Court Opinion

ID: 3002354
Source: CourtListenerOpinion
Date Created: 2015-09-24 20:28:03.780228+00
Date Added: 2024-06-11T11:59:17.447045
License: Public Domain

In the

United States Court of Appeals
               For the Seventh Circuit

No. 08-1118

S YCAMORE INDUSTRIAL P ARK A SSOCIATES,

                                              Plaintiff-Appellant,
                                v.

E RICSSON, INC.,
                                             Defendant-Appellee.

          A ppeal from the U nited States District Court
      for the Northern District of Illinois, Eastern Division
              N o. 06 C 768— D avid H . Coar, Judge.

   A RGUED S EPTEMBER 9, 2008—D ECIDED O CTOBER 20, 2008

  Before F LAUM, W ILLIAMS, and SYKES, Circuit Judges.
   F LAUM, Circuit Judge. In 1985, plaintiff Sycamore Indus-
trial Park Associates bought an industrial property with
fixtures, including a boiler-based steam heating system,
from defendant Ericsson, Inc. Before it sold the property,
Ericsson installed a new natural gas heating system, but
it left the old heating system in place. Several years after
purchasing the property, Sycamore discovered that the
boilers, pipes, and various pipe joints that make up the
2                                               No. 08-1118

old system were insulated with asbestos-containing
material. Sycamore sued to force Ericsson to remove and
dispose of the abandoned asbestos insulation and reim-
burse Sycamore for alleged response costs it has incurred
or will incur in removing the asbestos insulation. This
action arises under the Comprehensive Environmental
Response, Compensation, and Liability Act (“CERCLA”),
42 U.S.C. § 9607, and under the Resource Conservation
and Recovery Act (“RCRA”), 42 U.S.C. § 6972. The district
court granted Ericsson’s motion for summary judgment,
and Sycamore appealed. For the reasons explained below,
we affirm the district court’s grant of summary judgment.

                      I. Background
  Ericsson owned the 28-acre property at issue, located
in Sycamore, Illinois, for several decades. The property
contains nine buildings where Ericsson manufactured
electrical wiring and cable. During most of Ericsson’s
ownership of this property, the buildings were heated by
the boiler system. The boilers are large mechanical units
and are anchored to the floor of the two buildings that
house them. They are connected to the other buildings
through a pipe network. Most of the pipe network runs
near the ceilings of the several buildings and is connected
to the structures at intervals by metal fasteners. All of the
insulated piping is located inside the various structures
of the facility except for two areas where the piping
extends between buildings. The insulated piping that
extends between buildings is encased in a mechanical
piping chase or in a metal casing. To maximize thermal
No. 08-1118                                                3

efficiency, most elements of the steam boiler system are
covered with insulation. This insulation is physically
attached to the steam boiler system and associated piping.
  In January 1983, Ericsson ceased all of its manufacturing
operations at this facility and sought to sell it to a third
party. Soon thereafter, an Ericsson employee, Michael
Kreiger, decided that he would like to purchase the
property and operate it as an industrial park. Kreiger was
Ericsson’s vice president for managing services and
purchases and was in charge of managing the Sycamore
property for Ericsson.
  Meanwhile, in the winters of 1983 and 1984, the boiler-
based heating system was experiencing difficulty and
needed costly repair and maintenance. In December 1984,
while negotiating to sell the property to Kreiger, Ericsson
leased part of the property to UARCO Inc. Before UARCO
moved into the site, Ericsson installed asbestos-free
natural gas unit heaters in the parts of the facility that
UARCO would occupy.
  In late 1984, Ericsson reached an agreement to sell the
property to Kreiger. Kreiger then partnered with another
Ericsson employee, Robert Boey, to form Sycamore Indus-
trial Park Associates as an Illinois general partnership. As
soon as the sale was completed, Kreiger would transfer
ownership in the facility to the Sycamore partnership.
  In the spring of 1985, Ericsson installed additional
natural gas unit heaters so that the entire facility could be
heated with the new units. Upon installing the new
heaters, Ericsson discontinued use of the old boiler-
based heaters, but it left the old heating system in place.
4                                             No. 08-1118

  Ericsson’s sale of the property to Kreiger closed on May
30, 1985. Kreiger immediately assigned the property to
Sycamore. Ericsson did not remove the old heating system
at the time of sale; the boilers and piping remained com-
pletely in place after the sale. At the time of the sale,
neither Kreiger nor Boey requested that Ericsson
remove the old heating system.
  The abandoned boiler-based steam heating system has
not been used for the purpose of heating the buildings
since the 1985 closing. The parties disagree as to whether
the system is merely turned off, meaning that it could be
utilized again, or whether it is inoperable.
  In 2004, Sycamore discovered asbestos in the insulation
that covered the steam boiler system and associated
piping. The parties dispute the circumstances under which
the asbestos was discovered. Ericsson describes the
discovery as the result of a repair and maintenance opera-
tion in an attempt to show that Sycamore was contemplat-
ing use of the boiler-based system. Sycamore responds
that it discovered asbestos during a routine inspection by
a prospective tenant and that it was not considering
utilizing the old heating system.
  Sycamore sued Ericsson, seeking to compel it to remove
the asbestos-laden insulation. Sycamore claims that by
discontinuing use of the boiler-based heating system
containing asbestos insulation but not removing it from
the site, Ericsson violated CERCLA and RCRA. Sycamore
also sued under state law nuisance and negligence
theories not at issue on appeal.
No. 08-1118                                                 5

  On January 9, 2008, the district court granted Ericsson’s
motion for summary judgment. The district court found
that the defendant abandoned the asbestos insulation in
place at the property prior to sale. Yet it held as a matter
of law that the abandonment did not constitute “disposal”
of a solid or hazardous waste into or on any land or water
so that such solid waste or hazardous waste might enter
the environment, as CERCLA requires. In addition, the
district court held as a matter of law that the abandon-
ment of the boiler-based heating system and the subse-
quent sale of the Sycamore property was not “handling,
storage, treatment, transportation or disposal of any
solid or hazardous waste,” as required by RCRA. Sycamore
appeals the district court’s decision on the CERCLA
and RCRA claims.

                      II. Discussion
  A. Standard of Review
   This Court reviews a district court’s grant of a motion for
summary judgment de novo. Jackson v. County of Racine, 474
F.3d 493, 498 (7th Cir. 2007). In doing so, all facts and
reasonable inferences are construed in the light most
favorable to the nonmovant party, Sycamore. Lawson v.
CSX Transp., Inc., 245 F.3d 916, 922 (7th Cir. 2001). A
district court’s grant of summary judgment is to be af-
firmed if “the pleadings, the discovery and disclosure
materials on file, and any affidavits show that there is no
genuine issue as to any material fact and that the movant
is entitled to judgment as a matter of law.” Fed. R. Civ.
P. 56(c).
6                                                No. 08-1118

    B. CERCLA Claim
  CERCLA liability attaches when a plaintiff establishes
that: (1) the site in question is a “facility” as defined by
CERCLA; (2) the defendant is a responsible party; (3) there
has been a release or there is a threatened release of
hazardous substances; and (4) the plaintiff has incurred
costs in response to the release or threatened release.
42 U.S.C. § 9607(a); Envtl. Transp. Sys., Inc. v. ENSCO, Inc.,
969 F.2d 503, 506 (7th Cir. 1992); 3550 Stevens Creek Assocs.
v. Barclays Bank, 915 F.2d 1355, 1358 (9th Cir. 1990). The
second and third elements are at issue here.
  CERCLA states that a prior owner of a facility is a
responsible party if it controlled the site “at the time of
disposal” of a hazardous substance. 42 U.S.C. § 9607(a)(2).
We have held in the past that asbestos is a hazardous
substance within the meaning of CERCLA. G.J. Leasing Co.
v. Union Elect. Co., 54 F.3d 379, 384 (7th Cir. 1995). There-
fore, for Ericsson to be a responsible party, Sycamore
only needs to show that a disposal took place before
Ericsson relinquished control of the site. CERCLA adopts
the definition of “disposal” from the Solid Waste Disposal
Act, which defines “disposal” as:
     [D]ischarge, 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.
No. 08-1118                                                7

42 U.S.C. § 9601(29); 42 U.S.C. § 6903(3). Accordingly, to
make a case for Ericsson’s liability as a responsible party,
Sycamore must establish that at the time it controlled the
site it discharged, deposited, injected, dumped, spilled,
or leaked a solid or hazardous waste or placed it into or
on any land or water.
  One issue that arises is whether the asbestos-laden boiler
system is solid or hazardous waste. While CERCLA
purports to cover both solid and hazardous waste, in
order to be hazardous waste the material must be solid
waste because the statute defines “hazardous waste” as “a
solid waste, or combination of solid wastes, which
because of its quantity, concentration, or physical, chemi-
cal, or infectious characteristics” may be hazardous.
42 U.S.C. § 9601(29); 42 U.S.C. § 6903(5). “Solid waste” is
then defined as “any garbage, refuse, sludge from a
waste treatment plant, water supply treatment plant, or
air pollution control facility and other discarded material.”
42 U.S.C. § 6903(27). The parties dispute whether the
asbestos materials that Ericsson left in the facility can be
categorized as “discarded material” to satisfy the “solid
waste” definition. However, we do not need to address
this question. Assuming arguendo that the asbestos
material is solid waste, Ericsson’s actions still do not
constitute “disposal” because it did not place the asbestos
into or on any land or water so that it may enter the
environment or be emitted into the air or discharged
into any waters, as required by § 6903(3).
 Sycamore argues that Ericsson disposed of the asbestos
materials when it abandoned them in place and then
8                                               No. 08-1118

transferred the site to Sycamore. In other words, they
claim that by selling the real estate, Ericsson was
disposing of the asbestos.
  In G.J. Leasing v. Union Electric Company, the plaintiffs
advanced an argument very similar to Sycamore’s argu-
ment here: that Union Electric disposed of a hazardous
substance when it sold real estate containing asbestos. In
that case, Union Electric sold a power station consisting
of power generation equipment housed in a structure
with significant amounts of asbestos in the walls. G.J.
Leasing, 54 F.3d at 382-84. In G.J. Leasing, we determined
that the mere sale of property containing a hazardous
substance is not a disposal imposing liability. Our decision
in G.J. Leasing emphasized that the only exposure to
asbestos was inside the building; there was no apparent
danger to air, land, or water outside of the building as
required for “disposal.” Id. at 383. We acknowledged
that if the primary purpose and likely effect of the sale
was to remove the asbestos in circumstances that would
make the release of asbestos to the outside environment
inevitable, the transferor could be held liable under
CERCLA. But without such intent and likely effect, we
concluded that asbestos abandoned in place in a
structure did not lead to CERCLA liability. Id. at 385.
  The Ninth Circuit reached the same conclusion in
Stevens Creek, 915 F.2d 1355. Our sister Circuit determined
there was no private cause of action under CERCLA for
the sale of a building containing materials with asbestos
because the defendant never “disposed” of a hazardous
substance. It reasoned that asbestos built into a building
No. 08-1118                                                   9

could not enter the environment or be emitted into the
air, as required by the definition of “disposal.” Even if the
asbestos broke off, asbestos fibers would remain in the
building. Stevens Creek, 915 F.2d at 1361.
  G.J. Leasing and Stevens Creek are on point here. All
asbestos insulation at the Sycamore facility is either inside
a building or enclosed in a pipe chase or metal case.1 There
is no real threat that asbestos “or any constituent thereof
may enter the environment or be emitted into the air or
discharged into any waters, including ground water,” as
CERCLA requires in § 9601(29).
  Sycamore attempts to distinguish G.J. Leasing and
Stevens Creek. It argues that in those cases the asbestos-
containing material was being used for its intended
purpose (to insulate structures), whereas in the instant
case the asbestos insulation was no longer serving a

1
   Plaintiff cites testimony of David Kedrowski, defendant’s
expert, to argue that there may be another pipe underground.
Kedrowski testified: “I was informed by Mr. Boey that there
was another pipe extending underground between two of the
buildings described as running to and from the underground
pipe. The pipes I could see were not covered with insulation,
at the locations where they were described as running to and
from an underground pipe.” (Pl. Br. 36). This testimony does not
affect the conclusion that all insulated piping was encased
because Kedrowski explicitly states that there was no insula-
tion around this pipe. Moreover, Kedrowski’s expert testimony
is limited to the condition of the equipment after litigation
was commenced. It cannot establish a disposal or release or
threat of release at the time of sale.
10                                                No. 08-1118

purpose because the boiler-based heating system was out
of operation. In fact, in G.J. Leasing the power plant was
obsolete and “decommissioned.” G.J. Leasing, 54 F.3d at
381-82. More importantly, this distinction does not make
the reasoning from G.J. Leasing or that from Stevens Creek
inapplicable to the scenario at issue in this case. Like in
those cases, here there is no real possibility of asbestos
entering the environment, as required to have a “disposal.”
For CERCLA liability, the defendant must be a “responsi-
ble party,” defined as a party that controlled the site “at the
time of disposal” of a hazardous substance. 42 U.S.C.
§ 9607(a)(2). Without a disposal, Ericsson is not a responsi-
ble party.
  It is worth noting that in G.J. Leasing we also pointed
out practical reasons why “the sale of a product which
contains a hazardous substance cannot be equated to the
disposal of the substance itself or even the making of
arrangements for its subsequent disposal.” Id. at 384. As
we noted, a contrary rule would mean that sale of an
automobile is an arrangement for disposal of a hazardous
substance because every automobile contains lead in the
battery. Id. We carved out an exception to this general
principle, recognizing that an owner who wants to get
rid of a toxic retaining pond, for example, cannot avoid
CERCLA “arranger” liability merely by selling his entire
facility, which includes the pond, to an unsuspecting
purchaser. We described the toxic retaining pond
example as the “malicious motive case.” Id. We also
recognized a third category of cases, the “mixed-motive
case,” in which a seller’s intent is both to dispose of
No. 08-1118                                              11

hazardous waste and make a bona fide profit. We stated
the limiting principle may be whether the materials are
sold for reclamation. Id. Here, there is no evidence that
Ericsson transferred the Sycamore property with the
intent to dispose of a hazardous substance. It incidentally
left the old heating equipment in place when it sold
otherwise useful realty. It simply does not make sense to
hold that Ericsson is a responsible party just because
Sycamore decided to remove asbestos in place decades
after it purchased valuable real estate in a legitimate
transaction.
  Even if we were to find that Ericsson is a responsible
party, CERCLA also requires that there has been a release
or there is a threatened release of hazardous substances.
There is substantial overlap in terms used to define
“disposal” and “release,” so analysis of the “release”
element required for CERCLA liability inevitably
overlaps with “responsible party” analysis. See Carson
Harbor Village, Ltd. v. Unocal Corp., 270 F.3d 863, 879 (9th
Cir. 2001). CERCLA defines a “release” as “any spilling,
leaking, pumping, pouring, emitting, emptying, discharg-
ing, injecting, escaping, leaching, dumping, or disposing
into the environment.” 42 U.S.C. § 9601(22). The term
“environment” includes any “surface water, ground
water, drinking water supply, land surface or subsurface
strata, or ambient air within the United States.” 42 U.S.C.
§ 9601(8).
  The asbestos at the Sycamore facility is contained inside
the buildings of the facility or, in the instances when
insulated piping runs between buildings, is enclosed in a
12                                              No. 08-1118

piping chase or in a metal case. Sycamore has not pre-
sented evidence—such as evidence of soil, water or air
contamination—showing that the asbestos insulation has
been placed “into or on any land or water” or emitted into
the air as the applicable definition of “disposal” requires.
We have stated that “the release of asbestos inside a
building, with no leak outside, . . . is not governed by
CERCLA.” G.J. Leasing, 54 F.3d at 385; see also Covalt v.
Carey Canada, Inc., 860 F.2d 1434, 1439 (7th Cir. 1988) (“the
interior of a place of employment is not the environ-
ment for purposes of CERCLA”). The Ninth Circuit in
Stevens Creek similarly suggested that when any resulting
hazard from emission of asbestos fibers into the air would
be confined to the interior of the building, there is no
release or threat of release, and CERCLA does not apply.
Stevens Creek, 915 F.2d at 1359-60. We reaffirm that when
there is no emission into the outside environment, but
rather any hazard resulting from emission of asbestos
fibers would be confined inside a building, there is no
release or threatened release, and thus there can be no
liability under CERCLA. Even viewing all facts in the
light most favorable to Sycamore, Ericsson’s abandon-
ment of the asbestos-laden insulation in place at the
Sycamore site does not make it liable under CERCLA.

  C. RCRA Claim
  The RCRA citizen suit provision states, in relevant part,
“any person may commence a civil action . . . against
any person, . . . who has contributed or who is contributing
to the past or present handling, storage, treatment, trans-
No. 08-1118                                             13

portation, or disposal of any solid or hazardous waste
which may present an imminent and substantial endanger-
ment to health or the environment.” 42 U.S.C.
§ 6972(a)(1)(B).
  To establish RCRA liability, Sycamore must show that
Ericsson “handled, stored, treated, transported, or dis-
posed of” solid or hazardous waste. Sycamore first
argues that Ericsson “disposed” of the boiler-based heating
system when it abandoned the system in place. The
definition of “disposal” is the same under RCRA and
CERCLA, because RCRA also adopts the definition from
the Solid Waste Disposal Act, which is its predecessor
statute. 42 U.S.C. § 6903(3). Once again, because
Sycamore cannot show that Ericsson placed the asbestos
into or on land or water, emitted it into the air, or dis-
charged it into water, we do not need to address the
closer question whether the asbestos contained in the
boiler-based heater satisfied the “solid or hazardous
waste” requirement. Because the definition of “disposal”
is the same, our reasoning that established that there
was no disposal under CERCLA applies to a RCRA
analysis as well. Sale of a facility with an abandoned
asbestos-containing boiler system does not meet the
statutory definition of “disposal.”
  Sycamore argues in the alternative that even if Ericsson
did not dispose of the asbestos insulation, Ericsson is
nonetheless liable because it handled and stored the
asbestos insulation. Yet Sycamore presents no evidence
that Ericsson handled, stored, or even touched any part
of the heating system. In fact, there is no evidence that
14                                                  No. 08-1118

Ericsson did anything to the asbestos-containing boiler
system or its insulation prior to or after closing the sale
with Sycamore. A plain reading of the “has contributed or
is contributing” language of § 6972(a)(1)(B) compels us
to find that RCRA requires active involvement in
handling or storing of materials for liability. The ordinary
meaning of “contribute” is “to act as a determining factor.”
Webster’s II New College Dictionary (2005). By definition, the
phrase “has contributed or is contributing” requires
affirmative action. The vast majority of courts that have
considered this issue read RCRA to require affirmative
action rather than merely passive conduct—such as
leaving a heating system in place when selling the real
estate that houses it—for handling or storage liability. See
ABB Industrial Sys., Inc. v. Prime Tech., Inc., 120 F.3d 351, 359
(2d Cir. 1997); Interfaith Cmty. Org. v. Honeywell Int’l, 263
F. Supp. 2d 796, 844-46 (D. N.J. 2003); Delaney v. Town of
Carmel, 55 F. Supp. 2d 237, 255-57 (S.D.N.Y. 1999); Marriott
Corp. v. Simkins Indus., Inc., 929 F. Supp. 396, 398 n.2 (S.D.
Fla. 1996). Thus, as a matter of law, by leaving equipment
that is insulated by asbestos in place and then selling the
Sycamore property, Ericsson did not handle, store, treat,
transport, or dispose of the asbestos as required for
RCRA liability.

                       III. Conclusion
  For the foregoing reasons, we A FFIRM the district
court’s grant of summary judgment for defendant.

                            10-20-08