The manufacturer of a perchlorethlyene (“PCE” or “PERC”) recycling machine was recently found not liable as an “arranger” or “transporter” under the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) in Team Enterprises, LLC v. Western Investment Real Estate Trust, 2010 WL 3133195 (E.D.Cal. 2010). Team Enterprises (“Team”), a dry cleaner, asserted that R.R. Street & Co. (“Street”) was liable to pay for the cleanup of PERC contamination released at its laundry facility. Team alleged that Street was liable under various legal theories, including nuisance, trespass, and as a CERCLA “arranger” or “transporter.”

The machine at issue (known as a Puritan Rescue 800) recycles PCE by filtering and recycling spent PCE from what becomes “wastewater.” The Puritan Rescue 800’s installation manual instructed the user to run a pipe from the water separator to a “pail or other suitable container” to prevent wastewater from entering the drain if a spill occurred due to a machine malfunction. From these instructions, Team asserted that “the only disposal option available was to discharge waste water from the container into the sewer.”

Under CERCLA, if a party is found to be an “arranger” or “transporter” of hazardous substances, it is liable for the costs resulting from any associated contamination. The U.S. District Court held that a party is an “arranger” if it takes “intentional steps” to plan for and control disposal of a hazardous substance. Evidence showing that a party knew that its product would leak, spill, dump, or be discarded may prove the party’s intent to dispose of its hazardous waste. However, the court also held that proof of such knowledge alone does not automatically prove that the party “planned” the disposal.

Team unsuccessfully tried to establish that Street planned for the disposal of PCE because Street “instructed” Team to divert the wastewater to a pail or suitable container. Team also argued that Street “tracked or monitored” the machine’s operation because Street employees occasionally visited the property.

Street, on the other hand, claimed, and the court agreed, that Street did not “plan” for PCE disposal because Street did not install the machine, inspect the equipment, or oversee the disposal of the PCE. Street characterized the Puritan Rescue 800 as a machine that recovered PCE for reuse, not as a means of disposal. The court also agreed with Street’s claim that the machine’s instructions operated to reduce spills of PCE and that, ultimately, Team made the decision that caused wastewater to end up in the sewer. Accordingly, the court held Street did not take “intentional steps” to dispose of PCE as defined under CERCLA.

Street also asserted the “useful product defense,” which shields a potential “arranger” from liability if the product in question is a “useful product” as opposed to “waste.” The court labeled the Puritan Rescue 800 a useful product because it was a “principal product” that did not immediately necessitate PCE waste disposal and was not a manufacturing byproduct of a different product. In essence, the court found that Street simply sold a useful product to Team and nothing more. As such, Street could not face CERCLA liability as an arranger. Likewise, Street did not qualify as a “transporter” of hazardous waste under CERCLA because the Puritan Rescue 800 was a “useful product” and not “waste.” Consequently, Street was granted summary judgment as to all Team’s CERCLA claims.

For more information on CERCLA claims, please contact Frank Deveau or any member of Taft’s environmental practice group.