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Vine Street v. Borg Warner Corp.

ELR Citation: 45 ELR 20018
Nos. 07-40440, (5th Cir., 01/14/2015)

The Fifth Circuit held that a corporation should not be held liable as an arranger under CERCLA for costs associated with cleaning up a plume of perchloroethylene (PERC) that discharged from a dry cleaning business that operated in the 1960s and 1970s. A district court in 2006 had held the corporation liable for activities associated with a former subsidiary of the corporation that furnished dry cleaning equipment, design assistance, and an initial supply of PERC to the cleaning business. Three years later, however, the U.S. Supreme Court held in Burlington Northern & Santa Fe Railway Co. v. United States, 556 U.S. 599 (2009), that the term "arrange" should be interpreted to imply "action directed to a specific purpose" and that an entity may qualify as an arranger under §107(a)(3) when it takes "intentional steps to dispose of a hazardous substance." In the instant case, the current owner of the property argued that the facts support a finding of intent because the subsidiary knew that water separators designed to release wastewater, but not PERC, into the sewer were not completely effective. In addition, the subsidiary played a key role in designing the dry cleaning facility, including connecting the equipment to drains that emptied into a sewer. But after a full review of the record, the court found that the subsidiary did not intend to dispose of PERC when it sold dry cleaning equipment and an initial supply of PERC to the cleaners. The court, therefore, reversed and vacated the lower court decision.