A federal court in Connecticut has ruled that the sale to a scrap yard of transformers that may contain hazardous substances does not create a rebuttable presumption that the transformers contained polychlorinated biphenyls (PCBs).Schiavone v. Ne. Utils. Serv. Co., No. 08-429 (D. Conn. 3/22/11). From 1971 to 1978, defendant utility sold used transformers to a scrap yard operated by plaintiff’s predecessor. Plaintiff acquired the scrap yard in 1984. In 2002, the Connecticut Department of Environmental Protection discovered PCB contamination on the property. Subsequently, plaintiff retained an environmental engineering firm to conduct an investigation and remediate the property at a cost of $1.37 million.

In 2004, plaintiffs sued defendants for cost recovery under CERCLA, alleging that the transformers defendant sold to the scrap yard contained oil with PCBs in it. Plaintiffs sought a declaratory judgment against the utility as an “arranger” under CERCLA and filed a motion for summary judgment. Defendant filed a cross-motion for summary judgment, arguing that plaintiff could not establish that the transformers contained PCBs.

The court agreed with defendant, ruling that the EPA regulation codified at 40 C.F.R. section 761.2 did not create a rebuttable presumption that transformers manufactured before July 2, 1979, contain PCBs. According to the court, that regulation, which sets forth PCB concentration assumptions for transformers based on various factors, applies only to transformers “in use” or “in storage for reuse,” not to transformers being disposed of.

The court also cited Burlington Northern Santa Fe Railway Co. v. United States, 129 S. Ct. 1870 (2009), which concluded that an entity qualifies as an arranger when it takes intentional steps to dispose of a hazardous substance. In this case, the court found no evidence that the sale of transformers was based on anything other than the sale of metal for scrap—there was no consideration for or documentation of the sale of oil. Thus, the court denied plaintiffs’ motion with prejudice, granted defendants’ cross-motion and ordered the case to be closed.