When Is An Arranger Not An Arranger? When It Sells Some Good Stuff Along With The Junk

As Superfund lawyers know, the Supreme Court decision in Burlington Northern required proof of an intent to dispose hazardous substances as a prerequisite to imposition of arranger liability.  While lower courts have often blissfully ignored the holdings in Supreme Court decisions under CERCLA, arranger liability seems to be one area in which the lower courts have taken the Supreme Court decision to heart.

In any event, while I have been pleased that lower courts have applied the rule in Burlington Northern, the arranger liability decision last week in United States v. D.S.C. of Newark Enterprises suggests to me that the pendulum may actually have swung too far.  In D.S.C., a predecessor of the former owner had manufactured brake linings, shoes, and pads at the site.  Those operations generated asbestos dust, which the operator captured in baghouses.  In 1983, the operator sold the property and equipment, including the baghouses.

On these facts, the court granted the former owner’s summary judgment motion that it was not liable as an arranger.  The transaction documents did not mention waste disposal and instead “aimed to transfer a going concern.”  As a result, the Court concluded, an intent to dispose could not be found.

Since the point of baghouses is to collect waste asbestos dust and since, if it had continued to operate the site, the former owner would have had to dispose of that dust, this would seem one instance where a true intent to dispose could have been inferred by the court.  Certainly, at the summary judgment stage, it seems premature to grant judgment to the defendant.

It may be that this case is at least as much an object lesson regarding how to conduct discovery in Superfund cases as it is a meaningful development in arranger liability jurisprudence.  The contribution plaintiff apparently opposed the summary judgment motion on the ground that there was a witness who might have knowledge of the sale who should be deposed.  The court rejected this “speculation.”  Why the plaintiff had not deposed the witness prior to summary judgment briefing is not apparent.

Bottom line?  Intent is a required element of arranger liability – and inferences and speculation are not sufficient to make a case.

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