Opinion ID: 2788105
Heading Depth: 2
Heading Rank: 3

Heading: The Georgia Power Transformers

Text: When Georgia Power ceased using transformers, it sent them to its own repair facility. There, Georgia Power inspected each used transformer and designated it either for repair and reuse within the company or for disposal in a commercially reasonable manner. A 1974 Georgia Power bulletin provided procedures “for disposing of surplus, obsolete or damaged distribution line transformers.” (J.A. 1329.) The bulletin refers to the disposition of retired transformers as “scrapping,” but clarifies that scrapped transformers are “actually sold.” (Id. at 1331 (providing instructions for “[w]hen transformers are scrapped, (actually sold)”).) The “Scrapping Procedure” instructs Georgia Power employees to “conclude the disposal of the transformers to the best advantage of the company.” (Id.) Because PCBs are regulated by the Toxic Substances Control Act of 1976 (“TSCA”), Georgia Power had to adjust procedures after the passage of that Act. Georgia Power began testing surplus transformers for PCB concentration, with the resulting concentration dictating what course Georgia Power pursued with regard to a transformer. The TSCA prohibited Georgia Power from selling transformers with PCB concentrations at 50 parts per million (“ppm”) or more for continued use or rebuilding. Georgia Power therefore sent those transformers to TSCA-licensed 20 smelters. Transformers with less than 50 ppm were either repaired for reuse by the company or sold at auction. Georgia Power transferred the transformers designated for sale to its Salvage Department, also known as the Investment Recovery department. Before sale, Georgia Power usually removed the free-flowing oil from the transformers through a doublepumping procedure. This process removed all oil from the transformers except a thin sheen coating the inside of the transformers and the cores and coils. 3 Moisture from the atmosphere can cause damage to the internal components of an exposed transformer lacking oil. “[M]oisture [to a transformer] is basically like cancer to a person.” (Id. at 2211.) Georgia Power, nonetheless, sometimes kept surplus drained transformers uncapped and exposed to moisture prior to sale. Georgia Power sold used transformers in lots to the highest bidder at auction. Buyers placed bids on a per kilovolt-ampere basis (“KVA,” a measure of transformer capacity) for the entire lot. The winning bidder could inspect the transformers and reject any lots or, in some cases, individual units that it did 3 The removed PCB-contaminated oil was disposed of by thirdparty contractors, sold to TSCA-authorized boiler facilities, or burned in Georgia Power’s TSCA-authorized generating plant. Oil with less than 10 ppm was reclaimed for reuse, and oil with 10 to 49 ppm was sold as a secondary fuel. There is no issue as to the disposition of this removed oil. 21 not wish to purchase. Georgia Power guaranteed title to the transformers to the buyer, but made no other warranties. From September 1983 to October 1984, Ward successfully bid upon and purchased 101 Georgia Power transformers at four separate auctions. Ward bid on other lots of transformers that it did not win and on one occasion opted to take possession of only 11 transformers despite winning a lot that contained 18. Of the transformers that Ward purchased, Georgia Power designated approximately 20 as “scrap,” indicating that they needed repair. Ward records identify the same transformers and at least 20 others as “FAULTY,” which indicated an electrical defect due to a short, bad wiring, or some other problem. (Id. at 2215, 2219, 2222-23.) 4 Georgia Power drained the majority of the transformers prior to transfer, but it left the oil in 14 of the 101 transformers. These undrained units all had PCB concentrations between 0 and 50 ppm, except one that had a concentration of 488 ppm. Ward’s records indicate that one of the drained transformers still had “about 5 gals” of 17.4 ppm PCB oil in it four years after arriving at Ward. (Id. at 2225.) Ward replaced the five gallons with new oil. 4 A portion of Consol’s and PCS’ evidence stems from an affidavit that Georgia Power moved to strike. The district court assumed admissibility and denied the motion to strike as moot after granting summary judgment. (Id. at 3405.) For our analysis, we likewise assume that the evidence was admissible. 22 For the 101 transformers it purchased, Ward paid from $0.77 to $3.21 per KVA for 43 units. For another 31 units, the lot prices ranged from $1.11 to $1.18 per KVA. And for the final 27 transformers, Ward paid from $1.74 to $2.16 per KVA. Because transformers typically contain thousands of pounds of metals, even broken transformers remained valuable. 5 Ward sold all 101 transformers it purchased from Georgia Power to third parties as working transformers. It “rebuilt” 80 of the transformers prior to sale. “[I]n most cases,” this involved “untank[ing] the transformer and do[ing] some work to the coils, whether [it was] reconnecting or rewinding part of it.” (Id. 1046; 3267-68.) None of the Georgia Power transformers was sold for scrap.