During the 1990s, there was an interesting string of Superfund actions that addressed what turned out to be a common problem. Many products that contain hazardous materials are shipped in 55 gallon drums. When the drums arrive at their destination, usually a manufacturing facility, the product is used. The question is, what do you do with the empty drums? Since many facilities
have no use for the drums, there developed a business that was willing to accept the drums, clean them up and resell them. The problem was that the drums often contained some of the hazardous material. The drums were “RCRA empty,” but that designation allows some material to remain in the drum. Many of these refurbishing companies were a bit . . . lax . . . in their cleanup procedure and the residual product ended up on the ground. When the contamination was discovered, the company was often unable to pay for the cleanup. EPA would review all the records of the company and usually pursued the top 10 drum suppliers. These top 10 suppliers formed a committee, looked through the receipts and went after the other 500 -- or 5000 -- customers who had supplied the facility with drums. EPA was extremely successful in its endeavor and a large number of these “drum-and-barrel” facilities were cleaned up by thousands of unsuspecting companies that had sent the barrels to the facilities only to find, many years later, that mishandling of the barrels cost them a lot more money and time.
EPA’s underlying theory for this recovery was that all persons are responsible for hazardous materials from “cradle-to-grave.” It's one of those catch-phrases that rolls off the tongue so easily. It means that once you buy a hazardous material, you are responsible for every drop of it until its final disposition either by incorporation into a product or by arranging for its proper disposal.
A recent case from the Federal District Court of Connecticut (which will certainly be repeated) illustrates that a lot can happen in a decade or two.
In the case of Schiavone and Harbor Circles, LLC v. Northeast Utilities Service Company, the defendants, from 1971 through 1978, would obtain and drain electrical transformers of their PCB-containing oil. They then sold the transformers to a scrap yard. Not surprisingly, the sale contract made no reference to the residual PCBs or the disposal of hazardous substances. As you would guess, the scrap yard was eventually identified as a clean up site for PCBs and the suppliers of the scrap transformers were pursued. The Court first noted that the plaintiff failed to show that the transformers supplied to the scrap yard had any PCBs left in them. However, the Court went on to say that even if PCBs had been included, it would not matter. The District Court stated:
It is undisputed that the defendants had a specific purpose of disposing of used transformers, and in the case of the sales to Kasden, by selling them as scrap metal. The defendants have produced evidence that would support a conclusion that their specific purpose with respect to their dealings with Kasen did not extend beyond that, i.e., to disposing of any oil that was In the transformers or any PCBs that were in such oil. . . .
[T]he defendants’ specific intent to dispose of the transformers themselves is not enough to make them “arrangers” under Section 9607(a), even if the defendants had knowledge that oil was in the used transformers when they sold them to Kasden. [Citing to Burlington Northern v. United States]. The plaintiffs have produced no evidence that could support a conclusion that the defendants had as a purpose in their dealings with Kasden disposing of transformer oil containing PCBs.
The Court sustained the defendants’ motion for summary judgment because the intent element of arranging for disposal could not be established even if the actual release could be. Put another way, if an inevitable release is certain to happen based on the product supplied, but the supplier really hopes that the certainty will not occur, then the supplier is not responsible for the release. State of mind, particularly one rooted in fantasy, is a wonderful thing.
Still, it's hard to criticize Judge Thomson’s conclusion. It certainly fits with the holding of Burlington Northern. After all, if you intend no harm, why should you have to pay for it when it happens? In slightly different terms, I have gotten the same question from my five-year old. It is a bit disturbing to know that he now has the backing of the Supreme Court.
My only question is, now what? Are these orphan sites going to be cleaned up by EPA? Doesn’t this just shift the cost of cleanup from the refurbishing company to the public? Don’t get me wrong, perhaps that's the "fair" result. I just think someone should tell Congress while they are considering reauthorization of the Superfund tax.
And while we’re at it, do the thousands of individuals and companies who paid to clean up the old drum-and-barrel sites get their money back? I’m just wondering.
RELATED POSTS:
R.I.P. Superfund Arranger Liability: 1980 - 2010
Burlington Norther (Part 1): The Shell Game Of Shipping
