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United States v. North Landing Line Constr. Co.

Citation: 28 ELR 21511
No. Civ. 2:96CV1073, 3 F. Supp. 2d 694/46 ERC 2100/(E.D. Va., 04/20/1998)

The court holds that a federal electrical contractor is not liable under Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) § 107(a)(3) for response costs as a party who arranged for the disposal of transformers containing polychlorinated biphenyls (PCBs) at a Superfund site in Chesapeake, Virginia. The United States hired the contractor to upgrade the electrical system at a naval base. The contractor installed new transformers and hired subcontractors to remove the old transformers, which contained PCBs. Subsequently, the United States incurred response costs cleaning up PCBs at the site where the subcontractors disposed of some of the transformers.

The court first holds that the "crucial decision" approach to construing the term "arranged for disposal" set forth in Chesapeake & Potomac Telephone Co. v. Peck Iron & Metal Co., Inc., 814 F. Supp. 1293 (E.D. Va. 1993), should be applied, and that the government has failed to prove that the contractor made the crucial decision to dispose of the PCB-containing transformers at the site. The only evidence regarding the contractor's knowledge of the transformer disposal is that the subcontractor informed the contractor that he had found a buyer who would use the transformers for their normal business purpose, to supply electricity. The government introduced no evidence that the contractor knew or should have known that the transformers would ultimately arrive at the site. The contractor was not required to investigate beyond the subcontractor's representation that the transformers would be resold for their intended use. The court next holds that the problem of purposeful ignorance is nonexistent in this case. The government has introduced no receipts, memoranda, witnesses, or documentation from which the contractor should have known that the subcontractor would transfer the transformers to the site.

The court then holds that even if the court were to apply the "totality of circumstances" test advocated by the government, the contractor would not be liable as an arranger. Of the three primary factors to be considered under the test, only ownership may potentially weigh in favor of the government. The other two factors — intent and knowledge — weigh heavily in favor of the contractor. The contractor did not intend to dispose of the transformers in any illegal manner. And the contractor had no actual or constructive knowledge that the transformers would be disposed of at the site or disposed of in any environmentally harmful manner. Thus, the court grants the contractor's motion for a directed verdict as to its liability for response costs under CERCLA § 107(a)(3).

Counsel for Plaintiff
Helen F. Fahey
U.S. Attorney's Office
2100 Jamieson Ave., Alexandria VA 22314
(703) 299-3700

Counsel for Defendants
David A. Hearne
Outland, Gray, O'Keefe & Hubbard
112 Coastal Way, Chesapeake VA 23320
(757) 547-0171