U.S. v. National Railroad Passenger Corp.

Full title: UNITED STATES OF AMERICA, et al., Plaintiffs, v. NATIONAL RAILROAD…

Court: United States District Court, E.D. Pennsylvania

Date published: Jun 15, 2004

Civil Action No. 86-1094 (E.D. Pa. Jun. 15, 2004)

Opinion

Civil Action No. 86-1094.

June 15, 2004

MEMORANDUM

ROBERT KELLY, Senior District Judge

I. INTRODUCTION

Presently before this Court are two Motions. On April 20, 2004, the Third-Party Defendant, American Premier Underwriters, Inc. ("APU"), filed a Motion for Summary Judgment and Motion for Judgment on the Pleadings (hereinafter referred to as "APU's Motion"). APU's Motion asks this Court to grant summary judgment in favor of APU as it relates to Count I of the Original Third-Party Complaint. Additionally, APU's Motion asks for a judgment on the pleadings as it relates to Counts V and VI of the Original Third-Party Complaint. On April 22, 2004, the Third-Party Plaintiffs, the National Railroad Passenger Corporation ("Amtrak"), the Consolidated Rail Corporation ("Conrail") and the Southeastern Pennsylvania Transportation Authority ("SEPTA") (collectively referred to as the "Rail Companies"), filed a Motion to Amend the Third-Party Complaint (the "Rail Companies' Motion"). For the following reasons, the Rail Companies' Motion is granted in part and denied in part, and APU's Motion is denied as moot.

II. FACTUAL AND PROCEDURAL BACKGROUND ¹

1 At this stage of the litigation, the parties are well-versed in the underlying facts of the case, thus, this Court will only recite the facts relevant to the instant Motions.

This case arises from polychlorinated byphenyl ("PCB") contamination at the Paoli Rail Yard and accompanying 400-acre watershed (collectively referred to as "the Site") located in Chester County, Pennsylvania. The Paoli Rail Yard was used to repair, service and store commuter railcars. From the 1950's until the 1980's, railcars at the Paoli Rail Yard used fluids containing PCBs to cool their transformers. APU, by and through its predecessors, owned and operated the Paoli Rail Yard up until 1976.² APU then transferred the Paoli Rail Yard to Conrail on April 1, 1976, who subsequently transferred it to Amtrak on that same day. SEPTA took over the Paoli Rail Yard operation at the end of 1982 and continued to operate the Paoli Rail Yard until 1995.

2 APU was previously called the Penn Central Corporation which arose out of the reorganization of the Penn Central Transportation Company. To avoid confusion, this Court will refer to APU's predecessor corporations as APU.

In 1986, the United States sued the Rail Companies pursuant to the statutory provisions of the Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA"). Later that year, the Commonwealth of Pennsylvania intervened as a Plaintiff against the Rail Companies. Subsequently, on August 12, 1992, the Rail Companies filed the Original Third-Party Complaint against APU seeking to hold APU liable for its share of costs and expenses related to the PCB contamination at the Site. It is this Original Third-Party Complaint that is the basis for the two Motions currently before this Court. However, before the United States filed suit against the Rail Companies in 1986, SEPTA had begun to retrofill railcars at the Paoli Rail Yard pursuant to the Toxic Substances Control Act ("TSCA"), 15 U.S.C. § 2601 et. seq., and pursuant to regulations under 40 C.F.R. § 761.³

3 According to SEPTA, the retrofill program was to replace the PCB fluids with other coolants in the railcars' transformers.

The Rail Companies Original Third-Party Complaint contained six counts against APU. Specifically, Count I sought a claim for relief under Section 107 of CERCLA; Count II sought relief under Section 113 of CERCLA; Count III sought relief under Pennsylvania's Hazardous Sites Cleanup Act; Count IV sought relief under a deed of conveyance theory; Count V sought relief for restitution under common law; and Count VI sought relief for common law contribution. APU's Motion seeks an entry of summary judgement against the Rail Companies on Count I of the Original Third-Party Complaint and an entry for judgment on the pleadings against the Rail Companies on Counts V and VI of the Original Third-Party Complaint.

The Rail Companies' proposed Amended Third-Party Complaint also has six counts. Specifically, Count I seeks relief on behalf of all the Rail Companies against APU under Section 113 of CERCLA; Count II seeks relief on behalf of SEPTA against APU under Section 107 of CERCLA relating to SEPTA's costs incurred in retrofilling railcars at the Paoli Rail Yard; Count III seeks relief on behalf of SEPTA against APU under Section 113 of CERCLA relating to SEPTA's costs incurred in retrofilling railcars at the Paoli Rail Yard; Count IV seeks contribution relief on behalf of all the Rail Companies against APU under the Pennsylvania Hazardous Sites Cleanup Act ("HSCA"); Count V seeks contribution relief on behalf of SEPTA against APU relating to SEPTA's costs incurred in retrofilling railcars at the Site under Section 705 of the HSCA and; Count VI seeks direct relief on behalf of SEPTA against APU relating to SEPTA's costs incurred in retrofilling railcars at the Site under Section 702 of the HSCA. The Rail Companies argue that their proposed Amended Complaint merely clarifies and restates the Rail Companies' claims as set forth in the Original Third-Party Complaint. Additionally, the Rail Companies assert that their proposed Amended Complaint moots APU's Motion.

III. LEGAL STANDARD ⁴

4 Since the Rail Companies' Motion moots APU's Motion, this Court will only set forth the standard under a Motion to Amend a Complaint since analysis of APU's Motion is rendered unnecessary.

Federal Rule of Civil Procedure 15(a) dictates that leave to amend a complaint "shall be freely given when justice so requires." FED. R. CIV. P. 15(a). While the Federal Rules of Civil Procedure state that leave to amend shall be freely given, numerous courts have noted instances where leave to amend a complaint should not be given. For example, the United States Court of Appeals for the Third Circuit ("Third Circuit") has stated that "[a]mong the grounds that could justify a denial of leave to amend are undue delay, bad faith, dilatory motive, prejudice and futility." Shane v. Fauver, 213 F. 113, 115 (3d Cir. 2000) (citations and internal quotation marks omitted). It is these considerations that this Court must evaluate in determining whether to allow the Rail Companies to Amend the Third-Party Complaint.

IV. DISCUSSION

The Rail Companies' proposed Amended Complaint has three goals. First, it seeks to change the name of the Third-Party Defendant listed on the Original Third-Party Complaint from Penn Central Corporation to APU. APU does not contest this amendment. Next, the proposed Amended Complaint eliminates Counts I, IV, V and VI of the Original Third-Party Complaint. As Counts I, V and VI were the subject of APU's Motion, and the Rail Companies have agreed to eliminate Counts I, IV, V and VI, APU does not contest this amendment. However, it is the third amendment that APU contests and which will require additional analysis. SEPTA asserts that Counts II, III, V and VI of the proposed Amended Complaint merely restate with more specificity claims already asserted in the Original Third-Party Complaint. It should be noted that SEPTA is asserting these four counts alone against APU. The four counts arise from the retrofilling of railcars that occurred at the Site in the 1980's pursuant to regulations issued under the TSCA, 15 U.S.C. § 2601-29 and regulations promulgated at 40 C.F.R. § 761. APU contests SEPTA bringing these four claims at this stage of the litigation and makes several arguments to support a denial of this amendment. Specifically, APU argues the following: 1) by adding the four retrofilling counts, SEPTA seeks to add claims that were not asserted in the Original Third-Party Complaint filed in 1992; 2) the four retrofilling counts do not relate back to the Original Third-Party Complaint and thus should be considered new counts which are barred by the applicable statute of limitations; 3) Counts II and VI are improper since SEPTA is a potentially responsible party and/or not considered a "state" so as to not allow SEPTA to bring a direct action against APU under CERCLA and the HSCA; and 4) asserting these four claims at this stage of the litigation will result in undue delay.

First, this Court will analyze whether SEPTA can properly bring a Section 107 CERCLA claim against APU (Count II of the proposed Amended Complaint) for costs relating to the retrofilling of railcars. Next, this Court will analyze whether SEPTA can properly bring a Section 702 HSCA claim against APU (Count VI of the proposed Amended Complaint) for the costs incurred by SEPTA in retrofilling the railcars. Finally, this Court will analyze whether SEPTA can properly bring a Section 113 CERCLA claim and a Section 705 HSCA claim against APU for the costs incurred by SEPTA relating to the retrofilling of the railcars.

A. SEPTA'S SECTION 107 CERCLA CLAIM AGAINST APU (COUNT II) ⁵

5 While the costs incurred by SEPTA as a result of the retrofilling arose from the TSCA, a "clean up conducted under the auspices of TSCA does not automatically preclude recovery." See Reading Co. v. City of Phila., 823 F. Supp. 1228, 1229-30 (E.D. Pa. 1993). Indeed, "even if a party takes a cleanup action under an authority other than CERCLA . . . it may have a right of cost recovery under Section 107 if the action was a necessary response to a release of hazardous substances, and was performed consistent with the N.C.P. [national contingency plan]." Id. (citing 55 FED. REG. 8796 (1990)).

Under Section 107 of CERCLA, certain enumerated parties called "potentially responsible parties" ("PRP") "shall be liable for . . . all costs of removal or remedial action incurred by the United States Government . . .; [and] any other necessary costs of response costs or response incurred by any other person consistent with the national contingency plan." New Castle County v. Halliburton NUS Corp., 111 F.3d 1116, 1120 (3d Cir. 1997) (quoting 42 U.S.C. § 9607(a)). As the Third Circuit has noted, "[a] section 107 cost recovery action imposes strict liability on potentially responsible persons for costs associated with hazardous waste clean-up and site remediation." Id. (citations omitted).

In Count II of the proposed Amended Complaint, SEPTA asserts a claim against APU under Section 107 of CERCLA relating to the retrofilling of the railcars. APU makes two arguments to support its position that SEPTA should not be allowed to assert this Section 107 claim against it. First, APU asserts that SEPTA is not considered a "state" under CERCLA and therefore, SEPTA's claim under Section 107 of CERCLA against APU should not be allowed to proceed. Additionally, APU asserts that since SEPTA is a PRP as it relates to the retrofilling, SEPTA's Section 107 CERCLA claim should not be allowed to proceed. SEPTA argues that it should be considered a "state" under CERCLA and that APU's arguments relating to SEPTA being a PRP are not outcome determinative. This Court disagrees with SEPTA's assertions. Specifically, this Court finds that if SEPTA is considered a PRP relating to its retrofilling claims, it cannot bring a Section 107 CERCLA claim against APU.

In this case, there can be no doubt that SEPTA is a PRP as it relates to its retrofilling claims. "Section 107 of CERCLA assigns liability to four categories of 'potentially responsible parties' or PRPs for costs of removal or remediation or hazardous waste." PPG Indus., 197 F.3d at 103 (citing 42 U.S.C. § 9607(a)). Specifically:

[a] PRP includes: 1) the current owner or operator of a facility; 2) any person who owned or operated the facility at the same time of the disposal of a hazardous substance; 3) any person who arranged for transport for disposal or treatment of hazardous substances at a facility; and 4) any person who accepts or accepted hazardous substances for transport to sites selected by such person.

Id. (citing Halliburton, 111 F.3d at 1120). In this case, the "facility" at issue is the railcars that were the subject of the retrofilling. "As defined in CERCLA, the term facility encompasses rolling stock, such as railcars." Reading Co. v. City of Phila., 155 B.R. 890, 906 (E.D. Pa. 1993). Additionally, PCBs are classified as hazardous substances under CERCLA. See United States v. Penn Central Corp., No. 86-1094, 2004 WL 35780, at *1 n. 1 (E.D. Pa. Jan 8, 2004) (stating PCBs are classified as hazardous substances under CERCLA). Finally, it is clear that SEPTA either owned or operated the railcars at the time of the disposal of the PCBs. Indeed, it was SEPTA who retrofilled the railcars pursuant to federal regulations during the 1980's. Thus, SEPTA is a PRP as it relates to the retrofilling of the railcars.

The Third Circuit has stated that "a potentially responsible person under section 107(a) who is not entitled to any of the defenses enumerated under section 107(b), may not bring a section 107 action against another potentially responsible person." New Castle County v. Halliburton NUS Corp., 111 F.3d 1116, 1124 (3d Cir. 1997); see also N.J. Turnpike Auth. v. PPG Indus., Inc., 197 F.3d 96, 104 (3d Cir. 1999) (stating that "[a] section 107 cost recovery action may only be pursued by an innocent party"). Indeed, in Halliburton, the plaintiff, New Castle County, conceded that it was a potential responsible person under Section 107(a) and, thus, the Third Circuit noted that "New Castle is therefore not permitted, under any scenario, to pursue a section 107 cost recovery action against other potentially responsible persons."

In its Reply Brief, SEPTA argues that it is the determination of whether SEPTA is considered a "state" under CERCLA that is the only applicable issue in determining whether SEPTA can move forward with its Section 107 CERCLA claim against APU. (Rep. Mem. of SEPTA, Amtrak and Conrail in Supp. of Mot. for Leave to Amend Third-Party Complaint, 8). However, in Halliburton, the Third Circuit outlined no exception for governmental PRPs. Indeed, the Third Circuit noted that "while a potentially responsible person should not be permitted to recover all of its costs from another potentially responsible person, the person should be able to recoup that portion of its expenditures which exceeds its fair share of overall liability. Section 113 provides potentially responsible persons with the appropriate vehicle for such recovery." Halliburton, 111 F.3d at 1122 (citations omitted). Relying on Halliburton, at least one court in this Circuit has noted that "a governmental entity, if it is a PRP, may not proceed under section 107(a) but is limited to seeking contribution under section 113." In re Kaiser Group Int'l, Inc., 289 B.R. 597, 605 (Bankr. D. Del. 2003). Contrary to SEPTA's position, the threshold inquiry is whether SEPTA is a PRP as it relates to its retrofilling claims. Thus, since SEPTA is a PRP relating to its retrofilling claims, it cannot pursue a Section 107 CERCLA claim against APU.⁶

6 There is nothing to suggest nor does SEPTA attempt to argue that it falls under one of the defenses listed under Section 107(b) of CERCLA so as to allow it to pursue a Section 107 CERCLA claim.

B. SEPTA'S SECTION 702 HSCA CLAIM AGAINST APU (COUNT VI)

As courts have noted, "[t]he HSCA is Pennsylvania's version of CERCLA and was in fact modeled after the federal statute."Darbouze v. Chevron Corp., No. 97-2970, 1998 WL 512941, at *9 (E.D. Pa. Aug. 19, 1998) (citing General Elec. Envir. Serv. v. Envirotech Corp., 763 F. Supp. 113, 115 (M.D. Pa. 1991)). Similar to CERCLA, courts within this Circuit have stated that "a HSCA claim for cost recovery between potentially responsible parties [is] one for contribution." United States v. Pesses, No. 90-0654, 1998 WL 937235, at *16 (W.D. Pa. May 6, 1998); see also Darbouze, 1998 WL 512941, at *9 (stating that if plaintiff is unable to establish innocent landowner defense, then his recovery under the HSCA is limited to contribution). Thus, if SEPTA is a PRP under the HSCA as it relates to SEPTA's retrofilling claim, it can only proceed against APU under the HSCA's contribution statutory provision. "To hold otherwise would allow a 'responsible party' found liable to recoup all of its expenditures from another 'responsible party' regardless of its degree of fault." Id. Section 701 of the HSCA defines a responsible person as:

(1) The person [who] owns or operates the site;

(i) when a hazardous substance is placed or comes to be located in or on a site;

(ii) when a hazardous substance is located in or on the site, but before it is released; or

(iii) during the time of the release or threatened release.

35 PA. STAT. ANN. § 6020.701(a). Here again, there can be no doubt that SEPTA is a responsible party under the HSCA's statutory scheme so as to preclude its Section 702 claim against APU from moving forward.

In this case, the "site" at issue under the HSCA is the railcars that were the subject of the retrofilling. Under the HSCA, rolling stock can be considered a "site." 35 PA. STAT. ANN. § 6020.103. As set out in supra Part III.A, SEPTA operated the railcars during the 1980's and during the retrofilling. Thus, since SEPTA is a PRP as it relates to its Section 702 HSCA claim against APU, it is futile for this claim to move forward.⁷

7 As stated similarly in supra note 5, there is nothing to suggest nor does SEPTA attempt to argue that SEPTA falls within one of the defenses under 35 PA. STAT. ANN. § 6020.703(a).

C. SEPTA'S SECTION 113 CERCLA AND SECTION 705 HSCA CLAIMS AGAINST APU (COUNTS III AND V)

Finally, SEPTA asserts a Section 113 CERCLA claim and Section 705 HSCA claim against APU seeking contribution relating to the costs incurred by SEPTA in retrofilling the railcars during the 1980's. These two claims fall under the contribution sections of these two statutes. As explained in supra Part.III.A and Part III.B, as a PRP, SEPTA's claims against APU can only be brought as a contribution rather than a direct action. However, while this might be true, APU asserts various arguments as to why SEPTA should not be allowed to even bring a contribution action against it relating to the retrofilling costs. Principally, APU asserts that SEPTA's retrofilling claims constitute new claims and do not relate back to the Original Third-Party Complaint, thereby barring such claims due to the statute of limitations. Additionally, APU asserts that SEPTA's contribution claims should be barred because of the unwarranted delay incurred in bringing these claims and the significant further delay these two claims will have on the rest of the litigation. SEPTA asserts that its retrofilling contribution claims merely restate claims already asserted in the Original Third-Party Complaint or, at the very least, relate back to the claims asserted in the Original Third-Party Complaint. SEPTA also asserts that the retrofilling contribution claims have been brought within the applicable statute of limitations. Finally, SEPTA asserts that the retrofilling claims will not delay the rest of the litigation. While APU's arguments might have some merit, this Court is not prepared to deny SEPTA's contribution claims arising from the retrofilling at this stage of the litigation. However, as will be explained, pursuant to Federal Rule of Civil Procedure 21, this Court will sever SEPTA's contribution claims arising from the retrofilling from the rest of the litigation.

It is important to first note that the Rail Companies' Motion is a Motion to Amend their Third-Party Complaint. The two rationales APU asserts in opposing SEPTA's contribution claims are for its futility due to the applicable statute of limitations and the undue delay the retrofilling contribution claims will have on the rest of the litigation. Recognizing that APU has raised significant procedural issues that might bar SEPTA from asserting its retrofilling contribution claims, this Court is not prepared to say, at this point, that SEPTA's retrofilling contribution claims are "clearly futile." Indeed, as one court has noted, this "conclusion merely speaks to the appropriateness of allowing plaintiff to amend the complaint; a ruling that an amendment is not 'clearly futile' does not purport to predict the outcome of either a motion to dismiss or a motion for summary judgment." Liberty Fish Co. v. Home Indemnity Co., No. 89-5201, 1990 WL 83341, at *3 n. 6 (E.D. Pa. June 18, 1990). Thus, while the Rail Companies will be permitted to amend the Third-Party Complaint as it relates to Counts III and V, such amendment does not foreclose this Court from ruling on a future motion to dismiss or summary judgment motion by APU relating to these claims.

This Court will allow the Rail Companies and particularly SEPTA to assert Counts III and V. However, pursuant to Federal Rule of Civil Procedure 21, SETPA's retrofilling contribution claims will be severed from the rest of the litigation. As one court has noted, while Rule 21 is titled "Misjoinder and Non-Joinder of Parties," "it may be used to organize problematical issues other than joinder problems." Official Comm. of Unsecured Creditors v. Shapiro, 190 F.R.D. 352, 355 (E.D. Pa. 2000) (citation omitted). Indeed, the Rule clearly states that "[a]ny claim against a party may be severed and proceeded with separately." FED. R. CIV. P. 21. Additionally, courts have recognized the ability of a court to act pursuant to Rule 21 sua sponte. See Shapiro, 190 F.R.D. at 355 (citations omitted) ("In addition, the Rule [21] explicitly provides authority to sever parties sua sponte 'on such terms that are just.'); see also, Stark v. Indep. Sch. Dist. #640, 163 F.R.D. 557, 564 (D. Minn. 1995) (citations omitted) (stating underlying purpose of Rule 21 "is to allow the district court to exercise its power to align the parties and the issues presented in a single lawsuit in a way that will foster judicial efficiency, while protecting parties against prejudice"). Thus, while neither party has asked this Court to sever, Rule 21 permits a court to sever claims sua sponte.

A court must balance several considerations in determining whether severance is warranted, including "the convenience of the parties, avoidance of prejudice to either party, and promotion of the expeditious resolution of the litigation." Shapiro, 190 F.R.D. at 355 (citations and internal quotation marks omitted). The specific factors a court must consider in a Rule 21 severance are:

'(1) whether the issues sought to be tried separately are significantly different from one another, (2) whether the separable issues require the testimony of different witnesses and different documentary proof; (3) whether the party opposing the severance will be prejudiced if it is granted, and (4) whether the party requesting the severance will be prejudiced if it is not granted.'

Id. (quoting German v. Fed. Home Loan Mortgage, 896 F. Supp. 1385, 1400 (S.D.N.Y. 1995)). Regarding SEPTA's retrofilling contribution claims, this Court finds that the factors weigh in favor of severance. First, fact discovery regarding the underlying contribution claims by all of the Rail Companies against APU (Counts I and IV) is quickly nearing completion and this Court agrees with APU's position that additional discovery regarding SEPTA's retrofilling contribution claims will probably be necessary. By severing SEPTA's retrofilling contribution claims, the parties and this Court can move forward with the rest of the litigation in which discovery is almost complete. Second, this Court has already noted that there remain significant procedural issues that might bar SEPTA's retrofilling contribution claims. As explained above, while this Court cannot say that SEPTA's claims are "clearly futile," because of the possible procedural problems raised by APU, additional time and arguments will possibly be needed to address whether SEPTA's retrofilling claims are procedurally proper. Thus, by severing Counts III and V, it will not delay the contribution claims being brought by all of the Rail Companies against APU (Counts I and IV of the proposed Amended Complaint). Third, Counts III and V are claims being brought by only SEPTA against APU. By severing the two retrofilling contribution claims, this Court will eliminate any prejudice towards Conrail and Amtrak that would arise from a delay caused by these two retrofilling contribution claims. Finally, whereas the costs associated with the retrofilling arise from federal regulations, the costs associated with the Rail Companies' contribution claims arise from costs associated with the action filed by the United States against the Rail Companies in 1986. Thus, SEPTA's claims will most probably require different testimony and different documentary proof since the costs associated with the claims arose separately. Therefore, it is clear after considering the circumstances and factors arising from SEPTA's retrofilling contribution claims, this Court will sever SEPTA's retrofilling contribution claims from the rest of the litigation pursuant to Federal Rule of Civil Procedure 21.

V. CONCLUSION

Since the Rail Companies' proposed Amended Third-Party Complaint eliminates Counts I, IV, V and VI of the Original Third Party Complaint this Court will deny APU's Motion as moot. However, since SEPTA is a PRP under both CERCLA and the HSCA, its claims against APU for the retrofilling costs under Section 107 of CERCLA and Section 702 of the HSCA will not be allowed to be added to the Third-Party Complaint. Additionally, while this Court recognizes that there might be procedural issues which might prevent SEPTA from asserting its retrofilling contribution claims (Counts III and V of the proposed Amended Complaint) against APU, this Court is not prepared at this time to affirmatively state that the retrofilling contribution claims by SEPTA against APU are "clearly futile." However, so as to not prevent the rest of the litigation from moving forward, this Court will sever SEPTA's retrofilling contribution claims from the rest of the litigation pursuant to Federal Rule of Civil Procedure 21.

An appropriate Order follows.

ORDER

AND NOW, this 15^th day of June, 2004, upon consideration of the Third Party Defendant's, American Premier Underwriters, Inc. ("APU"), Motion for Summary Judgment on Count I of the Third Party Complaint and Judgment on the Pleadings on Counts V and VI of the Third Party Complaint (Doc. No. 54), and upon consideration of the Motion to Amend the Third-Party Complaint (Doc. No. 55) filed by the Third Party Plaintiffs, the National Railroad Passenger Corporation ("Amtrak"), the Consolidated Rail Corporation ("Conrail") and the Southeastern Pennsylvania Transportation Authority ("SEPTA") (collectively referred to as the "Rail Companies"), the Response, Reply and Exhibits attached thereto, it is hereby ORDERED that:

1. APU's Motion for Summary Judgment on Count I of the Third Party Complaint and Judgment on the Pleadings on Counts V and VI of the Third-Party Complaint is DENIED AS MOOT;

2. the Rail Companies Motion to Amend the Third Party Complaint is GRANTED IN PART and DENIED IN PART. Counts II and VI of the Rail Companies' proposed Amended Complaint will not be added to the Third Party Complaint;

3. the Rail Companies shall file a new Amended Complaint that follows the dictates of this Order and Memorandum within seven (7) days of this Order;¹ and

4. pursuant to Federal Rule of Civil Procedure 21, this Court will sever SEPTA's retrofilling contribution claims (designated as Counts III and V of the Rail Companies' proposed Amended Complaint) from the rest of the Third Party Complaint upon the filing of the new Amended Complaint by the Rail Companies within seven (7) days of this Order.

1 Because the Rail Companies' proposed Amended Complaint included Counts that this Court has ruled shall not be allowed to move forward, the Rail Companies must file a new Amended Complaint which follows the dictates of this Opinion.

MEMORANDUM

I. INTRODUCTION

Presently before this Court is the Third-Party Plaintiff's, the National Railroad Passenger Corporation ("Amtrak"), Motion for Partial Summary Judgment as to the 1978 Penn Central Settlement Agreement (the "Settlement Agreement") . This litigation arises from the environmental contamination and clean-up at the Paoli Rail Yard and a surrounding 400-acre watershed located in Chester County, Pennsylvania (hereinafter referred to as "the Site"). Amtrak's Motion seeks to prevent an argument by the Third-Party Defendant, American Premier Underwriters, Inc. ("APU"), that Amtrak's contribution claims are barred by a 1978 Settlement Agreement between Amtrak and Penn Central, APU's predecessor. For the following reasons, Amtrak's Motion will be granted. II. FACTUAL AND PROCEDURAL BACKGROUND

The history of this case is well-documented and is well-known to both the parties and this Court. However, for clarity, this Court will briefly detail the case history so as to place the instant Motion into context.

In the 1960's and 1970's, a financial crisis hit the railroad industry in the Northeast. In 1970, APU's predecessor, filed for bankruptcy reorganization.¹ As a result of this financial crisis, Amtrak and APU entered into a Basic Agreement (the "Basic Agreement") in 1971. Under the Basic Agreement, Amtrak agreed to relieve APU of its intercity passenger rail service and APU agreed to maintain its Rail Lines at the same level of utility that they were in when Amtrak began to use the Rail Lines.

1 APU's predecessor was the Penn Central Corporation which arose out of the reorganization of the Penn Central Transportation Company. For clarity, when referring to APU, or its predecessors, this Court will use the APU designation.

The Paoli Rail Yard was used to repair, service and store commuter railcars. These railcars used fluids containing polychlorinated byphenyls (PCBs) to cool their transformers. On April 1, 1976, pursuant to the Regional Rail Reorganization Act of 1973, APU transferred the Paoli Rail Yard to the Consolidated Rail Corporation ("Conrail"), who subsequently transferred the Paoli Rail Yard to Amtrak on the same day. While Amtrak continues to own the Paoli Rail Yard, Conrail operated it from April 1, 1976 until the end of 1982 when the Southeastern Pennsylvania Transportation Authority ("SEPTA") took over its operation. SEPTA continued its operation of the Paoli Rail Yard until 1995.

In 1986, the Environmental Protection Agency ("EPA") filed an action against Amtrak, Conrail and SEPTA (collectively the "Rail Companies") in this District pursuant to the Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA") seeking injunctive relief and reimbursement costs relating to the release of PCBs at the Site. The Commonwealth of Pennsylvania later that year intervened as a Plaintiff against the Rail Companies. The Rail Companies then sought permission from the Court handling APU's bankruptcy to file a claim against APU. See In re Penn Central Transp. Co., 944 F.2d 164, 167 (3d Cir. 1991). The United States Court of Appeals for the Third Circuit ("Third Circuit") ultimately rejected APU's argument that its bankruptcy discharged any CERCLA claims against it. Id. at 168. Thus, on August 12, 1992, the Rail Companies filed a Third-Party Complaint against APU seeking to hold APU liable for its share of the costs and expenses incurred relating to the PCB contamination at the Site. APU filed its Answer and own Claims against the Rail Companies on November 25, 1994. Subsequently, during the 1990's, the Rail Companies negotiated and eventually formed numerous consent decrees with the United States related to the Rail Companies liability arising from the environmental contamination at the Site.

The instant Motion filed by Amtrak arises from a 1978 Settlement Agreement signed between APU's predecessor, the Penn Central Transportation Company ("PCTC") and Amtrak. At a status conference on June 30, 2003, APU suggested that the Settlement Agreement arising out of the PCTC bankruptcy barred Amtrak's claims against APU, which, as previously mentioned, were filed by Amtrak and the other Rail Companies in 1992. Amtrak has filed the instant Motion seeking to preclude APU from arguing that Amtrak's claims against APU, arising from the environmental clean-up at the Site, are released by the language of the 1978 Settlement Agreement.

During the course of APU's predecessor's bankruptcy proceedings, Amtrak had several claims against APU's predecessor. Amtrak and APU's predecessor agreed to a Settlement Agreement in 1978. However, both Amtrak and APU vigorously contest whether the language of this 1978 Settlement Agreement is broad enough to encompass Amtrak's claims against APU filed in the Third-Party Complaint. In addition to arguing that the language of the 1978 Settlement Agreement does not preclude Amtrak's claims against APU, Amtrak also states that APU should be estopped from arguing that the 1978 Settlement Agreement released any liability APU owed to Amtrak since APU only raised this argument after Amtrak had expended millions of dollars to clean-up the Site.

III. STANDARD

Pursuant to Rule 56(c) of the Federal Rules of Civil Procedure, summary judgment is proper "if there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law." FED. R. CIV. P. 56(c). The moving party has the initial burden of informing the court of the basis for the motion and identifying those portions of the record that demonstrate the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). An issue is genuine only if there is a sufficient evidentiary basis on which a reasonable jury could find for the non-moving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249 (1986). A factual dispute is material only if it might affect the outcome of the suit under governing law. Id. at 248. To defeat summary judgment, the non-moving party cannot rest on the pleadings, but rather that party must go beyond the pleadings and present "specific facts showing that there is a genuine issue for trial." FED. R. CIV. P. 56(e). If the court, in viewing all reasonable inferences in favor of the non-moving party, determines that there is no genuine issue of material fact, then summary judgment is proper.Celotex, 477 U.S. at 322; Wisniewski v. Johns-Manville Corp., 812 F.2d 81, 83 (3d Cir. 1987).

IV. DISCUSSION

The instant Motion seeks to preclude APU from arguing that the 1978 Settlement Agreement released the claims by Amtrak against APU arising from the current litigation. In their Briefs and at Oral Argument, the parties focused their arguments on whether the language of 1978 Settlement Agreement either covers or does not cover Amtrak's claims against APU filed in the Third-Party Complaint. However, because this Court finds that APU has waived the affirmative defense of release, it is not necessary to analyze the parties' arguments concerning the substance of the 1978 Settlement Agreement. Rather, for the reasons that follow, this Court holds that APU has waived the affirmative defense of release so as to preclude APU from arguing that the 1978 Settlement Agreement released it from any liability.

The Federal Rules of Civil Procedure details a list of affirmative defenses. Specifically, Federal Rule of Civil Procedure 8(c) states:

In pleading to a preceding pleading, a party shall set forth affirmatively accord and satisfaction, arbitration and award, assumption of risk, contributory negligence, discharge in bankruptcy, duress, estoppel, failure of consideration, fraud, illegality, injury by fellow servant, laches, license, payment, release, res judicata, statute of frauds, statute of limitations, waiver, and any other matter constituting an avoidance or affirmative defense.

FED. R. CIV. P. 8(c) (emphasis added). An affirmative defense should be asserted in an appropriate responsive pleading or by an appropriate motion, or else it risks being waived by the party.See Eddy v. V.I. Water Power Auth., 256 F.3d 204, 209 (3d Cir. 2001) (citations omitted); Charpentier v. Godsil, 937 F.2d 859, 863 (3d Cir. 1991). In Charpentier, the Third Circuit noted that the "[f]ailure to raise an affirmative defense by responsive pleading or appropriate motion, however, does not always result in waiver."Id. (citing Prinz v. Greate Bay Casino Corp., 705 F.2d 692, 694 (3d Cir. 1983)). Indeed, failure to plead an affirmative defense must be read in conjunction with Federal Rule of Civil Procedure 15(a) which allows "a responsive pleading [to] be amended at any time by leave of court to include an affirmative defense." Charpentier, 937 F.2d at 863-64 (citations omitted). Such leave "shall be freely given when justice so requires." FED. R. CIV. P. 15(a). In the context of failing to plead an affirmative defense, the Third Circuit has stated that "a defendant does not waive an affirmative defense if he raised the issue at a pragmatically sufficient time, and the plaintiff was not prejudiced in its ability to respond." Charpentier, 937 F.2d at 864 (internal quotation marks and citations omitted).

In this case, Amtrak states that APU first raised the possibility that the 1978 Settlement Agreement acted to release any liability APU owed to Amtrak during a status conference conducted on June 30, 2003. (Amtrak's Mem. Law. Supp. Mot. Part. Summ. J. as to Penn Central Settlement Agreement at 11-12). APU has never contested this point made by Amtrak in its Briefs or at Oral Argument as to the first time this defense was raised. While APU asserted several affirmative defenses in its Answer to the Third-Party Complaint filed in 1994, it did not mention the affirmative defense of release. Furthermore, APU has not come forward with any evidence showing that it raised the specter of the 1978 Settlement Agreement as a release of Amtrak's claims against it at any point prior to this June 30, 2003 status conference.

However, as previously stated, mere failure by APU to raise the release affirmative defense in its Answer does not necessarily waive the defense. Instead, this Court must examine whether, under Federal Rule of Civil Procedure 15(a), justice so requires leave to amend so as to allow APU to raise the affirmative defense of release. As stated by the Third Circuit, the key to determining whether to allow APU to raise the release defense at this time is whether there will be prejudice to the other party, in this case, Amtrak.

The prejudice to Amtrak by allowing APU's release defense to go forward is perhaps best illustrated by Amtrak's statements to this Court during Oral Argument. Amtrak stated the following at the April 5, 2004 hearing:

In this case, what happened, of course, as the Court is well aware, is that for years and years, the three rail companies were out there cleaning up the Paoli property. That remediation is almost complete.

When the remediation is almost complete, APU comes into court and says, by the way, we don't have any obligation to pay anybody or certainly we don't have any obligation to pay Amtrak because there was a settlement agreement that was entered into 26 years ago that we think discharges that liability.

Now, the effect of that is if APU has asserted that earlier, Amtrak would have been in a position to go to the Government and go to the other parties and say, you know, if we front the money here, we're not going to have an ability to get it back, and therefore, our share ought to be lower, and we ought to pay less now. It is significant. They did not assert it in their answer. They never asserted it. They've only asserted it after the money was spent . . . So we submit that they should be estopped once again from not [sic] asserting this defense, allowing the parties to front the money, and then only asserting it once the monies have been spent.

(Summ. J. Hr'g Tr., at 19-20).

Contrary to other cases decided in this Circuit, this Court finds that there would be significant prejudice to Amtrak in allowing APU to raise the affirmative defense of release at this stage of the litigation. For example, in Charpentier, the Third Circuit had to determine whether the defendant had waived the affirmative defense of immunity by failing to plead it. 937 F.3d at 863. The Third Circuit ultimately held that it would be inappropriate to hold that the immunity defense was waived because the plaintiff had failed to claim any prejudice by the failure to plead immunity and because the immunity issue involved no factual issues. Id. at 864. Similarly, in Kleinknecht v. Gettysburg Coll., 989 F.2d 1360, 1374 (3d Cir. 1993), the Third Circuit had to determine whether the immunity defense was waived by the defendant's failure to include it in its answer. In Kleinknecht, the Third Circuit stated that even though the immunity defense was not raised until the defendant's summary judgment motion, the plaintiff failed to claim any prejudice so as to preclude the defendant from raising it in its motion. Id.

Unlike Charpentier and Kleinknecht however, the prejudice to Amtrak in this case is readily apparent. Amtrak noted during Oral Argument that had APU raised the affirmative defense of release in its Answer, Amtrak's role as it related to the settlement negotiations and consent decrees between the United States and the Rail Companies would have been completely different. Had Amtrak known that APU intended to argue that the 1978 Settlement Agreement released the claims by Amtrak against APU, Amtrak's role and position as this litigation moved forward would have been quite different. For example, as Amtrak stated, it would have attempted to expend less money at the front-end of this litigation knowing that APU had the possible affirmative defense of release available to it when Amtrak's claims for contribution became ripe. At a minimum, the knowledge that APU intended to raise the 1978 Settlement Agreement as a bar to Amtrak's claims certainly would have put Amtrak in a far different position as compared to the other Rail Companies who were not part of the 1978 Settlement Agreement that APU alleges releases them from any liability it might owe to Amtrak. To allow APU to raise the release affirmative defense close to ten years after it filed its Answer, and after Amtrak has contributed millions of dollars with the expectation of pursuing a contribution claim down the line against APU (or at least a contribution claim free from any release affirmative defense) is clearly prejudicial to Amtrak. Therefore, this Court will not allow APU, at this late date, to argue that the 1978 Settlement Agreement released it from any liability it might owe to Amtrak, and thus, Amtrak's Motion must be granted.

V. CONCLUSION

After reviewing the Briefs and hearing from the parties at Oral Argument, this Court finds that APU has waived the affirmative defense of release. APU filed its Answer on November 25, 1994, yet only first raised the affirmative defense of release during a June 30, 2003 status conference. During the intervening years, Amtrak expended millions of dollars in response costs to clean-up the Site with the expectation that it could then pursue a contribution claim against APU for its expenditures associated with the Site clean-up. Had APU raised its release argument in a timely manner, Amtrak certainly would have at least attempted to spend less money up front and would have been in a far different position as compared to the other Rail Companies as the settlement negotiations and consent decrees between the Rail Companies and the United States were negotiated and finalized. Thus, this Court cannot allow APU to raise the release argument at this late date because of the prejudice it would cause Amtrak.

An appropriate Order follows.

ORDER

AND NOW, this 15^th day of June, 2004, upon consideration of the National Railroad Passenger Corporation's ("Amtrak") Motion for Partial Summary Judgment as to the Penn Central Settlement Agreement (Doc. No. 36) and the response, replies, memoranda and exhibits related thereto, it is hereby ORDERED that Amtrak's Motion for Partial Summary Judgment on the Penn Central Settlement Agreement is GRANTED.

MEMORANDUM

Presently before this Court is the Third Party Plaintiffs', National Railroad Passenger Corporation ("Amtrak"), Southeastern Pennsylvania Transportation Authority ("SEPTA") and Consolidated Rail Corporation ("Conrail"), (collectively the "Rail Companies"), Motion for Partial Summary Judgment on the Liability of American Premier Underwriters, Inc. ("APU") under the Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA"), as well as under Pennsylvania's Hazardous Sites Cleanup Act ("HSCA"). For the following reasons, the Rail Companies' Motion will be granted.

I. INTRODUCTION AND FACTUAL BACKGROUND

The Rail Companies have brought this Motion for Partial Summary Judgment against APU seeking to establish that APU is a liable party under CERCLA and the HSCA. As stated by the Rail Companies, they have brought their Motion at this time so as to "narrow the issues remaining for trial." (Mem. Law in Supp. of Rail Companies' Mot. for Partial Summ. J. on Liability of APU under CERCLA and HSCA, at 2).

This case involves the liability and clean-up costs associated with the Paoli Rail Yard and a surrounding 400-acre watershed located in Chester County, Pennsylvania (collectively referred to as "the Site"). The Paoli Rail Yard was used to repair, service and store commuter railcars. As far back as 1950, these railcars used fluids containing polychlorinated byphenyls ("PCBs") to cool their transformers. The operation, repair, service and storage of the railcars at the Paoli Rail Yard resulted in the release of PCBs at the Site. One court recently noted the potential harmful environmental and health effects of PCBs. Specifically:

PCBs can cause a variety of adverse health effects. They are classified as suspected human carcinogens and may damage the immune system, may cause developmental problems in children and impair reproductive systems. PCBs have been shown to cause severe effects on exposed aquatic organisms and wildlife, including suppression of immune responses, impairment of reproduction and development, disruption of endocrine function, cancer, and organ enlargement and malfunction. Most PCBs do not degrade very quickly in the environment, and they can persist for many years in sediments, where they can cause adverse effects, not only to individual organisms, but also to entire aquatic populations.

United States v. Union Corp., 259 F. Supp.2d 356, 375 (E.D. Pa. 2003) (internal citations omitted).

APU, by and through its predecessors, owned and operated the Paoli Rail Yard from 1915 until April 1, 1976.¹ Pursuant to the Rail Reorganization Act of 1973 (the "Act"), APU transferred the Paoli Rail Yard to Conrail on April 1, 1976. Conrail subsequently transferred ownership of the Paoli Rail Yard to Amtrak on that same day. While Amtrak continues to own the Paoli Rail Yard, Conrail operated the Rail Yard from April 1, 1976 until the end of 1982 when SEPTA took over the Rail Yard's operation. SEPTA continued to use the Paoli Rail Yard until 1995 when it moved its maintenance operations to a different location.

1 APU was previously called The Penn Central Corporation which arose out of the reorganization of the Penn Central Transportation Company.

From at least 1950 until 1986, fluids containing PCBs were used at the Paoli Rail Yard. In 1986, the Environmental Protection Agency ("EPA") filed an action against Amtrak, Conrail and SEPTA in this District pursuant to the statutory provisions of CERCLA. Specifically, the EPA sought injunctive relief and reimbursement of costs in connection with the release of PCBs at the Site. Later that year, the Commonwealth of Pennsylvania intervened as a Plaintiff against the Rail Companies.

Also in 1986, the United States, Conrail and SEPTA petitioned APU's Bankruptcy Court for permission to file a claim against APU. See In re Penn Central Transp. Co., 944 F.2d 164, 166 (3d Cir. 1991). While APU opposed the petition, the United States Court of Appeals for the Third Circuit ("Third Circuit") rejected APU's argument that any CERCLA claim against it was discharged as a result of its bankruptcy. Id. at 168. Thus, on August 12, 1992, the Rail Companies filed a Third-Party Complaint against APU seeking to hold APU liable for its share of costs and expenses relating to the PCB contamination at the Site.

Also in 1992, the United States filed a Complaint against APU seeking to hold them liable for the PCB contamination. During this time, the Rail Companies cooperated with the government to clean-up the Site. For example, under a third partial preliminary consent decree, the Rail Companies conducted a remedial investigation to determine the extent of PCB contamination at the Site and a feasibility study of various remedial alternatives. Additionally, under other partial preliminary consent decrees, the Rail Companies agreed to conduct a soil sampling program to determine the extent of PCB contamination in the residential areas and the surface water channels as well as agreed to excavate approximately 3,500 cubic yards of contaminated soils from the residential areas north of the Paoli Rail Yard.

Furthermore, in 1990, the EPA placed the Site on the National Priorities List. The EPA then issued a Record of Decision ("ROD") in July of 1992, which reviewed remedial alternatives and their projected costs and selected remedies for the Site. As modified, the ROD required: 1) excavation and on-site treatment of contaminated rail yard soils; 2) ground water treatment and fuel oil recovery; 3) decontamination and demolition of rail yard buildings and structures; 4) excavation of contaminated residential soils and 5) excavation of contaminated stream sediments. Then, in 1995, the EPA proposed a sixth consent decree which required the Rail Companies and APU to implement the requirements set forth in the ROD for the remediation of the Paoli Rail Yard.

The Rail Companies agreed to the terms of a final consent decree, and on July 28, 1997, the United States filed a Praecipe to Lodge Consent Decree (the "Final Consent Decree") that resolved the Rail Companies' liability to the United States and the Commonwealth of Pennsylvania for the contamination at the Site. APU did not agree to this Final Consent Decree and continued with the litigation. The terms of the Final Consent Decree gave the Rail Companies significant contribution protection. APU argued that CERCLA did not authorize the contribution protection provided for in the Final Consent Decree to the Rail Companies and that the Final Consent Decree was substantively unfair. However, in 2000, the Third Circuit rejected APU's arguments and affirmed this Court's approval of the Final Consent Decree. See United States v. Southeastern Pa. Transp. Auth., 235 F.3d 817 (3d Cir. 2000). Currently, the Rail Companies have motioned this Court to hold that APU is liable under CERCLA and the HSCA so as to streamline their claims for contribution against APU.

II. STANDARD

Pursuant to Rule 56(c) of the Federal Rules of Civil Procedure, summary judgment is proper "if there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law." FED. R. CIV. P. 56(c). Essentially, the inquiry is "whether the evidence presents a sufficient disagreement to require submission to the jury or whether it is so one-sided that one party must prevail as a matter of law." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 251-52 (1986). The moving party has the initial burden of informing the court of the basis for the motion and identifying those portions of the record that demonstrate the absence of a genuine issue of material fact.Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). An issue is genuine only if there is a sufficient evidentiary basis on which a reasonable jury could find for the non-moving party.Anderson, 477 U.S. at 249. A factual dispute is material only if it might affect the outcome of the suit under governing law.Id. at 248.

To defeat summary judgment, the non-moving party cannot rest on the pleadings, but rather that party must go beyond the pleadings and present "specific facts showing that there is a genuine issue for trial." FED. R. CIV. P. 56(e). Similarly, the non-moving party cannot rely on unsupported assertions, conclusory allegations, or mere suspicions in attempting to survive a summary judgment motion.Williams v. Borough of W. Chester, 891 F.2d 458, 460 (3d Cir. 1989) (citing Celotex, 477 U.S. at 325 (1986)). Further, the non-moving party has the burden of producing evidence to establish prima facie each element of its claim. Celotex, 477 U.S. at 322-23. If the court, in viewing all reasonable inferences in favor of the non-moving party, determines that there is no genuine issue of material fact, then summary judgment is proper. Id. at 322; Wisniewski v. Johns-Manville Corp., 812 F.2d 81, 83 (3d Cir. 1987).

III. DISCUSSION

It is important to note what the Rail Companies are seeking to establish by filing this Motion for Partial Summary Judgment on the Liability of APU under CERCLA and the HSCA. This Motion is not seeking to establish that APU owes the Rail Companies a sum certain on the Rail Companies' contribution claims arising from the Paoli Rail Yard clean-up. Rather, this Motion is simply seeking to streamline the litigation so as to establish that APU can be considered a liable party under CERCLA and the HSCA. This Court finds that bringing this Motion at this time only as to the issue of liability under CERCLA and the HSCA is proper. For example, one court has noted that:

[l]iability may be decided first before the more complicated questions implicated in clean-up measures, which include fixing the proportionate fault of liable parties. Bifurcation and summary judgment provide powerful legal tools which, by effectively isolating the issues to be resolved, avoid lengthy and perhaps needless litigation.

United States v. Alcan Aluminum Corp., 990 F.2d 711, 720 (2d Cir. 1993). This Court agrees with the Rail Companies that their Motion as to the liability of APU is properly before this Court at this time.

First, this Court will analyze whether APU is a liable party under CERCLA. Next, this Court will analyze whether APU is a responsible party under the HSCA. Finally, this Court will examine APU's arguments opposing the Rail Companies' Motion. It should be noted at the outset that APU's arguments do not specifically address the elements under CERCLA and the HSCA, but instead attempt to argue that the Rail Companies' Motion should be denied on other grounds. As such, for the reasons that follow, APU's arguments do not impact this Court's analysis of the required elements to establish liability under CERCLA or the HSCA. For the following reasons, APU is a liable and responsible party under both CERCLA and the HSCA.² Therefore, the Rail Companies' Motion will be granted.

2 Since this Motion for Partial Summary Judgment was brought by the Rail Companies, the Rail Companies have sought to amend their Third-Party Complaint. However, at this time, for the purposes of the Motion currently before this Court, the liability of APU under CERCLA and the HSCA relates only to the Rail Companies claims being brought collectively, not SEPTA's individual claims against APU for the retrofilling costs incurred by SEPTA during the 1980's.

A. APU'S CERCLA LIABILITY

The Rail Companies' claims against APU are for contribution arising out of the Paoli Rail Yard clean-up. CERCLA provides for contribution costs. Specifically, "[a]ny person may seek contribution from any other person who is liable or potentially liable under section 9607(a) of this title, during or following any civil action under section 9606 of this title or under 9607(a) of this title." 42 U.S.C. § 9613(f)(1). Thus, for the Rail Companies to properly seek contribution from APU, APU must be considered a liable party under Section 9607(a). As the Third Circuit has noted:

[a] plaintiff must meet four elements to establish CERCLA liablility: (1) that hazardous substances were disposed of at a "facility"; (2) that there has been a "release" or "threatened release" of hazardous substances from the facility into the environment; (3) that the release or threatened release has required or will require the expenditure of "response costs"; and (4) that the defendant falls within one of four categories of responsible parties.

United States v. CDMG Realty Co., 96 F.3d 706, 712 (3d Cir. 1996) (citations omitted). "If these requirements are met, responsible parties are liable for response costs regardless of their intent." Id. (citing United States v. Alcan Aluminum Corp., 964 F.2d 252, 259 (3d Cir. 1992)). Thus, to be considered a liable party under CERCLA, the Rail Companies must show that APU meets all four requirements.

1. PCBs were disposed of at the Site

The first step in finding a party as liable under CERCLA is to show that hazardous substances were disposed of at a "facility." There is little doubt that this requirement is satisfied as it relates to APU. First, PCBs are classified as hazardous substances purusant to 42 U.S.C. § 9601(14). See United States v. Penn Central Corp., No. 86-1094, 2004 WL 35780, at *1 n. 1 (E.D. Pa. Jan. 8, 2004) (stating PCBs are classified as hazardous substances under CERCLA). Second, even APU readily admits that "PCBs were used and disposed of at the Paoli [Rail Yard] for some period of APU's predecessors ownership and operation of the [Paoli Rail Yard]." (APU's Mem. in Opp'n to Mot. of Rail Companies for Part. Summ. J. on the Liability of APU under CERCLA and HSCA, at 2). Third, the Paoli Rail Yard clearly falls within the definition of a "facility" under CERCLA. CERCLA defines facility as "any site or areas where a hazardous substance has been deposited, stored, disposed of, or placed, or otherwise come to be located; but does not include any consumer product in consumer use or vessel." 42 U.S.C. § 9601(9)(B). Thus, since APU readily admits that PCBs (a hazardous substance) were disposed of at the Paoli Rail Yard during its predecessors' ownership and operation of the Site, the Paoli Rail Yard is clearly a "facility" within the CERCLA definition. Therefore, the Rail Companies have established the first requirement as it relates to APU.

2. There has been a "release" or "threatened release" of PCBs from the Paoli Rail Yard into the Environment

The second step in finding a party liable under CERCLA's statutory scheme is to find that there has been a "release" or "threatened release" of "hazardous substances" from the "facility" into the environment. CERCLA defines the term "release" in the following manner:

[t]he term release means any spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping, or disposing into the environment (including the abandonment or discarding of barrels, containers, and other closed receptacles containing any hazardous substance or pollutant or contaminent) . . .

42 U.S.C. § 9601(22). The Third Circuit has noted that "[t]he definition of 'release' is thus broader than that of 'disposal': 'release' encompasses 'disposing' and some elements of the 'disposal' definition and also includes some additional terms."CDMG Realty, 96 F.3d at 715. In this case, there can be no doubt that there has been a release of PCBs at the Site.

APU admits that its predecessors owned and operated railcars at the Paoli Rail Yard until 1976 and that PCBs were used in these rail cars. (APU's Mem. in Opp'n to Mot. of Rail Companies for Part. Summ. J. on Liablity of APU under CERCLA and HSCA, at 2). The Third Circuit, as well as other courts, have noted that PCBs "are released during the servicing of train transformers and volatilize if overheated during train operation." Southeastern Pa. Transp. Auth., 235 F.3d at 819; see also Penn Central Corp. v. United States, 862 F. Supp. 437, 444 (Regional Rail Reorg. Ct. 1994) (stating "[t]he operation, service, repair, and storage of electric railroad cars resulted in widespread release of PCBs onto the land of the [Paoli Rail Yard] and into the water table underlying the [Paoli Rail Yard]"); Reading Co. v. City of Phila., 155 B.R. 890, 894 (E.D. Pa. 1993) (stating due to normal operation of electric rail car transformers and leaks in them, railroad cars released PCBs). Additionally, the Site falls within CERCLA's definition of the "environment." Specifically, CERCLA defines "environment as meaning:

(A) the navigable waters, the waters of the contiguous zone, and the ocean waters of which the natural resources are under the exclusive management authority of the United States under the Magnuson Fishery Conservation and Management Act [ 16 U.S.C.A. § 1801 et. seq.], and (B) any other surface water, ground water, drinking water supply, land surface or subsurface strata, or ambient air within the United States or under the jurisdiction of the United States.

42 U.S.C. § 9601(9). Clearly, the Site falls within part (B) of the "environment" definition under CERCLA. Thus, the Rail Companies have shown that APU fits within the second element in making APU a liable party under CERCLA's statutory scheme.

3. The Release or Threatened Release has Required or Will Require the Expenditure of "Response Costs"

The third element the Rail Companies must satisfy against APU is that there has been a release or threatened release that has or will require the expenditure of "response costs." "The terms 'respond' or 'response' means remove, removal, remedy, and remedial action; all such terms (including the terms 'removal' and remedial action') include enforcement activities related thereto." 42 U.S.C. § 9601(25). As one court has noted, "[r]esponse costs are the costs incurred in the clean up and restoration of released hazardous substances." City of Phila. v. Stepam Chemical Co., 748 F. Supp. 283, 285 n. 2 (E.D. Pa. 1990). In this case, response costs have been incurred in the clean-up effort associated with the Site.

Under various partial preliminary consent decrees, the Rail Companies have had to incur response costs. Specifically, the Rail Companies have performed the following actions: (1) constructed a combination fence that restricted access to the Paoli Rail Yard and limited further PCB migration into the surrounding area the yard; (2) conducted an engineering study addressing erosion and PCB migration from the Paoli Rail Yard and identified possible remedies to limit the spread of PCBs; (3) conducted a remedial investigation ("RI") to determine the extent of PCB contamination at the Site and a feasibility study ("FS") of various remedial alternatives; (4) conducted a soil sampling program to determine the extent of PCB contamination in the residential areas and the surface water channels north of the Paoli Rail Yard; and (5) excavated approximately 3,500 cubic yards of contaminated soils from the residential area north of the Paoli Rail Yard. The Rail Companies have spent millions dollars as a result of these response actions. (Mot. Rail Companies for Part. Summ. J. on Liability of APU under CERCLA and HSCA, at Ex. D ¶ 8).³

3 In response, APU argues that it too has had to spend millions of dollars as a result of its response actions at the Site. While this may be true, the differing expenditures spent by the parties as a result of the clean-up at the Site relates to the apportioning of responsibility for costs and, thus, has nothing to do with the finding of liability against APU which is what is at issue with the instant Motion before this Court. If APU can show that it has expended beyond its fair share in the clean-up effort, it can so argue during the apportionment phase of this litigation.

In addition to the response costs the Rail Companies have incurred as a result of the five partial preliminary consent decrees, the Final Consent Decree required the Rail Companies to implement the requirements set forth in the ROD. Specifically, the Rail Companies are required to execute the following actions: (1) excavation and on-site treatment of contaminated Paoli Rail Yard soils; (2) ground water treatment and fuel oil recovery; and (3) decontamination and demolition of Paoli Rail Yard buildings and structures. The EPA has estimated that this portion of the remedy will cost approximately twenty-one million dollars. Thus, it is clear that the "release" of PCBs at the Site has required and will continue to require response costs to be incurred. Therefore, the Rail Companies have satisfied the third element against APU, namely, that response costs have been or will be incurred as a result of the release of PCBs at the Site.

4. APU falls into one of four categories of responsible parties

The final element the Rail Companies must satisfy against APU is to show that APU fits into one of four categories of responsible parties under CERCLA. Specifically, the following four classes of people are liable for response costs under CERCLA:

the current owner or operator of facility, 42 U.S.C. § 9607(a); any person who owned or operated the facility "at the time of disposal" of a hazardous substance, id. § 9607(a)(2); any person who arranged for transport for disposal or treatment of hazardous substances at the facility, id. § 9607(a)(3); and any person who accepts or accepted hazardous substances for transport to sites selected by such person. id. 9607(a)(4).

CDMG Realty, 96 F.3d at 713. APU admits that "PCBs were used and disposed of at the Paoli [Rail Yard] for some period of APU's predecessors' ownership and operation of the [Paoli Rail Yard]." (APU's Mem. in Opp'n to Mot. of Rail Companies for Part. Summ. J. on Liability of APU under CERCLA and HSCA, at 2). Additionally, in a previous Brief filed with this Court, APU stated that it "cannot, and will not argue, that it is not a [Potentially Responsible Party] for the Site because, among other things, one of its witnesses in its insurance coverage litigation (Jack Evans) testified that PCBs were released at the Site while [Penn Central Transportation Company] owned and operated the Site." (Mem. of Law in Opp'n to SEPTA's and Amtrak's Mots. to Disqualify Blank Rome LLP, at 31). Thus, APU is clearly is a responsible party under 42 U.S.C. § 9607(a)(2) as a prior owner and operator of the Paoli Rail Yard at the time of the disposal of PCBs.

Even without these specific admissions by APU, this Court would still find that APU falls within one of the four categories for finding them a responsible party. As one court has noted:

[s]ince the uncontained discharge of dielectric fluid containing PCBs was inherent to the operation of transformers and hence the railcars, the discarding of wastes was inherent to the operation of the railcars. When the disposal of waste is inherent to the productive use of a substance, an "affirmative act" of disposal occurs every time the productive use occurs.

Reading Co., 823 F. Supp. at 1237-38. That court further stated that it would be "difficult to conceive how leaks and spills of dielectric fluid that occurred due to the operation of the railcars could be considered as anything other than a disposal."Id. at 1238. Thus, since APU's predecessors owned and operated the Paoli Rail Yard, and PCBs discharges were inherent to the operation of transformers in railcars, APU is clearly a party who owned or operated the Paoli Rail Yard at the time of disposal of PCBs. Therefore, the Rail Companies have satisfied the fourth and final requirement in showing that APU is a liable party under CERCLA.

B. APU'S HSCA LIABILITY

As with CERCLA, the HSCA provides a right for contribution.See Bethlehem Iron Works, Inc. v. Lewis Indus., Inc., No. 94-0752, 1996 WL 557592, at *70 (E.D. Pa. Oct. 1, 1996) (stating both CERCLA and the HSCA provide right for contribution). Specifically, the HSCA states that "[a] person may seek contribution from a responsible person under Section 701, during or following a civil action under section 501 or 1101." 35 PA. STAT. ANN. § 6020.705(a). The HSCA "is Pennsylvania's version of CERCLA and was in fact modeled after the federal statute." Two Rivers Terminal, L.P. v. Chevron USA, Inc., 96 F. Supp.2d 432, 443 (E.D. Pa. 2000) (internal quotation marks and citations omitted). However, while CERCLA and the HSCA are similar, they are "not identical statutes." Darbouze v. Chevron Corp., No. 97-2970, 1998 WL 512941, at *9 (E.D. Pa. Aug. 19, 1998).

To recover for contribution under the HSCA, the Rail Companies must show: (1) APU is a "responsible party"; (2) there has been a "release or threatened release" of "hazardous substances" from a "site"; (3) that caused "response costs" to be incurred; and (4) the response costs were reasonable and necessary or appropriate.Darbouze, 1998 WL 512941, at *9. Under the HSCA, a "responsible party" is defined as:

(1) [t]he person [who] owns or operates the site:

(i) when a hazardous substance is placed or comes to be located in or on a site;

(ii) when a hazardous substance is located in or on the site, but before it is released; or

(iii) during the time of release or threatened release.

35 PA. STAT. ANN. § 6020.701(a)(1). Since CERCLA and the HSCA definitions of "hazardous substances" are identical, the previous discussion of PCBs constituting a hazardous substance applies to the HSCA as well. See Darbouze, 1998 WL 512941, at *10 (stating "[t]he CERCLA and HSCA definitions of 'hazardous substance' are identical). Additionally, this Court notes:

[t]he term "release" is defined by both CERCLA and HSCA and there are no significant differences between these statutory definitions. Compare 42 U.S.C. § 9601(22) with 35 P.S. § 6020.103. In addition, although HSCA and CERCLA use different terminology, the terms "facility" under CERCLA and "site" under HSCA are almost identical. Compare 42 U.S.C. § 9601(9) with 35 P.S. § 6020.103.

Bethlehem Iron Works, 1996 WL 557592, at *65. Therefore, this Court finds that the prior discussion of whether there was a "release" of hazardous substances under CERCLA applies to whether there was a "release" of hazardous substances under the HSCA at the Paoli Rail Yard. Since this Court has found that the Rail Companies have established that APU, through its predecessors, owned and operated the Paoli Rail Yard while hazardous substances (PCBs) were released, the Rail Companies have satisfied the first two requirements under the HSCA for making APU a liable party under its statutory scheme.

Next, the Rail Companies must show that response costs were incurred. The HSCA defines "response" broadly as an "[a]ction taken in the event or threatened release of a hazardous substance or a contaminant into the environment to study, assess, prevent, minimize or eliminate the release in order to protect the present or future public health, safety or welfare or the environment." 35 PA. STAT. ANN. § 6020.103. As one court has noted, this third element of a HSCA claim is similar to the third element of a claim under CERCLA. See Bethlehem Iron Works, 1996 WL 557592, at *65. Thus, as the court found in Bethlehem Iron Works, this Court holds that the Rail Companies "have established the release or threat of release of hazardous substances at the [Site] caused them to incur response costs." Id. Therefore, the Rail Companies have met the third element under the HSCA.

The final element under the HSCA that the Rail Companies must satisfy against APU is that the response costs were reasonable and necessary or appropriate. "Unlike CERCLA, the HSCA does not require that response costs be necessary and consistent with the NCP [National Contingency Plan] prior to recovery." Darbouze, 1998 WL 512941, at *10 (citations omitted). This Court notes that the Rail Companies "only seek a declaration as to APU's liability under HSCA and request that a determination as to the recoverable response costs to be determined at a later date." (Mem. Law in Supp. of Rail Companies' Mot. for Part. Summ. J. on Liability of APU under CERCLA and HSCA, at 23). Here, for the reasons previously discussed in supra Part III.A.3, the Rail Companies response costs were reasonable and necessary since they were incurred to reduce and eliminate the PCB contamination at the Site. Thus, the Rail Companies have met all four elements under the HSCA and this Court holds that APU is a liable party under its statutory scheme.

C. APU'S ARGUMENTS

This Court will now examine APU's arguments opposing the Rail Companies' Motion. In its response to the Rail Companies' Motion, APU principally makes three arguments. Specifically, APU argues that (1) the Rail Companies Motion is premature as to APU's liability because discovery is still ongoing; (2) APU has reached a settlement agreement with the United States that could affect the outcome of the Rail Companies Motion; and (3) APU's settlement and release agreement with Amtrak precludes Amtrak's claim for contribution. This Court will analyze all of these arguments in the order APU has presented them.

The first argument APU makes in response to the Rail Companies Motion is that the Rail Companies' Motion is premature since discovery is ongoing. APU argues that "[t]o determine whether APU owes anything to the Rail Companies, this Court will have to decide that some or all of the Rail Companies have paid too much and APU has not paid enough. Discovery is still ongoing, and this is information APU has requested from the Rail Companies." (APU's Mem. in Opp'n to Mot. of Rail Companies for Part. Summ. J. on Liability of APU under CERCLA and HSCA, at 3) (footnote omitted). However, the Rail Companies' Motion is not seeking to hold APU liable for a precise amount. Instead, the Rail Companies' Motion is simply seeking to streamline the litigation. Thus, the instant Motion is not seeking "to establish the precise amount of APU's liablity, [but rather] only that APU is liable under the statutory scheme in an amount to be determined at a later date." (Rep. Mem. in Supp. of Rail Companies' Mot. for Part. Summ. J. on Liability of APU under CERCLA and HSCA, at 1-2). The discovery APU argues must be completed before this Court can grant the Rail Companies' Motion has nothing to do with a determination that APU is liable under CERCLA and the HSCA. Rather, the discovery APU suggests must be completed has to do with the second step of the process, namely that of properly apportioning the costs among the responsible parties. Therefore, APU's first argument must fail.

The next argument APU makes in response to the Rail Companies' Motion is that APU has reached a settlement with the United States which might affect the outcome of the Rail Companies' Motion. This Court finds such an argument unpersuasive. First, APU does not point to any specific evidence that such an agreement with the United States protects them from the Rail Companies' claims for contribution.⁴ As noted in supra Part II, to defeat summary judgment, APU cannot simply assert factually unsupported allegations, which is what this argument by APU amounts to. See Willaims, 891 F.2d at 460. Thus, this Court agrees with the Rail Companies that until APU comes forward with specific evidence, APU's argument is premature and in no way should impact this Court's ruling on the Rail Companies' Motion at this time.

4 Indeed, APU only states:

APU has just reached a settlement in principle with the US EPA and Department of Justice. The parties are in the process of preparing the proposed consent decree. The proposed consent decree, if approved, will affect the question of whether APU is liable to the Rail Companies, and could render some or all of the parties' contribution claims moot. (APU's Mem. in Opp'n to Mot. of Rail Companies for Part. Summ. J. on Liability of APU under CERCLA and HSCA, at 4).

APU's final argument is that a 1978 Settlement Agreement (the "Settlement Agreement") between Amtrak and APU's predecessor precludes any claim for contribution on the part of Amtrak. In effect, APU argues that this settlement agreement released APU from any liability it owed to Amtrak arising from the Paoli Rail Yard. This Court has already granted Amtrak's Motion for Partial Summary Judgment so as to preclude APU from arguing that the 1978 Settlement Agreement between APU and Amtrak released Amtrak's claims against APU. Thus, APU's argument relating to this 1978 Settlement Agreement is now moot.

IV. CONCLUSION

In conclusion, this Court finds that the Rail Companies' Motion is proper at this time. The Rail Companies have met their burden at the summary judgment stage for this Court to find that APU is a liable party under both CERCLA and the HSCA. Finally, APU's arguments to defeat the Rail Companies' Motion are unpersuasive. Thus, the Rail Companies' Motion for Partial Summary Judgement on the Liability of APU under CERCLA and the HSCA is granted.

An appropriate Order follows.

ORDER

This Court, having considered the Motion for Partial Summary Judgment filed by the Third Party Plaintiffs, National Railroad Passenger Corporation ("Amtrak"), Southeastern Pennsylvania Transportation Authority ("SEPTA"), and the Consolidated Rail Corporation ("Conrail") (collectively referred to as the "Rail Companies") against the Third Party Defendant, American Premier Underwriters, Inc. ("APU"), regarding APU's liability under the Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA"), 42 U.S.C. § 9601 et. seq. and Pennsylvania's Hazardous Sites Cleanup Act ("HSCA"), 35 PA. STAT. ANN. 6020.101et. seq., and having considered the memoranda and exhibits submitted by the parties, reaches the following conclusions:

1. APU is a covered entity under Section 107(a)(2) of CERCLA, 42 U.S.C. § 9607(a)(2), in its capacity as a former owner and operator of the Paoli Rail Yard, which is a twenty-eight acre rail yard property;

2. APU, through its predecessors, owned and operated the Paoli Rail Yard from 1915 until April 1, 1976;

3. APU, through its predecessors owned and operated railcars at the Paoli Rail Yard from 1915 until April 1, 1976;

4. Hazardous substances were disposed of at the Paoli Rail Yard during a period of APU's ownership and operation of the Paoli Rail Yard within the meaning of CERCLA, 42 U.S.C. § 9601(29) and of the HSCA, 35 PA. STAT. ANN. § 6020.103;

5. The Paoli Rail Yard is a facility as defined under CERCLA, 42 U.S.C. § 9601(9);

6. The Paoli Rail Yard is a site as defined under the HSCA, 35 PA. STAT. ANN. § 6020.103;

7. There has been a release of hazardous substances at the Paoli Site, as defined by the Environmental Protection Agency ("EPA") pursuant to CERCLA, which site includes the Paoli Rail Yard (excluding an electrical substation and the Harrisburg Rail Line), and the surrounding watershed, within the meaning of CERCLA, 42 U.S.C. § 9601(22) and of the HSCA, 35 PA. STAT. ANN. § 6020.103;

8. The release of hazardous substances at the Paoli Site caused the Rail Companies to incur response costs within the meaning of CERCLA, 42 U.S.C. § 9601(25) and of the HSCA, 35 PA. STAT. ANN. § 6020.103;

9. APU is liable under CERCLA, 42 U.S.C. § 9607(a), for some portion, to be determined by further proceedings in this Court, of the costs of responding to contamination of hazardous substances at the Paoli Site; and

10. APU is a responsible person under the HSCA, 35 PA. STAT. ANN. § 6020.701(a), for releases of hazardous substances at the Paoli Site.

Accordingly, this 15^th day of June, 2004, it is hereby ORDERED that the Motion of the Rail Companies for Partial Summary Judgment on the Liability of APU under CERCLA and HSCA (Doc. No. 39) is hereby GRANTED.