Type: Law Bulletins
Date: 04/12/2011

Electrical Utility Is Not a CERCLA "Arranger"

Plaintiffs, who owned a scrap yard, sued two of its utility customers under CERCLA for contribution towards the $1.37 million cost to conduct the State-mandated remediation of the on-site PCB contamination in Schiavone v. Northeast Utilities Service Company, 2011 WL 1106228 (D. Conn. Mar. 22, 2011).  The defendants had contracted with the plaintiffs to sell their used transformers for scrap.  The plaintiffs testified that they would pickup the transformers and bring them to their scrap yard where they would cut them open with a blow torch, remove the copper, and burn off the oil in the transformers.  Plaintiffs never tested the oil for PCBs, which are hazardous substances under CERCLA.

The district court followed the Supreme Court’s analysis of CERCLA arranger liability in Burlington N. of Santa Fe Ry. Co. v. United States, ---- U.S. ----, 129 S. Ct. 1870 (2009), where the Supreme Court reasoned that the term “arrange” means action directed to a specific purpose.  The District Court also noted that it would be error not to recognize the indispensible role that state of mind must play in determining whether a party has arranged for the disposal of, in this case, transformers.

The court found that the plaintiffs produced no evidence to create a genuine issue of material fact that the defendants intended to dispose of PCB-tainted oil when they arranged for the sale of their used transformers.  In contrast, the court concluded that the defendants produced persuasive contractual and other evidence to demonstrate that their specific intention, and the sole object, of their dealings with the plaintiffs was limited to the sale of scrap and not the arrangement for disposal of PCBs, even if the defendants had knowledge that the transformers sold may have contained oil with PCBs.  The court granted summary judgment in favor of the defendants, and found them not liable for contribution to the PCB cleanup.

Prior to the 2009 Burlington decision, the intent of a Defendant was simply one of several factors used by courts to determine if an entity was liable as an arranger pursuant to 42 U.S.C. § 9607(a)(3).  See, e.g., U.S. v. B&D Electric, Inc., 2007 WL 1395458 (E.D. Mo. 2007).  Since the Supreme Court’s ruling in Burlington, however, and as reflected in the Schiavone case, the analysis of CERCLA arranger liability will be more streamlined and, perhaps, more likely to be resolved by summary judgment.

For more information on CERCLA liability or other environmental matters, please contact Laura Ringenbach or any member of Taft’s Environmental Practice Group.

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