ELR Citation: ELR 21048
No(s). IP 90-1877C (S.D. Ind. Feb 10, 1994)

The court holds that two companies that sold capacitors containing polychlorinated biphenyls (PCBs) to a broker for resale are not liable as arrangers under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) §107(a)(3) for response costs the United States incurred cleaning up the site of the broker's warehouse. The companies sold PCB capacitors to the broker at a discount, but with no right of return, and frequently also sent capacitors at no charge. They made the sales after deciding to remove all PCB materials from their inventories when it became apparent that the U.S. Environmental Protection Agency would soon begin regulating storage, handling, and sale of PCBs. The broker maintained a successful business reselling the capacitors until a fire destroyed its warehouse, releasing the PCBs into the environment. The court holds that under CERCLA, the companies are persons, they owned the PCBs, the fire constituted a release of a hazardous substance, the warehouse was a facility, and the United States incurred response costs as a result of the release. Thus, the companies may be held liable if their actions constituted arranging for the disposal of a hazardous substance. The court next holds, however, that because CERCLA defines disposal by reference to the Solid Waste Disposal Act (the Resource Conservation and Recovery Act), disposal requires that the substance at issue be a waste, and that for a substance to be waste, it must be worthless. The court holds that the capacitors were not waste because they had substantial market worth, as evidenced by consumer demand and the broker's success in selling them. Thus, the sales did not constitute arranging for the disposal of a hazardous substance. The court holds that selling a useful, marketable product that is not destined to enter the environment does not constitute "disposal" under CERCLA. The sales also are not within the scope of CERCLA §107(a)(3) because the event that caused the release was an unanticipated fire, not a disposal that the companies arranged for. Finally, the court rejects the government's motion for reconsideration of a decision to exclude expert testimony. The proposed witness lacked the specialized knowledge to testify about the general marketability of surplus capacitors.

[A prior decision in this litigation is published at 23 ELR 20633.]

Counsel for Plaintiff
Thomas P. Carroll
Environment and Natural Resources Division
U.S. Department of Justice, Washington DC 20530
(202) 514-2000

Counsel for Defendants
Sherry W. McGrath
Barnes & Thornburg
1313 Merchants Bank Bldg., 11 S. Meridian St., Indianapolis IN 46204
(317) 638-1313