Superfund Liability for the Repair of a Useful Product

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A few months ago, I blogged on the decision in Duke Energy Progress Inc. v. Alcan Aluminum Corporation where a court held that a company would not be held liable for selling used transformers to a recycling facility for refurbishing and eventual resale to a new user.   At the center of that holding was the notion that the transformers were not leaking PCB oils when delivered to the recycling center and could be refurbished in the exercise of due care without causing a release of  PCBs.

The court recently issued a follow up decision in which it declined to apply its ruling to a company which had sent its transformers for repair by the same recycling facility.  The company argued that its situation was no different from the company selling its used transformers — in both instances the recycling facility in the course of refurbishing  transformers — whether for resale or repair — had potentially spilled PCBs.  The court, however, did not agree, pointing out that the company sending its transformers for repair continued to own its transformers and directed the specific manner in which those transformers were to be fixed.   As the court explained, a company which sent its transformer for repair and retained control over the manner of the repair was not analogous to a party selling a used product; depending on the specific facts, it was potentially comparable  to the defendant in Aceto which directed the manufacture of a product with its own ingredients knowing that there would be hazardous wastes generated in that process.  Although unspoken, the court seemed to leave open the question whether a company which sends a product for repair would have Superfund liability if it did not specify and control  the manner in which its product was to be repaired.