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Tippins Inc. v. USX Corp.

filed: September 12, 1994; As Corrected October 5, 1994.

TIPPINS INCORPORATED, A PENNSYLVANIA CORPORATION; AND INTERNATIONAL MILL CONSTRUCTION, INC., A PENNSYLVANIA CORPORATION
v.
USX CORPORATION, A PENNSYLVANIA CORPORATION; AND PETROCLEAN INC., A PENNSYLVANIA CORPORATION, USX CORPORATION, APPELLANT IN NO. 93-3587; PETROCLEAN, INC., APPELLANT IN NO. 93-3599; TIPPINS INCORPORATED AND INTERNATIONAL MILL CONSTRUCTION, INC., APPELLANTS IN NO. 93-3609



On Appeal From the United States District Court For the Western District of Pennsylvania. (D.C. Civ. No. 92-cv-01799).

Before: Becker and Hutchinson, Circuit Judges, and Joyner, District Judge.*fn*

Author: Becker

Opinion OF THE COURT

BECKER, Circuit Judge.

These appeals from two orders of the district court in a contribution action involving the allocation of response costs under the Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA"), 42 U.S.C.A. §§ 9601-75 (1983 & Supp. 1994), present an interesting question of first impression in the courts of appeals concerning transporter liability under CERCLA § 107(a)(4), 42 U.S.C.A. § 9607(a)(4). The first order granted summary judgment in favor of the plaintiffs/cross-appellants, Tippins Inc. and International Mill Construction, Inc. ("IMC"),*fn1 and held the defendants/appellants, USX Corporation and Petroclean Inc., liable for CERCLA response costs arising from the remedial action instituted by the United States Environmental Protection Agency ("EPA") and the Indiana Department of Environmental Management at the Four County Landfill ("Four County") in Rochester, Indiana. The court found USX liable as an arranger and Petroclean liable as a transporter. The second order allocated among Tippins, Petroclean, and USX all past and future response costs.

Appellants raise a number of issues. We write solely on Tippins' argument that a transporter is liable even if it does not select the facility at which the waste was disposed, and on Petroclean's argument that it cannot be held liable as a transporter unless the court finds that it made the ultimate decision to select Four County as the disposal facility. We find no error in the district court's treatment of any of the other issues (described infra at pp. 6-8), and as they are straightforward they will be affirmed without Discussion.

We reject Tippins' argument that under § 107(a)(4) a transporter is liable as a responsible party even if it does not "select" the disposal "facility" (in contrast to a "site"). We also reject Petroclean's assertion that it cannot be liable unless the court finds that it made the ultimate selection of the facility as the disposal location regardless of whether it contributed to the selection of the facility ultimately utilized. We basically agree with Tippins that § 107(a)(4) applies if the transporter's advice was a substantial contributing factor in the decision to dispose of the hazardous waste at a particular facility. As we interpret that section, a transporter selects the disposal facility when it actively and substantially participates in the decision-making process which ultimately identifies a facility for disposal. Since there is no dispute that Petroclean did so -- Petroclean had considerable input into the selection process and, importantly, Tippins relied upon Petroclean's expertise in hazardous waste management when making its disposal decision -- Petroclean is liable as a transporter. Accordingly, we will also affirm the grant of summary judgment against Petroclean on transporter liability.

I. FACTS AND PROCEDURAL HISTORY

In September 1987, Tippins signed an agreement with Sydney Steel Corporation of Nova Scotia to provide equipment for electric arc furnace ("EAF") steelmaking. Included in this agreement was a provision that required Tippins to furnish and install an EAF baghouse.*fn2 Tippins thereupon contacted a representative of U.S. Realty Development, a division of USX, and inquired about the availability of a baghouse. In October 1987, a purchase agreement was executed whereby USX agreed to sell, and Tippins agreed to purchase, a used EAF baghouse which was located at the USX Duquesne Works for $300,000. Under the purchase agreement, Tippins was responsible for the dismantling and load-out of the baghouse.

As a result of USX's manufacturing and processing of steel at the Duquesne Works, EAF dust was present in and around the baghouse. To effect cleanup of the EAF dust, Tippins solicited bids from contractors to pick up and transport the dust for disposal. Tippins eventually contracted with Petroclean, which is licensed to haul hazardous waste and specializes in the transport and disposal of hazardous substances, to transport the dust for disposal. The transportation agreement provided that Petroclean would supply the labor, equipment, and material for removal and transport of the EAF dust as well as obtain a provisional EPA identification number for the generation of the hazardous waste.

The CECOS International facility in Williamsburg, Ohio was chosen after Petroclean gathered information on the site and submitted a proposal to Tippins based on certain cost parameters. Those cost parameters involved the use of a certain type of container for the dust known as a bulk lift disposal bag. The parties subsequently learned that the CECOS site would accept EAF dust only if packaged in its own containers. Since those containers were "prohibitively" expensive, Tippins and Petroclean agreed to transport the dust to another disposal site. Petroclean, having surveyed substitute disposal sites, identified two landfills that would accept the dust, the Four County Landfill in Rochester, Indiana and Wayne Disposal, Inc. in Detroit, Michigan. Petroclean contacted each site, gathered financial information as to disposal costs, and offered Tippins both sites as possible disposal locations from which Tippins could choose. Tippins subsequently picked Four County, where Petroclean disposed of the EAF dust.*fn3

Later, both the EPA and the Indiana Department of Environmental Management requested the owner of Four County to participate in a program to monitor and close the landfill. The EPA thereafter notified Tippins that it was a potentially responsible party for environmental contamination at Four County. Tippins then made written demands upon Petroclean and USX, advising them of their potential liability under CERCLA for remedial investigation and response costs incurred by Tippins arising from the monitoring and closing of the landfill. Petroclean and USX denied CERCLA liability.

In August 1992, Tippins filed an action in the District Court for the Western District of Pennsylvania against Petroclean and USX pursuant to CERCLA §§ 107(a) and 113(f), 42 U.S.C.A. §§ 9607(a), 9613(f), and the Declaratory Judgment Act, 28 U.S.C.A. § 2201 (1994), seeking indemnity and contribution for past response costs and a declaratory judgment apportioning future response costs arising from the remedial action at Four County. Tippins alleged that USX had arranged by contract for the disposal of the EAF dust and was liable as an arranger under § 107(a)(3) of CERCLA. Tippins also alleged that Petroclean was liable as a transporter under § 107(a)(4).

On cross-motions for summary judgment by Tippins and USX, the district court granted Tippins' motion, but denied that of USX. The court determined that USX was liable as an arranger under § 107(a)(3), rejecting USX's claim that the purchase agreement with respect to the EAF dust was for the sale of a useful commodity in contrast to a contract arranging for the disposal of a hazardous substance. The court also declined to find that Tippins was contractually bound to assume all potential CERCLA liability arising from the disposal of the dust by virtue of an indemnification clause in the purchase agreement. As for Petroclean, the court summarily concluded that it was liable as a transporter under § 107(a)(4). In a footnote, the court stated that "despite defendant Petroclean's attempt to characterize itself as merely the transporter who did not select the site . . ., it is a responsible party under CERCLA, as one who caused or contributed to a release or threatened release of hazardous waste." Mem. Op. at 11 n.5 (May 25, 1993) (quotations and citations ...


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