FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

CALIFORNIA DEPARTMENT OF TOXIC 

SUBSTANCES CONTROL,

Plaintiff-Appellant,

v.

No. 05-55962

ALCO PACIFIC, INC.; MORRIS P.

D.C. No. KIRK; DAVIS WIRE CORPORATION;

 CV-01-9294 SJO EXIDE TECHNOLOGIES (GNB); P.

(FMOx) KAY METAL SUPPLY, INC.; LEAD

PRODUCTS COMPANY, INC.; OPINION

PASMINCO, INC.; QUEMETCO, INC.;

RSR CORPORATION; and J.L.

SHEPHERD & ASSOCIATES,

Defendants-Appellees. 

Appeal from the United States District Court

for the Central District of California

S. James Otero, District Judge, Presiding

Argued and Submitted

May 15, 2007—Pasadena, California

Filed November 28, 2007

Before: Raymond C. Fisher and Richard R. Clifton,

Circuit Judges, and Jeremy D. Fogel, District Judge.*

Opinion by Judge Fogel

*The Honorable Jeremy Fogel, United States District Judge for the

Northern District of California, sitting by designation. 

15257
COUNSEL

Laurie R. Pearlman, Supervising Deputy Attorney General,

Edward H. Ochoa, Deputy Attorney General, Office of the

Attorney General, San Diego, California, for the appellant. 

CALIFORNIA DEP’T TOXIC v. ALCO PACIFIC 15259
Chris M. Amantea, Brandon J. Roker, Charles E. Weir,

McDermott Will & Emery LLP, Los Angeles, California,

Eugene J. Frett, Sperling & Slater, P.C., Chicago, Illinois, for

the appellees. 

OPINION

FOGEL, District Judge: 

The California Department of Toxic Substances Control

(“the State”) brought this cost recovery action under the Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”), 42 U.S.C. §§ 9601 et seq., seeking

cleanup costs arising from the release of hazardous substances

at a former lead processing facility (“the site”) operated by

Alco Pacific, Inc. and Morris P. Kirk (collectively, “Alco”).

The State asserts that Defendants RSR Corporation (“RSR”),

Quemetco, Inc. (“Quemetco”), Davis Wire Corporation

(“Davis”), Pasminco, Inc. (“Pasminco”), and P. Kay Metal

Supply, Inc. (“PKM”) (collectively “Defendants”) sold lead

content materials to Alco and thus are subject to “arranger”

liability for contamination of the site under CERCLA

§ 107(a)(3), 42 U.S.C. § 9607(a)(3). The district court granted

summary judgment for Defendants after concluding as a matter of law that the subject sales fell within the “useful product

doctrine” and thus did not constitute arrangements for disposal or treatment of hazardous wastes under CERCLA. California Department of Toxic Substances Control v. Alco

Pacific, Inc., No. CV-01-9294 (C.D. Cal., Feb. 6, 2004). We

have jurisdiction over the State’s timely appeal under 28

U.S.C. § 1291. We reverse and remand. 

BACKGROUND

Alco operated a lead processing facility on the site from

approximately 1950 to 1990. During that period Alco refined

15260 CALIFORNIA DEP’T TOXIC v. ALCO PACIFIC
and reclaimed lead from raw materials acquired from thousands of sources. These materials included lead ingots, automobile batteries, scrap metal, wheel weights, dross and slag.

The latter two materials are particularly important in the

context of the instant appeal. “Dross” is the material that rises

to the surface of melted metal that is not perfectly pure. Dross

typically is skimmed off the molten metal and stored for later

use or disposal. Depending on the care taken in skimming, the

dross thus removed may contain a significant percentage of

the metal itself. “Slag” also results from the separation of

impurities from metal during the smelting and refining process. Alco purchased high lead content dross and slag that

were by-products of other lead processors’ operations. Material was deemed to have high lead content if it contained

approximately thirty percent recoverable lead. The price Alco

paid for the dross, slag and other raw materials it purchased

was based upon an analysis of the lead content of the material

and the published market price of lead at the time of the transaction, as measured by the commodities price index quoted in

daily newspapers. 

After processing the materials supplied by Defendants and

others, Alco sold the resulting refined and reclaimed lead in

various forms. For example, Alco cast lead sailboat keels and

produced sheet metal and lead anodes. Alco also sold lead in

the form of ingots or babbitts. Alco disposed of the waste

material resulting from its operations—low lead content slag

—at a facility authorized to accept hazardous wastes. Alco did

not dispose of dross generated during its operations, but rather

used the dross again in its smelting process. 

Defendants RSR and Quemetco

RSR is the parent corporation of Quemetco. RSR did not

sell or transfer any materials to Alco, but it allegedly arranged

for the sale of materials to Alco on behalf of Quemetco. Quemetco is a lead smelter that reclaims lead from scrap and leadCALIFORNIA DEP’T TOXIC v. ALCO PACIFIC 15261
acid automobile batteries. Though Quemetco sold several different types of lead content materials to Alco, the parties have

focused on sales of lead content slag. 

Quemetco generates three types of slag: “first run slag” or

“reverb slag,” which is produced during the initial processing

of scrap through a reverberatory furnace; “second run slag” or

“rerun slag,” which has been processed a second time; and

“inert slag” or “waste slag,” which has been processed at least

twice and is ready for disposal. On October 25, 1988, Quemetco sold to Alco 47,920 pounds of “rerun antimonial lead

slag.” On October 31, 1988, Quemetco sold to Alco 49,580

pounds of “rerun antimonial lead slag.” Alco paid seven cents

per pound on both transactions, resulting in total payments of

$3,354.40 on the first purchase and $3,470.60 on the second

purchase. 

Defendant Davis 

Davis1 operated a wire manufacturing company that used

molten lead to treat wire. A by-product of this process was

lead content dross that was composed of lead and coke.

Between 1978 and 1988, Davis periodically sold lead content

dross to Alco at varying prices, depending on the amount of

lead contained in the particular shipment. Alco paid Davis at

least $110,000 for lead content dross during this period. 

Defendant Pasminco

Pasminco operated a zinc smelting facility. Between 1978

and 1983, Pasminco periodically sold lead content dross and

other materials to Alco. 

1Prior to its bankruptcy, Davis Wire Corporation was known as Davis

Walker Corporation. Davis Wire Corporation sought summary judgment

in this action on bankruptcy grounds, but the district court denied that

motion, and Davis Wire Corporation voluntarily dismissed its appeal of

that ruling. Davis Wire Corporation and Davis Walker Corporation are

referred to collectively herein as “Davis.” 

15262 CALIFORNIA DEP’T TOXIC v. ALCO PACIFIC
Defendant PKM

PKM operates a solder manufacturing facility, reclaiming

tin and lead in a manner similar to that used by Alco. PKM

reclaims tin, lead and other metals and converts them into solder that it sells to others. PKM sold various materials to Alco,

including lead dross, solder dross and antimonial lead dies.

The parties have focused on the dross transactions. Between

1982 and 1989, PKM periodically sold lead and solder dross

to Alco at varying prices. PKM characterizes these transactions as part of a “conversion” agreement whereby Alco processed the dross to strip it of impurities and then returned the

extracted refined metal to PKM. PKM paid a fee for this conversion process. 

Contamination of the Site

During Alco’s operations, molten lead, slag and other materials, including dust and residue from the materials, occasionally spilled or otherwise were deposited onto the ground at the

site. Additionally, solidified lead and slag were stored on the

ground at least temporarily. The State determined that surface

dust, soils and slag piles at the site were contaminated with

lead. It incurred significant cleanup costs at the site and filed

the instant action seeking reimbursement from Defendants on

the theory that the above-described transactions constituted

arrangements for the disposal or treatment of hazardous waste

under CERCLA § 107(a)(3), 42 U.S.C. § 9607(a)(3). The

State also seeks declaratory relief with respect to any future

cleanup costs. 

The district court granted summary judgment for Defendants, concluding as a matter of law that Defendants’ transactions with Alco were within the scope of the useful product

doctrine. The State subsequently reached settlement with the

remaining defendants in the case, and the district court

entered a final order and consent decree resolving all outstanding issues. 

CALIFORNIA DEP’T TOXIC v. ALCO PACIFIC 15263
STANDARD OF REVIEW

We review de novo a district court’s grant of summary

judgment. Olsen v. Idaho State Bd. of Med., 363 F.3d 916,

922 (9th Cir. 2004). Viewing the evidence in the light most

favorable to the non-moving party, we must determine

whether there are any genuine issues of material fact and

whether the district court correctly applied the relevant substantive law. Id. We may affirm on any ground supported by

the record. Id.

DISCUSSION

[1] Under CERCLA, a plaintiff may attempt to recover

cleanup costs from four categories of persons, defined at 42

U.S.C. § 9607(a). Only the third category, persons defined as

“arrangers,” is at issue here: 

[A]ny person who by contract, agreement, or otherwise arranged for disposal or treatment, or arranged

with a transporter for transport for disposal or treatment, of hazardous substances owned or possessed

by such person, by any other party or entity, at any

facility or incineration vessel owned or operated by

another party or entity and containing such hazardous substances . . . . 

42 U.S.C. § 9607(a)(3). We recently held that arranger liability encompasses not only transactions in which the central

purpose is the disposal of hazardous waste but also “transactions that contemplate disposal as a part of, but not the focus

of, the transaction.” United States v. Burlington N. & Santa

Fe Ry. Co., 479 F.3d 1113, 1139 (9th Cir. 2007). 

CERCLA itself does not define the terms “disposal” and

“treatment,” but instead incorporates the definitions of those

terms as set forth in the Solid Waste Disposal Act (“SWDA”).

See 42 U.S.C. § 9601(29). The SWDA defines “disposal” as:

15264 CALIFORNIA DEP’T TOXIC v. ALCO PACIFIC
the discharge, deposit, injection, dumping, spilling,

leaking, or placing of any solid waste or hazardous

waste into or on any land or water so that such solid

waste or hazardous waste or any constituent thereof

may enter the environment or be emitted into the air

or discharged into any waters, including ground

waters. 

42 U.S.C. § 6903(3). “Treatment” is defined as: 

any method, technique, or process, including neutralization, designed to change the physical, chemical,

or biological character or composition of any hazardous waste so as to neutralize such waste or so as to

render such waste nonhazardous, safer for transport,

amenable for recovery, amenable for storage, or

reduced in volume. 

42 U.S.C. § 6903(34). 

[2] We have held that these definitions necessarily implicate the concept of “waste,” and have developed a body of

case law distinguishing between the disposal or treatment of

“waste” and the sale of a “useful product.” See, e.g., Burlington, 479 F.3d at 1140-41; A & W Smelter & Refiners, Inc. v.

Clinton, 146 F.3d 1107, 1112 (9th Cir. 1998); Catellus Dev.

Corp. v. United States, 34 F.3d 748, 750 (9th Cir. 1994). A

person may be held liable as an “arranger” under § 9607(a)(3)

only if the material in question constitutes “waste” rather than

a “useful product.” A & W Smelter, 146 F.3d at 1112; Catellus, 34 F.3d at 750. Application of this distinction has been

referred to as the “useful product doctrine.” 

Because the doctrine has developed piecemeal through case

law, its contours are not entirely clear. In Louisiana-Pacific

Corp. v. ASARCO, Inc., 24 F.3d 1565 (9th Cir. 1994), one of

our early cases touching on the useful product doctrine, the

relevant issue was whether a copper smelter’s sale of slag to

CALIFORNIA DEP’T TOXIC v. ALCO PACIFIC 15265
logyards via a middleman gave rise to liability under CERCLA. The logyards used the slag like gravel, spreading it on

the ground to provide a firmer surface to aid in the storage of

logs and operation of heavy equipment. Id. at 1570-71. When

the slag became mixed with wood waste and other debris, the

logyards hauled it to a landfill and put down a new load of

slag. Id. at 1571, 1575. The logyards and landfill eventually

became contaminated with heavy metals from the slag, and

the smelter, ASARCO, was held liable under CERCLA. Id. 

On appeal, we did not refer explicitly to the useful product

doctrine, but phrased the question before us as “whether the

sale of slag to the logyards can simultaneously be both the

sale of a product with intrinsic value in trade or commerce

under Washington law, and the disposal of a hazardous substance under CERCLA.” Id. at 1574. We answered this question in the affirmative, concluding that slag was a by-product

of ASARCO’s principal business—copper smelting—and that

the slag had only nominal commercial value in that the logging companies paid only $3.50 per ton. Id. at 1575. Prior to

attempting to develop a market for its slag, ASARCO had

dumped the slag into a nearby bay with the permission of the

local park district. Id. We distinguished other cases in which

the sale of products was not considered disposal of hazardous

waste on the ground that those cases involved “the producers’

principal business products, not by-products that the producers had to get rid of.” Id. at 1575 n.6. Under the circumstances, ASARCO could be held liable as an arranger for

contamination caused by the slag ultimately sold to logyards.

Id. at 1575. 

In Catellus Dev. Corp. v. United States, 34 F.3d 748 (9th

Cir. 1994), the defendant auto parts dealer, General, accepted

used automotive batteries from customers as trade-ins. Id. at

749. General in turn sold the batteries to a battery cracking

plant that extracted and smelted the lead and dumped the battery casings. Id. at 749-50. Tons of crushed battery casings

15266 CALIFORNIA DEP’T TOXIC v. ALCO PACIFIC
ended up on the property of the plaintiff, Catellus, and contaminated it with lead. Id. at 750. 

We declined to read ASARCO as announcing a broad rule

that any sale of a nonprincipal business product or by-product

necessarily is an arrangement for disposal or treatment under

§ 107(a)(3). Catellus, 34 F.3d at 751. ASARCO was limited to

“the situation where the by-product being sold will have to

continue to be used in its identical state until it is disposed

of.” Id. However, given the battery recycling procedure at

issue, “[a]n inescapable fact is that the leftover battery casings

must be disposed of.” Id. at 752. The battery casings had to

be “gotten rid of” either by General, which could have

cracked the casings itself before selling the scrap lead, or by

the purchaser who bought the entire battery. Id. We concluded

that “General cannot escape having the battery casings

defined as discarded material simply by selling the battery to

another party who then disposed of the casings.” Id.

We expressly rejected General’s argument that it could not

be held liable as an arranger under CERCLA because it did

not control the eventual disposition of the batteries’ remnants.

Catellus, 34 F.3d at 752. “Requiring continued ownership or

control for section 107(a)(3) liability would make it too easy

for a party, wishing to dispose of a hazardous substance, to

escape by a sale its responsibility to see that the substance is

safely disposed of.” Id. It is sufficient that the substance has

“the characteristic of waste” at the time it is delivered to

another party. Id. We likewise held that there is no requirement in treatment cases that there be a contract specifying

how treatment will take place, stating that, “[a]s with our

interpretation of the arrangement for disposal provision, all

that is necessary is that the treatment be inherent in the particular arrangement, even though the arranger does not retain

control over its details.” Id. at 753. 

In Cadillac Fairview/California, Inc. v. United States, 41

F.3d 562 (9th Cir. 1994), we addressed the appropriate charCALIFORNIA DEP’T TOXIC v. ALCO PACIFIC 15267
acterization of a series of transactions between manufacturers

of synthetic rubber and Dow, a supplier of styrene used in

rubber production. The rubber companies purchased styrene

from Dow, but could convert only sixty to seventy percent of

that styrene into rubber. Id. at 564. The unconverted styrene

contained contaminants from the rubber manufacturing process, so the rubber companies sent the contaminated styrene

to Dow for re-distillation. Id. Dow cleaned the styrene of contaminants, which were deposited in pits near the styrene plant,

and returned the recovered styrene to the rubber companies

for use in rubber manufacturing. Id. Dow charged the rubber

companies nine cents a pound for styrene and credited them

seven cents a pound for contaminated styrene returned to

Dow for re-distillation. Id. When it was sued for contamination caused by styrene and other hazardous substances at the

site of its operations, Dow sought contribution from the rubber companies as arrangers under section 107(a)(3) of CERCLA. Id.

Citing ASARCO and Catellus, we held that it was not dispositive that the rubber companies did not own the contaminated styrene during the re-distillation process and did not

control the re-distillation process that resulted in the release

of contaminants. Id. at 565. We likewise held that it was not

dispositive that the transactions in question were characterized as sales. Id. at 566. Noting that the question on summary

judgment is, “whether the fact-finder could infer from all the

circumstances that a transaction in fact involves an arrangement for the disposal or treatment of a hazardous substance,”

id. at 565 (internal quotation marks, alterations, and citations

omitted), we concluded that, “[a] trier of fact could find the

substance of the transactions to have been that the rubber

companies paid Dow two cents per pound to remove the contaminants from the used styrene and return the fresh styrene

to them—that they simply arranged and paid for treatment of

the contaminated styrene by Dow.” Id. at 566. We found that,

“[r]emoval and release of the hazardous substances was not

15268 CALIFORNIA DEP’T TOXIC v. ALCO PACIFIC
only the inevitable consequence, but the very purpose of the

return of the contaminated styrene to Dow.” Id.

In A & W Smelter & Refiners, Inc. v. Clinton, 146 F.3d

1107 (9th Cir. 1998), the United States Environmental Protection Agency (“EPA”) ordered A & W to dispose of an ore pile

at its smelting facility because the pile contained quantities of

naturally occurring lead and slag. A & W complied and filed

a complaint seeking reimbursement of its compliance costs

under CERCLA. Id. at 1109. The district court granted summary judgment for the EPA and its co-defendants. We

reversed and remanded on the ground that there were triable

issues of material fact as to whether the ore pile constituted

“waste” or a “useful product.” Id. at 1113. Although the district court had been persuaded that the pile could not be a useful product because it was unusable in its current state, we

noted that “raw materials, by definition, can’t be used in their

current state” but rather “must be refined—a process which

separates the useful portion from the waste.” Id. at 1112. The

pile was waste only if the ore was mixed with so much slag

that it was no longer useable for A & W’s principal business.2

Id. at 1113. Whether this was the case could not be answered

on the existing record, but required consideration of other relevant evidence regarding A & W’s actions and the market

value of the ore pile, if any. Id. 

We recently commented at length on arranger liability and

the useful product doctrine in United States v. Burlington N.

& Santa Fe Ry. Co., 479 F.3d 1113 (9th Cir. 2007). In that

case, Brown & Bryant, Inc. (“B & B”), operated an agricultural chemical storage and distribution facility. Id. at 1121. As

2

Indeed, A & W Smelter recognized that A & W’s contract to have

another company process the ore “suggests the material was a useful product,” even though “[s]melting unprocessed ore was A & W’s business”

and such a contract was necessary because the ore did not contain enough

precious metal to “justify smelting by A & W’s methods.” A & W Smelter,

146 F.3d at 1109, 1113. 

CALIFORNIA DEP’T TOXIC v. ALCO PACIFIC 15269
part of its business, B & B purchased, stored and distributed

chemicals manufactured by Shell. Id. at 1122. The chemicals

were shipped to B & B in common carrier trucks and transferred to large storage tanks by hoses. Id. The transfer process

was messy, with frequent spills. Id. Moreover, the chemicals

were corrosive and caused leakage in storage tanks only a few

years old. Id. Federal and state agencies ultimately found contamination on the B & B site. Id. at 1123. Following a bench

trial, the district court held Shell partially responsible for

cleanup costs as an arranger under CERCLA. Id. We affirmed

Shell’s arranger liability on appeal. Id. at 1142. 

[3] In discussing the necessity of adopting an expansive

view of arranger liability in light of CERCLA’s goals, we

observed that even “[a]rranging for a transaction in which

there necessarily would be leakage or some other form of disposal of hazardous substances is sufficient” to impose

arranger liability. Id. at 1140-41. While acknowledging that

we have “refused to hold manufacturers liable as arrangers for

selling a useful product containing or generating hazardous

substances that later were disposed of,” we held that “[t]he

useful product cases have no applicability where, as here, the

sale of a useful product necessarily and immediately results in

the leakage of hazardous substances.” Id. We concluded that,

“[i]n that circumstance, the leaked portions of the hazardous

substances are never used for their intended purpose.” Id.

Because leakage of the Shell chemicals was inherent in the

transfer process arranged by Shell and contemporaneous with

that process, the useful product doctrine was inapplicable. Id.

We emphasized that, “Shell’s liability derives not from its

role as a manufacturer of a useful product but rather from its

role in leakage prior to use.” Id. at 1140 n.31. Shell owned the

chemicals at the time the sale was entered into, and had sufficient control over and knowledge of the transfer process to be

considered an “arranger” under CERCLA. Id. at 1142. 

In the instant case, the district court attempted to synthesize

our holdings into a cohesive approach to arranger liability and

15270 CALIFORNIA DEP’T TOXIC v. ALCO PACIFIC
the useful product doctrine. Relying primarily upon ASARCO

and A & W Smelter, the district court crafted a three factor

test, and used it to conclude that all of the ingots and other

high quality lead sold to Alco fall within the useful product

doctrine. The court noted that the slag and dross sold to Alco

present a more difficult case. However, the court was persuaded that these materials also fall within the useful product

doctrine because Alco paid prices that were tied to the prevailing commodity price of lead and the lead content in the

particular dross or slag, and because Alco purchased the dross

and slag as raw materials for its smelting business in lieu of

purchasing virgin ore. The court found that although dross

and slag were by-products of Defendants’ businesses, on the

record before it dross and slag could not be characterized as

worthless waste that needed to be disposed of but rather were

valuable commodities. 

[4] While at this juncture we refrain from expressly adopting or crafting a concrete test for this fact-intensive inquiry,

we agree that the factors upon which the district court relied,

including (1) “the ‘commercial reality’ and value of the product in question”; (2) “a factual inquiry into the actions of the

seller in order to determine the intent underlying the transaction”; and (3) “whether the material in question was a principal product or by-product of the seller,” are among the factors

appropriate to consider in determining “whether in light of all

the circumstances the transaction involved an arrangement for

disposal or treatment of a hazardous waste.” Cadillac Fairview, 41 F.3d at 566. However, because a reasonable finder

of fact could infer from the evidence in the record that this

question should be answered in the affirmative, we conclude

that the district court misapplied the factors in granting summary judgment for Defendants. 

The first factor—the “commercial reality” of the

transaction—most strongly supports the district court’s grant

of summary judgment, particularly in light of the undisputed

fact that the prices at which the dross and slag were sold were

CALIFORNIA DEP’T TOXIC v. ALCO PACIFIC 15271
linked to the market price of lead. The district court correctly

found that the link between the commodities market price of

lead and the price paid by Alco for the Defendants’ dross and

slag supported their claim that they were selling a useful product, not disposing of waste. It is not particularly significant

that Defendants received only a fraction of the market price:

the dross and slag themselves contained only a fraction of

lead, and clearly Alco would have to expend further resources

in order to extract whatever portion of that fraction it could

ultimately successfully reclaim. Nor does it matter that the

prices at which the dross and slag were sold were “low” in

some absolute sense. A product does not become waste simply because it is inexpensive. Rather, it is the de-linking of the

price of a substance from the market value of whatever might

feasibly be extracted from it that supports a conclusion that a

price is nominal and a sale only a disguised disposal. There

is no conclusive evidence in the record of such de-linking. 

Price, however, is only one indicator of whether a transaction was an arrangement for the disposal of waste or the sale

of a useful product. Neither a product’s absolute price nor its

price in comparison with the value of the materials that might

be reclaimed from it is dispositive by itself. Evidence of the

frequency and volume of transactions, the parties’ prior dealings, the nature of the processing carried out by the buyer and

previous or alternative arrangements for handling the byproducts of the seller’s business operations also are potentially relevant. As the district court recognized here, “it is

clear that the dross and slag were by-products of the various

Defendants,” not their principal product. This finding undercuts the conclusion that the commercial reality factor unambiguously supports summary judgment for the defendants. See

RSR Corp. v. Avanti Dev., Inc., 68 F. Supp. 2d 1037 (S.D.

Ind. 1999) (distinguishing between “persons who sell a used

product to dispose of it, and those whose sale is their main

profit-making venture”). 

[5] On the present record, a reasonable finder of fact could

conclude—after a full factual inquiry into the actions of the

15272 CALIFORNIA DEP’T TOXIC v. ALCO PACIFIC
parties—that almost all of the transactions were intended as

arrangements for the disposal or treatment of a hazardous substance. The existence of triable issues of material fact is particularly clear with respect to PKM. PKM’s transactions with

Alco were not straightforward sales; instead they involved a

conversion agreement under which Alco cleaned PKM’s

dross of impurities and then returned the extracted refined

metal to PKM. PKM paid a fee for this conversion process

that was incorporated into the sale price of the dross. These

facts are extremely close to those in Cadillac Fairview, in

which we held that the useful product doctrine would not

apply if the true nature of the transactions between the rubber

companies and Dow was an arrangement for treatment of contaminated styrene. Cadillac Fairview, 41 F.3d at 566. 

Similarly, a reasonable fact-finder could conclude that

Davis and Pasminco sold slag and dross to Alco so that Alco

would treat and dispose of the material. Neither company was

primarily engaged in the sale of lead products. Davis was

engaged in the manufacture and sale of wiring products, not

slag and dross. See id. Pasminco operated a zinc smelting

facility. Even though the transactions between Davis,

Pasminco and Alco were “cast in the form of a sale,” id., a

reasonable fact-finder could conclude that Davis and

Pasminco sold the by-products of their manufacturing processes primarily for treatment and disposal purposes. 

Defendant Quemetco presents a closer question. As the district court recognized, one of Quemetco’s primary business

activities was selling recycled lead products to third parties.

Accordingly, the State’s claim that Quemetco’s primary intent

in contracting with Alco was to “get rid of” its slag and dross

may be more difficult to prove. Nonetheless, it is undisputed

that slag and dross were by-products of Quemetco’s operations, and thus a fact-finder reasonably could infer that the

sales between Quemetco and Alco at least in part involved

arrangements for disposal or treatment of a hazardous subCALIFORNIA DEP’T TOXIC v. ALCO PACIFIC 15273
stance. Accordingly, we reverse the district court’s grant of

summary judgment as to all defendants. 

[6] The State requests that we not only determine that the

district court erred in granting summary judgment for Defendants but also conclude as a matter of law that the useful

product does not apply in this case. The State argues that

some spillage and leakage is inevitable during smelting, and

that Defendants were well aware of this fact. The State also

argues that a significant portion of the dross and slag sold to

Alco necessarily constituted “waste” that would have to be

disposed of eventually, and that Defendants in essence shifted

this responsibility to Alco by means of the transactions at

issue. However, while these facts obviously are relevant to the

appropriate characterization of the transactions as a whole,

they are not the only relevant facts; as discussed above, the

fact that the pricing of the slag and dross clearly was related

to the market value of lead cuts the other way. Thus, the current record is insufficient to establish as a matter of law that

the useful product doctrine does not apply in this case. As we

held in Cadillac Fairview and discussed above, the trier of

fact must consider the totality of circumstances in determining

the proper characterization of the relevant transactions. Id. 

The State also argues that the useful product doctrine

applies only to new products, manufactured specifically for

the purpose of sale, and can never apply to by-products. The

case cited for this proposition, State of California v. Summer

Del Caribe, Inc., 821 F. Supp. 574 (N.D. Cal. 1993), is a district court decision that pre-dates all of the Ninth Circuit decisions discussed above. In Catellus, we clarified explicitly that

classification of the material in question as “a nonprincipal

business product or a by-product” is not dispositive of the

applicability of the useful product doctrine. Catellus, 34 F.3d

at 751. 

Finally, relying upon A & W Smelter, the State argues that

the useful product doctrine applies only if the material in

15274 CALIFORNIA DEP’T TOXIC v. ALCO PACIFIC
question could be used in the producer’s principal business.

A & W Smelter does discuss the usefulness of the ore pile at

issue in terms of A & W’s principal business, stating that,

“[i]f the ore was mixed with enough slag so that it was no longer usable for A & W’s principal business, then it was waste.”

A & W Smelter, 146 F.3d at 1113. However, that decision

simply assumed without discussion that slag is a waste byproduct that never can constitute a useful product. Id. The

facts of the case did not involve the sale of slag from one

smelter to another. Thus, A & W Smelter cannot be read as

establishing a general rule that material can never fall within

the useful product doctrine unless the material is useful to the

producer’s principal business. 

At oral argument, Defendants asserted that finding arranger

liability here will have adverse effects on the market, because

companies with commercially useful by-products will resort

to disposal rather than resale to avoid potential CERCLA liability from contamination arising out of subsequent reclamation or manufacturing processes in which they have no part

and over which they have no control. While Defendants’ policy argument has some appeal, both the relevant statutory language and our case law support a broad application of

CERCLA’s liability provisions. See Burlington, 479 F.3d at

1138-39. Moreover, Defendants’ policy concerns have not

gone unheeded by Congress. “[O]ne of the [Superfund Recycling Equity] Act’s purposes is ‘to remove the disincentives

and impediments to recycling created as an unintended consequence of the 1980 Superfund Liability provisions.’ ” Gould,

Inc. v. A & M Battery & Tire Serv., 232 F.3d 162, 171 (3d

Cir. 2000) (quoting Pub. L. No. 106-113, § 6001(a)(3), 113

Stat. 1501, 1501A-598 to 1501A-599 (1999)). Congress created a recycling exemption to encourage reuse of materials,

42 U.S.C. § 9627, an exemption Defendants unsuccessfully

sought to claim before the district court.3

3Defendants urge us to affirm the district court’s judgment on the independent ground that the transactions at issue constituted arrangements for

CALIFORNIA DEP’T TOXIC v. ALCO PACIFIC 15275
[7] Accordingly, we reverse the district court’s grant of

summary judgment for Defendants under the useful product

doctrine and remand for further proceedings consistent with

this opinion.4

REVERSED AND REMANDED.

recycling of scrap metal and thus fell within the recycling exemption codified at section 127 of the Superfund Recycling Equity Act, 42 U.S.C.

§ 9627. See Olsen v. Idaho State Bd. of Med., 363 F.3d 916, 922 (9th Cir.

2004) (holding that a judgment may be affirmed on any ground supported

by the record). Under that statute, “a person who arranged for recycling

of recyclable material” is exempt from arranger liability under CERCLA.

42 U.S.C. § 9627(a)(1). Scrap metal is defined as recyclable material

under the statute provided that certain requirements are met. 42 U.S.C.

§ 9627(d). The district court properly concluded that Defendants failed to

offer evidence establishing at least one such requirement, that the recyclable material met a commercial specification grade at the time of the transaction, see 42 U.S.C. § 9627(c)(1), and thus properly denied Defendants’

motion for summary judgment under the recycling exemption. Defendants

point to a 2003 publication of the Institute of Scrap Recycling Industries,

Inc., entitled “Scrap Specifications Circular 2003,” but fail to explain how

this 2003 language established a specification grade for materials sold to

Alco in the 1970s and 1980s. Defendants also point to the testimony of

Alco’s designee, who stated that Alco preferred to purchase lead slag with

at least thirty percent lead content, but fail to explain why Alco’s preference constituted a “commercial specification grade” within the meaning of

the statute. 

4The State also appealed the district court’s order excluding the testimony of its expert witness, Mr. Brodwin. Because Mr. Brodwin’s proposed testimony concerned the applicability of the recycling exemption,

this aspect of the appeal is moot. 

15276 CALIFORNIA DEP’T TOXIC v. ALCO PACIFIC