Lead Opinion
Affirmed by published opinion. Judge AGEE wrote the majority opinion, in which Judge SHEDD joined. Judge WYNN wrote a dissenting opinion.
In the early 1980s, Georgia Power, a utility company that supplies power to most of Georgia, sold many of its used electrical transformers at auction to Ward Transformer Company (“Ward”). These electrical transformers contained insulating oil, and some of that oil contained polychlorinated biphenyls (“PCBs”), toxic compounds that have been banned since 1979. Ward repaired and rebuilt used transformers, including those it purchased from Georgia Power, for resale to meet third-party customers’ specifications. In the process, Ward’s Raleigh, North Carolina, facility (the ‘Ward Site”) became contaminated with PCBs.
In the mid-2000s, the EPA added the Ward Site to its National Priorities List and initiated a costly removal action. Consolidated Coal Company (“Consol”) and PCS Phosphate Company, Inc. (“PCS”) have borne much of that removal cost. They filed a complaint under the Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”) against Georgia Power, contending that, as supplier of some of the transformers to Ward, it should be liable for a contribution to those costs. The district court granted summary judgment in favor of Georgia Power. For the reasons discussed below, we affirm the judgment of the district court.
I. Background
A. CERCLA
In 1980, Congress enacted CERCLA in response to the environmental and health risks posed by industrial pollution. Burlington N. & Santa Fe Ry. Co. v. United States,
CERCLA imposes liability upon four broad categories of “potentially responsible parties” (“PRPs”). Id. at 605, 608. 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. 42 U.S.C. § 9607(a). 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.
Id. § 9607(a)(3) (emphasis added). IfPRP status is established, a party faces liability under CERCLA for “all costs of removal or remedial action incurred by the United States Government or a State” as well as “any other necessary costs of response incurred by any other person consistent with the national contingency plan.” Id. § 9607(a)(4). CERCLA permits a PRP to “seek contribution from any other person
B. The Ward Site
Ward operated a business in which it purchased used, obsolete, or damaged electrical transformers and reconditioned or repaired them for resale. These types of transformers “step down” the voltage of electricity as it moves from power plants to end users. The particular type of electrical transformer at issue here typically contains an enclosed, vacuum-sealed external tank, an internal iron core, and coils consisting of copper or aluminum windings wrapped in cellulose insulation that tightly surround the core. These internal parts must be immersed in oil to work properly, and often the insulating oil contained PCBs.
Ward left some of the transformers it purchased on an outside lot. When Ward received an order, it would then select a transformer from the lot and recondition or rebuild it to the customer’s specifíea--tions. This process ranged from cleaning, testing and painting a transformer, to rebuilding it entirely by draining any remaining oil and removing the inner components by crane to perform work on the core and coils.
Given the sometimes significant work Ward performed on transformers, some oil spills occurred at the Ward Site.
C. The Georgia Power Transformers
When Georgia Power ceased using transformers, it sent them to its own repair facility. There, 'Georgia Power inspected each used transformer and designated it either for repair and reuse within the company or for disposal in a commercially reasonable manner. A 1974 Georgia Power bulletin provided procedures “for disposing of surplus, obsolete or damaged distribution line transformers.” (J.A. 1329.) The bulletin refers to the disposition of retired transformers as “scrapping,” but clarifies that scrapped transformers are “actually sold.” (Id. at 1331 (providing, instructions for “[w]hen transformers are scrapped, (actually sold)”).) The “Scrapping Procedure” instructs Georgia Power employees to “conclude the disposal of the transformers to the best advantage of the company.” (Id.)
Because PCBs are regulated by the Toxic Substances Control Act of 1976 (“TSCA”), Georgia Power had to adjust procedures after the passage of that Act. Georgia Power began testing surplus transformers for PCB concentration, with the resulting concentration dictating what course Georgia Power pursued with regard to a transformer. The TSCA prohibited Georgia Power from selling transformers with PCB concentrations at 50 parts per
Georgia Power transferred the transformers designated for sale to its Salvage Department, also known as the Investment Recovery department. Before sale, Georgia Power usually removed the free-flowing oil from the transformers through a double-pumping procedure. This process removed all oil from the transformers except a thin sheen coating the inside of the transformers and the cores and coils.
Moisture from the atmosphere can cause damage to the internal components of an exposed transformer lacking oil. “[M]ois-ture [to a transformer] is basically like cancer to a person.” (Id. at 2211.) Georgia Power, nonetheless, sometimes kept surplus drained transformers uncapped and exposed to moisture prior to sale.
Georgia Power sold used transformers in lots to the highest bidder at auction. Buyers placed bids on a per kilovolt-am-pere basis (“KVA,” a measure of transformer capacity) for the entire lot. The winning bidder could inspect the transformers and reject any lots or, in some cases, individual units that it did not wish to purchase. Georgia Power guaranteed title to the transformers to the buyer, but made no other warranties.
From September 1983 to October 1984, Ward successfully bid upon and purchased 101 Georgia Power transformers at four separate auctions. Ward bid on other lots of transformers that it did not win and on one occasion opted to take possession of only 11 transformers despite winning a lot that contained 18. Of the transformers that Ward purchased, Georgia Power designated approximately 20 as “scrap,” indicating that they needed repair. Ward records identify the same transformers and at least 20 others as “FAULTY,” which indicated an electrical defect due to a short, bad wiring, or some other problem. (Id. at 2215, 2219, 2222-23.)
For the 101 transformers it purchased, Ward paid from $0.77 to $3.21 per KVA for 43 units. For another 31 units, the lot prices ranged from $1.11 to $1.18 per KVA. And for the final 27 transformers, Ward paid from $1.74 to $2.16 per KVA. Because transformers typically contain thousands of pounds of metals, even broken transformers remained valuable.
D. Savannah Electric Transformers
In 1980, Savannah Electric and Power Company (“Savannah Electric”) sold 20 transformers at auction to Electric Equipment Company of New York (“EECNY”). EECNY then shipped these units to Ward for storage until it or Ward could find a third-party buyer. In 2006, Savannah Electric merged with Georgia Power with Georgia Power as the surviving entity.
When it sold the transformers to EEN-CY, Savannah Electric was updating its inventory of transformers by selling and replacing those that contained PCBs. To accomplish that goal it sold transformers that “were in good shape” that it “just had no use for.” (Id. at 2231.)
The 20 transformers that Savannah Electric sold to EECNY thus were in “perfectly good working order.” (Id. at 2233.) These transformers “had been in service and were simply de-energized and sold with no record of any problems or defects.” (Id.) All the units sold contained oil, with some level of PCB concentration. Ward performed work on some of the units to alter obsolete voltage configurations to meet the demands of certain prospective purchasers. Ward sold three units as “COMPLETELY REBUILT” with changed voltages, having opened the transformers to rewind the coils. (Id. at 2234-35, 2456.) Ward labeled three other transformers as “REBUILT AND GUARANTEED,” after baking out their coils and doing other work. (Id. at 2235-36, 2438.) However, all 20 transformers were functioning units that could have been used without alteration by a third-party purchaser with a matching KVA need.
Ward sold each of the 20 Savannah Electric transformers as well as the 101 Georgia Power transformers. The available records show that Ward sold the transformers for more than it had paid and expended varying degrees of resources on those transformers before sale.
E. Relevant Proceedings Below
In 2005, Duke Energy Progress, Inc. (“Progress,” f/k/a Carolina Power & Light Company) and Consol entered into an administrative settlement with the EPA, in which they agreed to perform removal actions at the Ward Site and to reimburse the EPA for removal costs. PCS later entered a trust agreement with Progress and Consol and contributed toward the costs of the Ward cleanup. Consol and PCS have each paid more than $17 million in cleanup costs related to the Ward Site.
In 2008 and 2009, Consol and Progress filed complaints in the U.S. District Court for the Eastern District of North Carolina against Georgia Power, PCS, and a number of other defendants seeking contribution for response costs under CERCLA. See 42 U.S.C. § 9613(f)- The district court consolidated the suits into two cases, one
The parties proceeded via a test case method, in which one defendant who had sold transformers to Ward and one defendant who had transformers repaired by Ward volunteered to litigate their respective liability, with discovery stayed for all other parties. The district court bifurcated the proceedings into two phases: the first to determine liability under CERCLA and, if necessary, the second to allocate damages. Georgia Power volunteered to be the test case for a selling defendant.
After discovery, Georgia Power moved for summary judgment. The district court granted the motion, finding that Georgia Power had “show[n] it did not have the necessary intent to create arranger liability under CERCLA.” Carolina Power & Light Co. v. Alcan Aluminum Corp. (CP & L),
Consol and PCS timely appealed, and we consolidated the appeals into the present case. We have jurisdiction over this appeal pursuant to 28 U.S.C. § 1291.
II. Discussion
Consol and PCS argue that the district court improperly focused on the overall value of the used transformers and Ward’s ability to profit from their resell. This, they contend, overlooks the possibility that Georgia Power had a dual intent: to gain revenue from the sales and to arrange for the disposal of PCBs. Georgia Power counters that it intended only to engage in legitimate sale transactions in a competitive market and that nothing in the record suggests its intent to dispose of PCBs.
We review de novo the district court’s determination of PRP status under CERCLA and grant of summary judgment. PCS Nitrogen Inc. v. Ashley II of Charleston LLC,
A. CERCLA Arranger Liability
What qualifies as “arranging for disposal” under CERCLA “is clear at the margins but murky in the middle.” NCR Corp.,
In Burlington, the Supreme Court considered whether Shell Oil had arranged for disposal of pesticides and other chemical products by shipping them to a wholesale distributor “under conditions it knew would result in the spilling of a portion of the hazardous substance by the purchaser or common carrier.” Id. at 612. The government contended that the phrase “arranged for disposal” should be interpreted broadly, based on the definition of the statutory term “disposal.”
The Supreme Court rejected the government’s position. To be sure, the Court acknowledged, “in some instances an entity’s knowledge that its product will be leaked, spilled, dumped, or otherwise discarded may provide evidence of the entity’s intent to dispose of its hazardous wastes.” Id. at 612. But the Court further concluded that “knowledge alone is insufficient to prove that an entity ‘planned for’ the disposal, particularly when the disposal occurs as a peripheral result of the legitimate sale of an unused, useful product.” Id. at 612. To qualify as an arranger, Shell would have had to sell the chemicals “with the intention that at least a portion of the product be disposed of during the transfer process by one or more of the methods” within the statutory definition of disposal. Id. at 612. Far from intending for the spills to occur, Shell “took numerous steps to encourage its distributors to reduce the likelihood of such spills.” Id. at 613. Given those circumstances, Shell’s “mere knowledge that spills and leaks continued to occur” provided “insufficient grounds” to find that Shell had arranged for a disposal within the meaning of § 9607(a)(3). Id. Thus, for arranger liability to be found, something more is required than mere knowledge “that some disposal may occur as a collateral consequence of the sale itself.” Id. at 612.
Prior to Burlington, we identified four factors in Pneumo Abex Corp. v. High Point, Thomasville and Denton Railroad Co. 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).
In Pneumo Abex, a parts foundry sought contribution for cleanup costs from railroads that shipped used wheel bearings
We concluded that the railroads did not arrange for disposal of the wheel bearings, for CERCLA purposes, by sending them to the foundry. “The intent of both parties to the transaction was that the wheel bearings would be reused in their entirety in the creation of new wheel bearings,” not simply disposed of as hazardous metals. Id. We likened the case to one “in which a party sells to another a material which becomes hazardous in its use, but is contained when sold.” Id.
Several factors led to that conclusion. The slag and dust would have been produced “even if virgin materials were used to make the new bearings.” Id. The dirt and grease were removed “incidental to remolding new bearings,” and “were not the hazardous materials, the metals themselves were.” Id. Also, the foundry paid for the bearings; the railroads did not pay for disposal of unwanted metal. Id. In sum, “[t]he parties contemplated that the bearings were a valuable product for which the Foundry paid a competitive price.” Id. at 775-76.
Consol and PCS do not contend that the sole or even primary purpose of the sale-of the transformers was to dispose of PCBs. On this record, Burlington would foreclose that claim. Instead, Consol and PCS contend Georgia Power and Savannah Electric had a secondary motive for the transformer sale — to dispose of PCBs — and that this secondary motive is sufficient to create arranger liability under CERCLA.
In that regard, neither Burlington nor Pneumo Abex foreclose arranger liability as a matter of law based on a secondary intent, at least when there is a sufficient factual basis for such a finding from the necessary “fact intensive and case specific” inquiry. Burlington,
The something more could be the seller’s “intentional steps,” beyond what is inherent to the sale, to dispose of the hazardous waste. Id. at 611,
Consol and PCS fail to establish a material issue of fact in dispute as to Georgia Power’s intent to arrange for the disposal of PCBs in the 101 transformers it sold to Ward. There is no direct evidence that Georgia Power intended, even in part, to arrange for the disposal of PCBs through these transactions. Nor is there circumstantial evidence from which a reasonable juror could infer that Georgia Power so intended.
1. Direct Evidence
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. (J.A. 1331.) Although Georgia Power’s procedures for offloading transformers refer to “scrapping,” and even to “disposal,” it is equally clear that, where permitted by the TSCA, Georgia Power meant those terms to reflect that the transformers were “actually sold.” (Id.) Georgia Power may have called these sales “disposals” in its 1974 procedures bulletin, but that has limited bearing on its intent to “dispose” of transformers as the word is construed in CERCLA, let alone the PCBs within those transformers.
Consol and PCS argue that Georgia Power’s PCB testing procedure for used transformers—-first testing the PCB concentrations and then processing the transformers differently based on the result—proves that one overall goal was to dispose of PCBs. The procedure, however, merely demonstrates Georgia Power’s intent to comply with the TSCA, the federal waste statute that compels a differential process based on products with PCB levels above or below 50 ppm. Georgia Power legitimately sought to sell used transformers to its greatest commercial advantage, and the TSCA circumscribed how Georgia Power went about accomplishing that goal. Compliance with the TSCA does not create a backdoor arranger liability factor under CERCLA.
In Burlington, the Supreme Court noted “the indispensable role that state of mind must play in determining whether a party has otherwise arranged for disposal ... of hazardous substances.”
2. Circumstantial Evidence
The circumstantial evidence surrounding Georgia Power’s transformers sales also fails to create a material issue of fact as to Georgia Power’s intent in selling the transformers. Consol and PCS argue that intent to dispose of the PCBs is evident from the nature of the sales. For example, they contend that some transformers were drained of oil and non-fune-tional, exposed to damaging moisture, or sold in lots at low prices. However, the circumstances of the sales, viewed through the lens of Burlington and supported by the Pneumo Abex factors, do not support arranger liability in this case. The record reflects the position of Consol and PCS rests on speculation, not a dispute over a genuine issue of material fact.
a) Intent for Reuse
The first Pneumo Abex factor asks whether the parties intended for “the materials ... to be reused entirely or re
Much of the parties’ disagreement as to this and the remaining Pneumo Abex factors turns on whether the court should apply the factors with respect to the overall product (the transformers) or only the hazardous material contained within, ignoring all other circumstances of the transaction. Where, as here, the hazardous materials are part of the overall product, a court may consider whether those materials were necessary to the sale, or instead, could and should have been separated. As we noted in Pneumo Abex, if the hazardous materials are an “incidental” component of a legitimate sale, then their inclusion in the transaction may well demonstrate nothing more than the seller’s intent to complete the sale of the overall product. Pneumo Abex,
On the other hand, if. the hazardous material could practicably have been excluded from the sale, that may suggest the seller entered the transaction with a further intent to arrange for a disposal. See, e.g., Cello-Foil,
At the product level in this case, there is no dispute that Ward, the purchaser, intended to reuse the transformers to the greatest extent possible, including as whole units. Ward was in the repair and resale business; it did not operate a disposal facility. The record does not establish that Ward purchased the transformers to resell for scrap. Nor does the record establish that the parties had any divergent intent for how Ward would handle the PCB-containing oil and oil-soaked parts. The evidence, such as it is, simply does not support an inference that either of the parties entered into the sale of the transformers with the intent that Ward would replace the oil or any oil-soaked parts as a matter of course.
Ward’s later decision not to reuse the PCB oil and oil-coated parts in some transformers does not imply that Georgia Power had an intent to dispose of the oil when selling the transformers. Third-party customer specifications, which directed Ward’s profit motive, dictated how Ward chose to process the transformers. While some of the former Georgia Power transformers might be sold “as is, where is” to a
Any disposal of PCBs occurred only as a result of Ward’s later business judgments, not any implicit agreement or understanding between Ward and Georgia Power at the time of auction. Nothing in the record reflects to the contrary. See NCR Carp.,
Other than speculation on the part of the appellants, there is no record basis to conclude that when Georgia Power sold the transformers to Ward, either party .had any intent that the transformers be scrapped or sold for parts as reclaimed materials as opposed to “reused entirely.” Thus, we find no error in the district court’s implicit conclusion that the first Pneumo Abex factor weighs in Georgia Power’s favor based on its “fact-intensive and case-specific” inquiry.
b) Value
Pneumo Abex also advises courts to consider “the value of the materials sold.” Id. Consol and PCS argue that the transformers had value “despite the tainted residual oil, not because of it.” (Appellant’s Br. 40.) Georgia Power emphasizes, as the district court did, that the transformers had real commercial value, for which Ward paid a “competitive price” and later sold them all for profit. See CP & L,
The record confirms that Georgia Power recovered revenue in excess of scrap value from the sales, and that Ward profited from the resale of the transformers. Ward purchased the transformers at competitive auctions, sometimes losing units to higher bids. Cf. Pneumo Abex,
The record does not support the conclusion that the presence of PCB-contaminated oil and parts depressed the transformers’ value. Consol and PCS present no evidence that Ward paid less for transformers based on PCBs, which could have suggested Georgia Power’s intent to “con-tractu away [its] responsibility” to dispose. Fla. Power & Light Co.,
Consol and PCS argue that certain factors relating to the sales — that Georgia Power sold the transformers in lots, allowed some of the coils to be exposed to moisture, and provided no warranties except as to title — reflect an intent to simply scrap the transformers to get rid of the PCBs in the oil. But Consol and PCS adduced no evidence that such sale factors had any relationship to a decision to dispose of PCBs and were not ordinary commercial terms of sale. The value of the transformers was in their ability to be resold to meet third-party customers’ orders. Cf. NCR Corp.,
c) Usefulness
The third Pneumo Abex factor considers “the usefulness of the materials in the condition in which they were sold.”
The PCB content thus does not appear to have factored into the continued usefulness of the auctioned transformers. Con-sol and PCS say that some materials in some transformers were discarded, but not that they had to be. Georgia Power did not auction all of the used transformers that regulations permitted it to sell; some
Once Ward acquired the transformers, the record does not show that Ward was required or necessarily had to remove residual oil or oil sheen containing the PCBs. Customer specifications dictated how Ward processed the transformers, and it was able to process all of them for sale. Again, we find no error in the district court’s application of this Pneumo Abex factor.
d) State at the Time of Transfer
Finally, the fourth Pneumo Abex factor addresses “the state of the product at the time of transferral,” and particularly whether the “hazardous material [was] contained or leaking/ loose.”
There is no evidence that any form of “disposal” under CERCLA occurred during the transformers’ transfer from Georgia Power to Ward. None of the undrained transformers were leaking oil at the time of sale because they were capped. CP & L,
e) Knowledge
Finally, relying on Burlington, Consol and PCS argue that Georgia Power’s intent to dispose can be inferred from its knowledge that Ward could spill PCBs while rebuilding the transformers. The district court observed that knowledge alone was insufficient for liability “where all other factors counsel toward a finding that Georgia Power lacked the requisite intent for arranger liability.” CP & L,
In some respects, Georgia Power appears even less culpable than Shell Oil in Burlington, which apparently had some knowledge “that some disposal may occur as a collateral consequence of the sale itself.” Id. at 612. Shell Oil was nonetheless found not to have sufficient intent for arranger liability. In contrast, the record here shows no knowledge by Georgia Pow
In sum, Consol and PCS fail under Burlington to adduce record evidence creating any genuine issue of material fact as to whether Georgia Power sold the transformers “with the intention that at least a portion of the product be disposed of during the transfer process by one or more of the methods” within the statutory definition of disposal.
C. Savannah Electric Transformers
Applying the same analysis, we find the circumstances as to the sale of the Savannah Electric transformers fall squarely on the side of a legitimate sale and against arranger liability. The 20 Savannah Electric transformers were in “perfectly good working order” and “were simply de-energized and sold with no record of any problems or defects.” (Id. at 2233.) The record appears to reflect that the Savannah Electric transformers were operational at the time of sale and could have been used without adjustment if they fit a particular customer’s KVA requirements. The record evidence indicates only that Savannah Electric intended for the transformers to be reused entirely (factor 1); that the transformers retained significant value (factor 2); that the transformers were in a useful condition (factor 3); and that they were not leaking (factor 4). “While Ward opted to rebuild some of the transformers, that decision was made to meet customer orders and reveals nothing about Savannah Electric’s intent at the time of the original sale.
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.
III.
For the foregoing reasons, we find that the circumstances of the transformer sales by Georgia Power and Savannah Electric do not indicate the intent to dispose of PCBs and therefore do not support arranger liability. The judgment of the district court is
AFFIRMED.
Notes
. Though PCBs have been banned since 1979, the EPA continues to employ CERCLA in an effort to clean PCB-contaminated sites. See, e.g., NCR Corp. v. George A. Whiting Paper Co.,
. Georgia Power disputes that contamination occurred after 1979, during the years at issue here. Ward witnesses testified that they believed contamination occurred before the early 1980s because, in approximately 1978, Ward implemented strict policies and procedures regarding handling of transformers and transformer oil. The district court, however, made no factual finding on this issue. Taking the evidence in the light most favorable to Consol and PCS, we assume that some contamination continued at the Ward Site through the period at issue in this case.
. The removed PCB-contaminated oil was disposed of by third-party contractors, sold to TSCA-authorized boiler facilities, or burned in Georgia Power’s TSCA-authorized generating plant. Oil with less than 10 ppm was reclaimed for reuse, and oil with 10 to 49 ppm was sold as a secondary fuel. There is no issue as to the disposition of this removed oil.
. A portion of Consol's and PCS' evidence stems from an affidavit that Georgia Power moved to strike. The district court assumed admissibility and denied the motion to strike as moot after granting summary judgment. (Id. at 3405.) For our analysis, we likewise assume that the evidence was admissible.
.The record provides sparse evidence from which to give any context to these per-KVA values. Richard Westover, who defendants below disclosed as an expert in used electrical equipment, testified that a sale at $3.00 per KVA would tend to indicate that the transformers were functional, whereas a sale
. CERCLA defines “disposal” as "the discharge, deposit, injection, dumping, spilling, leaking, or placing of any solid waste or hazardous waste into or on any land or water so that such solid waste or hazardous waste or any constituent thereof may enter the environment or be emitted into the air or discharged into any waters, including ground waters.” 42 U.S.C. § 6903(3).
. Consol and PCS argue that the district court’s failure to expressly state its resolution of the first Pneumo Abex factor is a fatal error that requires vacation of the judgment. We find the district court’s resolution of this factor to be sufficiently clear from its remaining analysis, and in any event, Pneumo Abex merely highlights some factors that courts "focus on” in carrying out the arranger liability inquiry.
Dissenting Opinion
dissenting.
In 1983 and 1984, Georgia Power Company (“Georgia Power”) sold Ward Transformer Company (“Ward Transformer”) over one hundred electrical transformers at “scrapping” auctions. The used transformers were in various stages of disrepair and contained varying amounts of oil tainted with polychlorinated biphenyls (“PCBs”) — potent human carcinogens “linked to skin cancer, liver cancer, brain cancer, intestinal cancer, bladder cancer, leukemia, birth defects in humans and animals, and other health problems.” United States v. Gen. Elec. Co.,
A party who arranges the disposal of hazardous materials may be liable for response costs under the Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”). The Supreme Court recently made clear that intent is central to the question of arranger liability. Burlington N. & Santa Fe Ry. Co. v. United States,
At the heart of this CERCLA case, then, is Georgia Power’s intent. Today the majority holds as a matter of law that a power company who, in its own words, “disposefs] of’ “scrap!]” electrical transformers known to contain varying levels of hazardous substances does not intend even in part to “dispose of’ hazardous substances within the meaning of CERCLA. Viewing the evidence in the light most favorable to the non-moving parties, as we must on summary judgment, however, a rational finder of fact could conclude otherwise.
I.
Congress enacted CERCLA in 1980 “in response to the serious environmental and health risks posed by industrial pollution.” Burlington Northern,
By enacting CERCLA, Congress sought to provide “a mechanism for clean up of sites polluted with hazardous waste” as well as “a mechanism by which a governmental entity or private party may recover the cost of clean up from all parties responsible for the pollution of the site.” Pneumo Abex Corp. v. High Point, Thomasville & Denton R. Co.,
As courts have repeatedly emphasized, CERCLA is a remedial statute and thus “must be given a broad interpretation to effect its ameliorative goals.” First United Methodist Church of Hyattsville v. U.S. Gypsum Co.,
With that background in mind, I turn to the CERCLA provision at issue here.
II.
A.
Central to this case is CERCLA’s arranger liability provision. Specifically, among the “covered persons” liable under CERC-LA for recovery costs are persons who “arranged for the disposal ... of hazardous substances.” 42 U.S.C. § 9607(a)(3). “[A]rranger liability was intended to deter and, if necessary, to sanction parties seeking to evade liability by ‘contracting away’ responsibility.” Gen. Elec. Co.,
CERCLA does not define “arrange.” In Burlington Northern, the Supreme Court held some amount of intent inheres in the word “arrange” and that an arranger must therefore intend, at least in part, to dispose of a hazardous substance for CERC-LA liability to attach. Arranger liability thus turns on a fact-sensitive analysis of the defendant’s state-of mind — a type of analysis rarely appropriate for summary judgment. See Charbonnages,
In reaching this conclusion, the Supreme Court relied on United States v. Cello-Foil Prods., Inc., for the proposition that “ ‘state of mind’ ” plays an “ ‘indispensable role’ ” in determining whether a party qualifies as an arranger. Burlington Northern,
In Cello-Foil, a solvent company shipped solvents in reusable drums, charging customers a deposit that would be refunded upon the drums’ return. 100 F.3d at-1230. Many customers returned drums with residual amounts of solvent inside. Id. “Some of the drums’ contents had been emptied as much as possible, some had been refilled with water, and some contained unused solvents of up to fifteen gallons.” Id. In most eases, the solvent company would simply pour any remaining contents of the drums onto the ground. Id. But nothing indicated that the customers knew how the solvent company handled residual solvents left in the drums.
The government brought an action to recover response costs from several solvent purchasers, alleging that they had “arranged for” the disposal of hazardous substances when they returned their drums in exchange for the deposit. Id. The district court granted summary judgment to the solvent purchasers, stating that “the purpose of Defendants’ returning of the drums was to recover the deposits
Notably, in concluding that the district court “acted too hastily in finding no showing of intent [as a matter of law],” the court cited Fourth Circuit precedent counseling that “issues regarding parties’ intent ... ‘present interpretive issues traditionally understood to be for the trier of fact.’ ” Id. at 1234 (quoting Charbonnages,
B.
Rather than heed the advice of Cello-Foil and defer resolving the question of intent until after trial, the majority concludes that no reasonable finder of fact could infer that Georgia Power intended to “dispose of’ PCB-tainted oil within the meaning of CERCLA when it, in its own words, “disposed of’ and “scrapp[ed]” its “surplus, obsolete or damaged” transformers by auctioning them off with varying amounts of PCB-tainted oil inside. J.A. 1331, 1329. In reviewing Georgia Power’s motion for summary judgment, we are bound to view the facts in the light most favorable to Appellants PCS Phosphate Company (“PCS”) and Consolidation Coal Company (“Consol”) and to draw all reasonable inferences in their favor. Garofolo v. Donald B. Heslep Assocs., Inc.,
Many of the transformers at issue were nothing more than “usable carcasses,” while others would have to be “completely rebuilt.” J.A. 1279. Perhaps not surprisingly, then, Georgia Power left the transformers at issue exposed to the elements, knowing that moisture exposure could cripple the transformers’ ability to function. Some of Georgia Power’s transformers ended up with an “oil residue & rainwater mixture” inside of them. J.A. 1427. Such moisture to a transformer is “basically like cancer to a person” as it- is “the number one cause of failures.” J.A. 1250. Georgia Power referred to its sale of the transformers as “scrapping” and “disposing of’ them. J.A. 1331. And it sold the transformers with no minimum price and no warranties other than as to title.
Further, while Georgia Power drained some of its transformers of insulating oil, some still contained gallons of oil even after being drained. Indeed, one of the drained transformers had “about 5 [gallons]” of 17.4 parts per million (“ppm”) PCB oil in it after arriving at Ward Transformer. Others were not drained at all. J.A. 2225. In fact, though regulations under the Toxic Substances Control Act of 1976 (“TSCA”) prohibited Georgia Power from selling transformers containing greater than 50 ppm PCB oil, Ward Transformer’s records show that one of Georgia Power’s transformers arrived with 488 ppm PCB oil still inside. Significantly, any oil-laden transformers would have to
What is more, Georgia Power had a keen awareness of the PCB contents of its transformers and their hazardous nature. It also knew from its own employees’ experiences that transformer repairs were likely to result in the spilling and disposal of oil. Significantly, the district court described such disposal events at the Ward Transformer facility as “inevitable.” Carolina Power & Light Co.,
In this Circuit, we have long recognized that “subjective states and objective manifestations of intent ... present interpretive issues traditionally understood to be for the trier of fact.” Charbonnages,
As in Cello-Foil, Georgia Power may well have disposed of the transformers at issue here for economic gain. That the arrangement was economically beneficial does not, however, mean that it was not also intended as a way of getting rid of hazardous materials. A transaction may have multiple purposes, and a reasonable finder of fact could determine here that in selling its transformers to Ward Transformer, Georgia Power intended to “dispose of’ the used transformers and the PCB-laden oil therein.
C.
In reaching the opposite conclusion, the majority accords essentially no significance to Georgia Power’s use of terms like “dispose” and “scrapping” to describe its treatment of the transformers it sold to Ward Transformer. It is true that Burlington Northern instructs courts to look “beyond the parties’ characterization of the transaction as a ‘disposal’ or a ‘sale’ and seeks to discern whether the arrangement was one Congress intended to fall within the scope of CERCLA’s strict-liability provisions.”
In Pneumo Abex, we identified several factors courts have looked to in determining the intent of a transaction, i.e., to discern whether it “was for the discard of hazardous substances” or “for the sale of valuable materials”: whether the materials were to be reused entirely or reclaimed and then reused; the value of the materials sold; the usefulness of the materials in the condition in which they were sold; and the state of the product at the time of transferal. Pneumo Abex,
Regarding the first factor, the parties could not have intended that the Georgia Power’s transformers would be used “in their entirety.” Id. For Ward Transformer to “reuse” Georgia Power’s transform
Regarding the second factor' — '“the value of the materials sold” — the majority opinion suggests that this factor favors Georgia Power because Ward Transformer was able to resell the transformers at a profit. However, a party is not absolved of liability as an arranger merely because it is able to identify some market, however small, for a product containing the hazardous substances it seeks to discard. And as already discussed, a transaction may have multiple motivations, including economic gain and disposal of hazardous substances.
The third Pneumo Abex factor looks to the “usefulness of the materials in the condition in which they were sold.”
III.
Viewing the evidence and reasonable inferences in the light most favorable to Consol and PCS, as we must on summary judgment, a reasonable factfinder could decide that Georgia Power intended, at least in part, to dispose of hazardous waste when it sold Ward Transformer its used, broken, and obsolete transformers laden with carcinogen-ridden oil at “scrapping” auctions. Accordingly, I respectfully dissent.
. The majority also points to NCR Corp. v. George A. Whiting Paper Co., as supporting summary judgment for Georgia Power here.
. In its decision below, the district court relied in large part on Florida Power & Light Co. v. Allis Chalmers Corp.,
In Florida Power & Light, a utility purchased transformers containing PCB-tainted oil from the manufacturers of the transformers and used them in their business for forty years.
It is also notable that the utility that sold the transformers for scrap in Florida Power & Light participated in cleanup efforts at the contaminated site. See United States v. Pepper’s Steel & Alloys, Inc.,