Eighth Circuit Reverses Summary Judgment Finding of CERCLA Arranger Liability

On December 10, the Eighth Circuit Court of Appeals, in a 2-1 decision, reversed a trial court’s summary judgment finding that Dico, Inc. had arranger liability under CERCLA for selling buildings known to contain PCB-contaminated insulation. United States v. Dico, Inc., et al, No. 14-2762 (8th Cir. 2015). The Court found that under the U.S. Supreme Court opinion in Burlington Northern and Santa Fe Railway Co. v. U.S., 129 S. Ct. 1870 (2009), the determination of intent to arrange for disposal of a hazardous substance is fact-specific, and that because there was some evidence that the buildings had some commercial value, there was a genuine factual dispute as to whether Dico’s intent in selling the buildings was to dispose of the PCB-contaminated insulation. The case was remanded to the trial court for trial. The case arises out of the sale by Dico of buildings to Southern Iowa Mechanical (SIM). The buildings had been subject to a cleanup order by EPA. After cleanup, the buildings still contained encapsulated PCBs in insulation. Dico did not disclose the PCB contamination to SIM when it sold the buildings. SIM dismantled the buildings and disposed all the material except steel beams which had PCB-contaminated insulation attached to them. EPA eventually ordered that four tons of insulation be retrieved and disposed of properly. The district court found that there were no issues of material fact that Dico intended to dispose of the PCB-contaminated insulation when it sold the buildings to SIM. Judge Kermit Bye wrote the majority opinion that found the existence of a genuine issue of material fact on the question of intent. Concurring with that conclusion but not with Judge Bye’s reasoning, Judge James Loken wrote a concurring opinion disagreeing with Judge Bye’s legal analysis, but agreeing that issues of fact precluded summary judgment. Judge Jane Kelly dissented and found that, under multi-factor tests followed by other Circuit Courts, the undisputed facts did show that Dico intended to dispose of the PCB-contaminated insulation. The case underscores the importance of exercising good judgment and prudence when selling buildings or real estate known to be contaminated. For more information on the Dico case or on arranger liability under CERCLA, contact Steve O’Day or Phillip Hoover.

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