liability under CERCLA (the Comprehensive Environmental Response, Compensation and Liability Act), the Fifth Circuit on January 14 reversed a Texas federal district court that had held BorgWarner liable for leaks of dry cleaning solvent into the environment from equipment sold by Norge, an affiliate of BorgWarner’s corporate predecessor. Vine Street LLC v. Borg Warner Corp., No. 07-40440 (5th Cir., Jan. 14, 2015). Following the Supreme Court’s landmark decision in Burlington Northern & Santa Fe Railway Co. v. United States, 556 U.S. 599 (2009), the Fifth Circuit held that Norge had no “intent” to dispose of dry cleaning solvent and remanded to the district court to enter judgment in favor of BorgWarner.

Norge designed and sold the dry cleaning equipment to the plaintiff Vine Street LLC, including a system for reclaiming perchloroethylene (PERC). Over time, some of the PERC leaked into sewer pipes and from there into the ground. Vine Street sued to recover clean-up costs. Following a full trial, in 2006 the district court for the Eastern District of Texas found BorgWarner liable for 75 percent of the clean-up costs on the grounds that Norge knew that its reclamation system wasn’t completely effective and that some PERC would inevitably be discharged to the sewer system.

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