Opinion ID: 597450
Heading Depth: 2
Heading Rank: 2

Heading: Apportionment of CERCLA Liability

Text: 42 Defendants next contend that even if the release did not bar AMI's CERCLA action, AMI is nonetheless liable for some or all of the clean-up costs under the terms of the Act. Section 107(a) provides that necessary costs of response incurred by any other person consistent with the national contingency plan in cleaning up a facility from which there is a release, or a threatened release ... of a hazardous substance may be recovered by such other person from liable parties, as defined in that section of the Act. 42 U.S.C. § 9607(a)(4)(B) and (a)(4). Section 113(f) of CERCLA provides for contribution among parties deemed liable under section 107(a), with response costs to be allocated among such parties using such equitable factors as the court determines are appropriate. 42 U.S.C. § 9613(f)(1). Section 107(a) defines the following as liable parties: (1) owners and operators of a facility at the time of its cleanup; (2) owners and operators of the facility at the time of disposal; (3) generators of waste who arranged for disposal; and (4) transporters who selected the site for disposal. 42 U.S.C. § 9607(a)(1)-(4). 43 In its unpublished September 20, 1990 Memorandum Opinion and Order following the trial, the district court ruled that AMI was entitled to recover the entire amount of the clean-up costs because it was not a liable party under any of these four categories, whereas defendants were liable under the first two, as present owners of the facility and owners at the time of waste disposal. 44 Defendants do not dispute the finding that they are liable parties, but argue that AMI is liable as well, under the third category: [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 ... at any facility.... 42 U.S.C. § 9607(a)(3). Defendants assert that AMI owned the chemicals creating the hazard because the written asset sale contract between IFE and AMI does not list these substances among the assets sold to IFE. Defendants argue that the only evidence supporting a finding that ownership was transferred is parol evidence, which may not be used to contradict or add terms to an unambiguous written contract. They therefore contend that AMI abandoned these chemicals when it left the Babbit Road facility in 1982. Defendants cite case law from another jurisdiction for the proposition that the owner of hazardous substances remains liable, under federal statutory environmental schemes, for damage caused by hazardous substances it abandons. 8 Accordingly, under Ohio law, the release was not valid to bar AMI's CERCLA claim against defendants. See Moreco Energy, Inc. v. Penberthy-Houdaille, 682 F.Supp. 933 (N.D.Ill.1988) (addressing liability for disposal of PCB's under the Toxic Substances Control Act, 15 U.S.C. § 2601 et seq.). Defendants next argue that if AMI is nonetheless held to have transferred ownership of the chemicals to IFE as part of the asset sale agreed upon in October 1982, AMI is still liable under section 107(a)(3) because such a transfer constitutes an arrangement for disposal. As both of defendants' arguments are unpersuasive, we affirm the district court's determination that AMI did not arrange for disposal of hazardous substances for the purposes of establishing liability under section 107(a). 45 Even if AMI owned the chemicals at issue, it did not incur liability under section 107(a)(3), because it did not arrange for their disposal. Disposal under section 101(29), 42 U.S.C. § 9601(29), is deemed to take place only at the point at which there is a threat that hazardous wastes will be emitted into the environment, air, soil, or groundwater. 9 The district court determined that in this case the threat only arose after defendants purchased the entire facility and allowed the building and its sprinkler system to deteriorate. The deterioration of the roof was found to have given rise to flooding that endangered the groundwater, and the broken sprinkler was found to give rise to the threat of fire that would endanger the air. The district court concluded that events at the facility after AMI left it were entirely responsible for the disposal of the wastes. In addition, defendants' contention that the chemicals were abandoned was essentially refuted by the district court, which found that these substances were 46 left by AMI in 1982, under appropriate conditions, because AMI believed that Dziak wanted them. Dziak stated in the supply contract negotiations that he wished the substances used in the processes to be left so that he would have a complete ongoing process. He did not indicate to the contrary during the asset sale negotiations and, until OEPA appeared, acted not only with knowledge of the chemicals, but as if they were his. 47 District Court's September 20, 1990 Memorandum Opinion and Order at 11. The factual determinations of a district judge sitting without a jury are reviewed only for clear error, Fed.R.Civ.P. 52(a); Pesterfield v. Tennessee Valley Auth., 941 F.2d 437, 440 (6th Cir.1991), and nothing in the record indicates that the district court's findings were clearly erroneous. 48 Alternatively, if ownership of the substances was transferred to defendants, AMI still cannot be deemed to have arranged for the disposal of hazardous substances. 10 The rule relied upon by defendants does not apply to this case. Defendants cite New York v. General Electric Co., 592 F.Supp. 291 (N.D.N.Y.1984), in which the court refused to dismiss the plaintiff's CERCLA claim on a Fed.R.Civ.P. 12(b)(6) motion, because the plaintiff alleged that the defendant sold used transformer oil to a raceway in order to dispose of it. The court pointed out that for purposes of the motion it had to accept the allegation that the defendant acted with the knowledge that the substances would be deposited on the land surrounding the raceway's drag strip, and held that a waste generator's liability under CERCLA is not to be so facilely circumvented by its characterization of its arrangements as 'sales.'  Id. at 297. 49 However, courts interpreting section 107(a)(3) have consistently held that the mere sale of a product is not arranging for disposal under the statute. See Kelley v. ARCO Indus. Corp., 739 F.Supp. 354, 357-58 (W.D.Mich.1990), and cases cited therein. In Kelley, the court pointed out that the General Electric case 'in no way stated or implied that liability attaches to all transactions in a hazardous substance.'  Id. at 360 (quoting Edward Hines Lumber Co. v. Vulcan Materials Co., 685 F.Supp. 651 (N.D.Ill.), aff'd, 861 F.2d 155 (7th Cir.1988)). Liability only attaches to parties that have taken an affirmative act to dispose of a hazardous substance ... as opposed to convey a useful substance for a useful purpose. Prudential Ins. Co. v. United States Gypsum, 711 F.Supp. 1244, 1253 (D.N.J.1989). Thus, it has been held that no arrangement for disposal of hazardous wastes has taken place where there has been a conveyance of a useful, albeit dangerous product, to serve a particular, intended purpose. Id. at 1255, quoted in Kelley, 739 F.Supp. at 358; cf. United States v. A & F Materials Co., 582 F.Supp. 842 (S.D.Ill.1984) (holding that the seller of a caustic solution could be a responsible party under CERCLA if the motivation for the sale was the disposal of the solution). 50 In this case, the district court determined that the chemicals were not left at the facility with disposal in mind: Both Dziak and AMI intended that the chemicals would be used for the purposes for which they had been bought--the continued operation of the electroplating, heat-treating, and other processes. District Court's September 20, 1990 Memorandum Opinion and Order at 21. Furthermore, the district court specifically found that the chemicals were useful and had value, and that [m]any of the compounds were valuable even four years later. Id. at 11. As these determinations are well supported by the record, we cannot hold that they are clearly erroneous. Therefore, even if ownership of the chemicals was transferred by AMI as part of the asset sale, such a transfer was not an arrangement to dispose of hazardous substances under section 107(a)(3). 51 Because we conclude that the district court properly determined that AMI was not a liable party under section 107(a), we need not address defendants' claim concerning the appropriate apportionment of liability under section 113(f).