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Media Alerts - Consolidation Coal v. Georgia Power -- Fourth Circuit
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April 30, 2015
  Consolidation Coal v. Georgia Power -- Fourth Circuit
Headline: CERCLA Liability for 400,000 Tons of Contaminated Soil Requires More than Eventual Contamination

Area of Law: Environmental Law

Issue Presented: Whether the district court erred in granting summary judgment in favor of a utility supplier by denying arranger liability under CERCLA for the sale of a product that led to severe environmental contamination.

Brief Summary: In 1980, Congress enacted the Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA") in response to the environmental and health risks posed by industrial pollution. The Act was designed to promote timely cleanup of hazardous waste sites and to ensure that cleanup costs were borne by those responsible for the contamination. Therefore, CERCLA imposes liability upon various potentially responsible parties, including those persons who arrange for the disposal or treatment of hazardous substances ("arranger liability").

In the early 1980s, Georgia Power Company ("Georgia Power") and Savannah Electric and Power Company (who later merged with Georgia Power), sold many of their used electrical transformers to Ward Transformer Company ("Ward") and Electric Equipment Company of New York. These transformers contained insulating oil and polychlorinated biphenyls ("PCBs"), which are toxic carcinogens that have been banned since 1979. Ward rebuilt and reconditioned some of these transformers at a site in Raleigh, North Carolina, resulting in 400,000 tons of contaminated soil. As a part of an administrative settlement with the EPA, PCS Phosphate Company and Consolidation Coal Company ("Appellants") have each paid more than $17 million in cleanup costs. Appellants filed a CERCLA complaint against Georgia Power, claiming Georgia Power intended to dispose of the PCBs when it sold the transformers to Ward and thus, should be subject to arranger liability and responsible for a portion of the cleanup costs. The United States District Court for the Eastern District of North Carolina granted summary judgment in favor of Georgia Power. The district court found that Georgia Power did not have the necessary intent for arranger liability. On appeal Appellants argued that the district court improperly focused on the overall value of the used transformers and Ward's ability to profit from their resale.

The United States Court of Appeals for the Fourth Circuit affirmed the district court's decision. An entity is subject to arranger liability under CERCLA if the entity enters into a transaction "for the sole purpose of discarding a used and no longer useful hazardous substance." However, between a clear "sole purpose" and the sale of a product with no knowledge of its future potential for contamination, courts must undergo a fact-intensive inquiry and look beyond the entity's own characterization of the transaction. The Fourth Circuit first found there was no genuine issue of material fact as to whether the Georgia Power intended to dispose of PCBs by selling the transformers. As the court explained, arranger liability requires more than "selling a product to a buyer who at some point down the line disposes of a hazardous substance that was within the product." Here, the record did not contain any evidence of "intentional steps" on the part of Georgia Power to dispose of the hazardous waste. The evidence that was introduced, the court concluded, supported a reasonable motive of Georgia Power: to recover revenue. There was no evidence that the contamination took place in conjunction with the sale of the transformers, and Appellants acknowledged that the transformers were not leaking at the time of the sale. Therefore, absent any direct or circumstantial evidence indicating Georgia Power intended to dispose of PCBs when they sold the transformers, the Fourth Circuit affirmed the entry of summary judgment.

In dissent, Judge Wynn found that intent giving rise to arranger liability is generally a question for the finder of fact. He further stated that a reasonable fact finder could decide that Georgia Power intended, at least in part, to dispose of hazardous waste when it sold its "used, broken, and obsolete transformers laden with carcinogen-ridden oil" to Ward. This analysis of Georgia Powers' state of mind, concluded Judge Wynn, is rarely appropriate for summary judgment.

To read the full opinion, please click here.

Panel: Judges Shedd, Agee, and Wynn

Argument Date:
10/30/2014

Date of Issued Opinion:
3/20/2015

Docket Number:
No. 13-1603

Decided: Affirmed by published opinion

Case Alert Author: Jamie Lee, Univ. of Maryland Carey School of Law

Counsel: ARGUED: Daniel M. Darragh, COHEN & GRIGSBY, P.C., Pittsburgh, Pennsylvania; Michael Howard Ginsberg, JONES DAY, Pittsburgh, Pennsylvania, for Appellants. Daniel S. Reinhardt, TROUTMAN SANDERS LLP, Atlanta, Georgia, for Appellee. ON BRIEF: Julie W. Vanneman, COHEN & GRIGSBY, P.C., Pittsburgh, Pennsylvania, for Appellant Consolidation Coal Company. Brian J. Murray, Chicago, Illinois, Mary Beth Deemer, JONES DAY, Pittsburgh, Pennsylvania, for Appellant PCS Phosphate Company, Incorporated. Hollister A. Hill, Jaime L. Theriot, Atlanta, Georgia, Whitney S. Waldenberg, TROUTMAN SANDERS LLP, Raleigh, North Carolina, for Appellee.

Author of Opinion: Judge Agee; Judge Wynn, dissenting

Case Alert Circuit Supervisor:
Professor Renée Hutchins

    Posted By: Renee Hutchins @ 04/30/2015 10:10 AM     4th Circuit  

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