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U.S. v. NATIONAL RAILROAD PASSENGER CORPORATION

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 ...


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