Arranger Liability Under CERCLA; Courts Know It When They See It

Two recent decisions from the Southern District of Texas make clear that, like pornography, the courts know arranger liability under CERCLA when they see it. Both cases involve defendants in private cost recovery actions arising out the Tex Tin Superfund Site in Texas City, Texas. The Tex Tin Settling Defendants Steering Committee (known by the mellifluous acronym TTSDSC) brought suit against Dow Chemical and Bayer USA, alleging that each had arranged for the disposal of hazardous materials at the Tex Tin Site. Dow Chemical obtained summary judgment that it was not liable for its shipments of hydrochloric acid – HCl – to the Site. Bayer Chemical was not so lucky. The Court denied Bayer’s motion, related to its shipment of nickel catalyst to the Site.

The Court began each decision acknowledging that decisions regarding arranger liability are necessarily site- and fact-specific. It then enumerated the relevant factors, which include: “whether the person (1) intended to engage in a transaction for the purpose of waste disposal; (2) owned or possessed the waste; (3) had some actual involvement in the decision to dispose of the waste, or, alternatively had an obligation to control the disposal of the waste; (4) and/or controlled the waste disposal regardless of whether it owned or possessed the waste.” The Court also noted that liability may only be imposed “if the material in question constitutes ‘waste’ rather than a ‘useful product.’”

With these helpful guidelines, let’s figure out who’s liable at Tex Tin.

Dow Chemical sent HCl to Tex Tin. Dow produced HCl as a byproduct from the manufacture of other chemical products. It thus appears that HCl production was not the primary intent of Dow’s operations. However, Dow did sell HCl to numerous customers and had a dedicated Marketing Manager for HCl sales. The HCl was used the by Tex Tin site operators without any further processing.

Bayer send nickel catalyst to Tex Tin. The nickel was apparently sufficiently useful that the site operator paid Bayer $.50/pound. However, the nickel required processing at the Tex Tin site and the price paid by Tex Tin was substantially below the market price of nickel of $2.96/pound during the period of the sales to Tex Tin. Based on these facts, the court was not prepared to grant summary judgment to Bayer.

Given that these decisions were at the summary judgment stage, they both seem reasonable on their facts. It would have been interesting to see what the Court would have done if the TTSDSC had also filed a summary judgment motion against Bayer. It will also be interesting to see what happens at the trial, if the case does not settle. The bottom line is that there is no less uncertainty on this issue than there ever was – good for lawyers; not so good for clients.

2 thoughts on “Arranger Liability Under CERCLA; Courts Know It When They See It

  1. Seth,
    Briefs are due to the United States Supreme Court next week in connection with the Court’s review of the Ninth Circuit’s controversial decision in Burlington Northern that the seller of product containing hazardous substances was liable as an “arranger” because it knew spills of the product at the buyer’s facility were inevitable. I think most folks following the caselaw on this issue were pleasantly surprised the Supreme Court decided to weigh in.
    We can all look forward to a decision in the spring.
    This is quite a blog you and your colleagues have put together. Congratulations!

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