Chemical Purchasers May Be Operators and Liable for Releases That Occur During Shipment

Any company that purchases chemical products should be aware that it could potentially be liable for releases that occur during the shipment of the purchased products. In a recent New York District Count case, Kemira Water Solutions, Inc. (“Kemira”) was found liable for cleanup costs incurred when a chemical it purchased leaked from its packaging. APL Co. v. Kemira Water Solutions, Inc., No. 11 Civ. 1686, 44 ELR 20047 (S.D.N.Y., February 25, 2014). Kemira purchased the chemical product from a Taiwanese supplier and specified how the chemical was to be packaged. The packaging instructions required, among other things, that the chemical be packaged in such a manner that the material would arrive “intact and without material leakage.” Kemira argued that it was not an operator because the Taiwanese chemical supplier was responsible for packaging the chemical as specified. The court disagreed and found Kemira liable as an operator because it had a role in the packaging scheme.

Kemira also argued that it was a “shipper” pursuant to Section 9601 (2) (B) of CERCLA, which provides that shippers are not liable for releases during transport that result solely from circumstances or conditions beyond the shipper’s control. The court rejected Kemira’s argument and said there can only be one “shipper,” which in this case was the Taiwanese chemical supplier that negligently packaged the chemicals.

It is important to note that the court’s decision was not driven by an interest to find a viable party to pay for cleanup costs. Even though the Taiwanese chemical supplier had gone out of business and was therefore not a viable potential responsible party (“PRP”), it was not that fact that drove the court to find Kemira liable. In fact, the court seemed to acknowledge that Kemira had minimal involvement with, or limited proof of responsibility for, the shipment. Nonetheless, Kemira’s liability was clear under CERCLA and arguments about its lack of involvement/responsibility would need to be considered during an equitable allocation. Though it is not addressed in the decision, perhaps Kimera would have been better off not providing any specifications for the chemical’s packaging.