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U.S. v. NATIONAL RAILROAD PASSENGER CORPORATION

United States District Court, E.D. Pennsylvania


June 15, 2004.

UNITED STATES OF AMERICA, et al., Plaintiffs,
v.
NATIONAL RAILROAD PASSENGER CORPORATION, et al., Defendants/Third Party Plaintiffs, v. PENN CENTRAL CORPORATION, Third Party Defendant.

The opinion of the court was delivered by: ROBERT KELLY, Senior District Judge

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.*fn1 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.

  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.*fn2 Therefore, the Rail Companies' Motion will be granted.

  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).*fn3

  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.*fn4 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.

  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. 6020.101 et. 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 15th 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.

  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.*fn5 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.

  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 15th 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.


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