Georgia Power Co. sold used electrical transformers at an auction to Ward, who repairs and rebuilds transformers to meet the specifications of third-party consumers and resells them to those third parties. In the process of rebuilding the transformers, Ward’s property became contaminated from PCBs in the transformer. The property became a CERCLA site, and the company that bore most of the cost of the expensive removal action sought to join Georgia Power Company as a potentially responsible party (PRP). Georgia Power Company filed a motion for summary judgment on grounds that the company was not liable as a PRP because there was no evidence that the company intended, even in part, to dispose of the PCBs through selling the transformers. The district court agreed and granted summary judgment, finding that Georgia Power had “show[n] it did not have the necessary intent to create arranger liability.”
Circuit Judge Agee … CERCLA imposes liability upon four broad categories of “potentially responsible parties” (“PRPs”)…. Briefly stated, these categories are (1) owners and operators of a vessel or facility, (2) any person who owned or operated a facility at the time a hazardous substance is disposed, (3) those persons who arrange for disposal or treatment of hazardous substances, and (4) those who accept hazardous substances for transport to disposal or treatment facilities….
The case before us involves the third liability category, often termed the arranger provision, which imposes liability on any person who by contract, agreement, or otherwise arranged for disposal or treatment … of hazardous substances owned or possessed by such person, by any other party or entity, at any facility or incineration vessel owned or operated by another party or entity and containing such hazardous substances…. Consol, Progress, and PCS alleged that Georgia Power “arranged for disposal … of” PCBs through its sales of used transformers to Ward….
… What qualifies as “arranging for disposal” under CERCLA “is clear at the margins but murky in the middle.” … At one extreme, liability plainly attaches if an entity enters a transaction “for the sole purpose of discarding a used and no longer useful hazardous substance.” … On the other extreme, there is no liability “merely for selling a new and useful product if the purchaser of that product later, and unbeknownst to the seller, disposed of the product in a way that led to contamination.” … “[B]etween these two extremes” are arrangements where “the seller has some knowledge of the buyers’ planned disposal or whose motives for the ‘sale’ of hazardous substances are less than clear.” In those cases, the court must undertake a “fact-intensive inquiry that looks beyond the parties’
characterization of the transaction as a ‘disposal’ or a ‘sale.’” ….
[In Pneumo Abex] we identified four factors … that could be useful in “determining whether a transaction was for the discard of hazardous substances or for the sale of valuable materials”: [1] the intent of the parties to the contract as to whether the materials were to be reused entirely or reclaimed and then reused, [2]
the value of the materials sold, [3] the usefulness of the materials in the condition in which they were sold, and [4] the state of the product at the time of transferral (was the hazardous material contained or leaking/loose)…. We also recognized that there was “no bright line” and that “[a]
party’s responsibility … must by necessity turn on a fact-specific inquiry into the nature of the transaction.”… [A] party does not “intend to dispose” of a hazardous substance solely by selling a product to a buyer who at some point down the line disposes of a hazardous substance that was within the product….
… Consol and PCS have pointed to no direct evidence that Georgia Power auctioned its transformers to Ward intending to dispose of the contained PCBs.
What direct evidence does exist of Georgia Power’s subjective intent reflects only that it wished to sell its used transformers “to the best advantage of the company”—to recover revenue…‥ On this record, the Pneumo Abex factors counsel against arranger liability and do not support the inference that Savannah Electric’s intent was to dispose of PCBs. Accordingly, the district court did not err in awarding summary judgment to Georgia Power.
CRITICAL THINKING:
After reviewing the four factors discussed in the case, do you agree with the court’s decision to uphold the summary judgment? What facts, if proven, might have changed the outcome of the case? Why?
ETHICAL DECISION MAKING:
What stakeholders would benefit from this decision? What values are furthered by it?