By Andrew H. Perellis and Ilana Morady

If you sell products that you no longer need that contain residual hazardous substances, and the buyer mishandles them so as to create the need for remediation, are you liable under CERCLA for having arranged for disposal of the hazardous substance?

A federal District Court recently granted summary judgment to a CERCLA defendant concluding that because the company did not take intentional steps to dispose of a hazardous substance, it was not subject to CERCLA liability. In Carolina Power & Light Company (CP&L) v. Georgia Power Company et al., No. 08-CV-460 (E.D. NC February 1, 2013), CP&L filed a contribution complaint alleging that Georgia Power arranged for the disposal of hazardous waste when it sent electrical transformers containing PCB-laden oil to the Ward Superfund Site.

Yet Georgia Power only sent transformers to the site that were capped to prevent oil spillage or that had been drained of oil and contained only a residual oil sheen. The transformers also had resale value: the Ward Transformer Company repaired and reconditioned the transformers and sold them for a profit. 

The Court granted Georgia Power’s summary judgment motion based on its consideration of several factors:

  • Value and usefulness of materials sold. Because Ward was able to resell the transformers for a profit, and because the transformers were, by extension, useful materials, the Court found that Georgia Power had not arranged for the disposal of a hazardous waste. 
  • State of the product. Because the transformers were either capped or drained of oil save for a residual sheen, the Court found that Georgia Power’s purpose was not to dispose of the PCB-laden oil.
  • Knowledge. Although Georgia Power had general knowledge about transformer repair and PCBs in transformer oil, it did not have knowledge that the oil would be spilled or leaked at the Site.

This case is a reminder that simply sending a hazardous material to a Superfund site is not enough to establish arranger liability under CERCLA. Courts will undertake a fact-specific inquiry on whether a CERCLA defendant had the necessary intent to qualify as an arranger.