By Andrew H. Perellis, Philip L. Comella, and Craig B. Simonsen

In U.S. v. D.S.C. of Newark Enterprises Inc., No. 09-2270, (D.N.J. 6/12/13), the Court found that the sale of an ongoing business with hazardous materials remaining on site, which is later released by the purchaser, does not make the seller liable for having arranged for disposal.

The case concerns U.S. Environmental Protection Agency (EPA) response costs incurred during the cleanup of a three-acre industrial site (Site), located in Trenton, New Jersey. In 1983 the Site was sold, including its manufacturing equipment, baghouses, works-in-process, raw material inventories, and supplies. The parties to the sale characterized the inventories as “useful products” and valued the products as part of the business assets that were sold as a “going concern” for over $2 million.

The new owner began its brake manufacturing operations on the Site, including use of the baghouses and other equipment purchased. A leasee then leased the Site from the owner and manufactured brake shoes and pads on the Site from 1983 until approximately 2002. The operational processes created asbestos dust, which was collected and stored in the baghouses located on the Site.

In 2002, the leasee “ceased operations at the [Site], abandoning barrels and other containers of hazardous substances and waste materials….” The EPA then engaged in removal activities. As a result, the EPA incurred response costs of over 1.2 million in the Site cleanup.

In the end, the Court found that contrary to the buyer’s “argument that any use of the baghouses constitutes disposal, containerizing asbestos dust for temporary storage does not constitute a ‘disposal’ under CERCLA.” Further, the seller had demonstrated to the Court that the record revealed no facts indicative of an “intent to arrange for the disposal of hazardous substances.”