In Re Reading Co. , 115 F.3d 1111 ( 1997 )

Opinions of the United
1997 Decisions States Court of Appeals
for the Third Circuit
6-13-1997
In Re Reading Co
Precedential or Non-Precedential:
Docket 95-1987,95-1988
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Filed June 13, 1997
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
Nos. 95-1987 and 95-1988
In The Matter of READING COMPANY,
Debtor
United States of America,
Appellant in 95-1987
In The Matter of READING COMPANY,
Debtor
Consolidated Rail Corporation,
Appellant in 95-1988
On Appeal from the United States District Court
for the Eastern District of Pennsylvania
(D.C. Civil Action No. 71-cv-00828)
Argued July 15, 1996
Before: SLOVITER, Chief Judge, COWEN and R OTH,
Circuit Judges
(Opinion Filed June 13, 1997)
Robert P. Frank, Esq. (Argued)
Andrew J. Soven, Esq.
Reed, Smith, Shaw & McClay
1650 Market Street
2500 One Liberty Place
Philadelphia, PA 19103-7301
John W. Morris, Esq.
Suite 1300
30 S. 15th Street
Philadelphia, PA 19102
Attorneys for Appellee In Re:
Reading Co.
Lois J. Schiffer, Assistant Attorney
General
Alan Tenenbaum, Esq.
Alan D. Greenberg, Esq.
Martin W. Matzen, Esq.
John A. Bryson, Esq. (Argued)
United States Department of Justice
P.O. Box 23795
L'Enfant Plaza Station
Washington, DC 20026
Earl Salo, Esq.
John Wheeler, Esq.
U. S. Environmental Protection
Agency
Washington, DC 20026
Attorneys for Appellant United
States of America in 95-1987
2
Philip J. Katauskas, Esq. (Argued)
Michael H. Reed, Esq.
Edmund B. Spaeth, Jr., Esq.
Anne M. Package, Esq.
Pepper, Hamilton, Scheetz
18th & Arch Streets
3000 Two Logan Square
Philadelphia, PA 19103-2799
Attorneys for Appellee in 95-1987
and Appellant in 95-1988
Consolidated Rail Corporation
("Conrail")
OPINION OF THE COURT
ROTH, Circuit Judge:
After a decade-long reorganization, the Reading Railroad
emerged from bankruptcy on January 1, 1981. On that
day, the newly-established Reading Company1 was given a
fresh start by a consummation order which granted
Reading protection from all pre-consummation debts and
liabilities. Now, sixteen years later, the Consolidated Rail
Corporation (Conrail) asks that we circumvent the
protection of the bankruptcy discharge and permit Conrail
to seek contribution from Reading for environmental clean-
up costs. The district court rejected Conrail's claim. We will
affirm the judgment of the district court.
This appeal involves a number of issues under the
Comprehensive Environmental Response, Compensation,
and Liability Act (CERCLA), 42 U.S.C. §§ 9601-9675, as
amended by the Superfund Amendments and
Reauthorization Act of 1986 (SARA), Pub.L. No. 990499,
§ 101 et seq., 100 Stat. 1613 (1986). We will first have to
determine what type of claim or claims appellants, Conrail
and the United States, can maintain against Reading. We
_________________________________________________________________
1. In this opinion, we will refer to the bankrupt railroad as the Reading
Railroad and the post-bankruptcy, non-rail entity as the Reading
Company, or simply Reading.
3
will then consider how Reading's bankruptcy affects
appellants' ability to enforce any claims.
As a result of our consideration of these issues, wefind
that Conrail's only viable claim against Reading is one for
contribution under § 113(f). We also find that this claim
was not discharged by Reading's consummation order.
Nevertheless, we determine that Conrail's claim fails as a
matter of law because Reading is not liable to the United
States under § 107(a) and consequently Reading cannot be
liable to Conrail for contribution of the response costs that
Conrail must pay to the United States.
I. FACTS
The roots of this dispute stretch back to November 23,
1971, when the Reading Railroad filed for reorganization
under § 77 of the Bankruptcy Act of 1898, formerly 11
U.S.C. § 205 (1976) (repealed 1978). By 1973, seven other
major American railroads had joined Reading in
reorganization. The seemingly intractable nature of these
bankruptcies, combined with the obvious public need for
continuing rail service, spurred Congress to action. The
result was the Regional Rail Reorganization Act of 1973
("RRRA"), 45 U.S.C. § 701 et seq., which established a plan
for conveying the rail assets of the bankrupt corporations to
a new entity, Conrail. The railroads would receive Conrail
securities in return for their assets, and the former
railroads would then emerge from bankruptcy as new, non-
rail entities. See In re Reading Co., 24 B.R. 858, 859-60
(E.D. Pa. 1980).
On May 2, 1974, the district court subjected the Reading
Railroad to the RRRA. See In re Reading Co., 378 F.Supp.
474, 481 (E.D. Pa.), aff'd sub nom. In re Penn Central
Transp. Co., 384 F. Supp. 895 (Sp. Ct.R.R.A. 1974). On
April 1, 1976, Reading Railroad's rail assets were conveyed
to Conrail pursuant to the final system plan, In re Reading
Co., 24 B.R. at 860, and the company's 5,664 rail
employees became eligible for employment with Conrail,
Final System Plan of the U.S. Railway Assoc. at 162,
reprinted in Supplemental Appendix at 178. "The remainder
of the estate then consisted of real property, a trucking
4
company, some marine equipment, other investments, and
the probable proceeds from the [rail assets] valuation case
. . .." 24 B.R. at 860. For all practical purposes, Reading
ceased to be a railroad on April 1, 1976.
The Reading Railroad reorganization continued for
another four years. By mid-1979, the Trustees hadfiled an
Amended Plan for Reorganization with the district court. On
May 21, 1980, after notice to numerous parties including
the United States and Conrail, the district court approved
the Amended Plan. 24 B.R. at 874. Both the United States
and Conrail attended hearings on the plan's confirmation
and proposed consummation. Neither objected. On
December 23, 1980, the district court entered an order that
established December 31, 1980, as the consummation date
for the plan.
The most significant feature of the consummation plan
for purposes of this appeal was a sweeping injunction
which protected the Reading Company from all liability
based on the obligations of its predecessor:
7.02 Injunction. All persons, firms, governmental
entities and corporations, wherever situated, located or
domiciled, are hereby permanently restrained and
enjoined from instituting, prosecuting or pursuing, or
attempting to institute, prosecute or pursue, any suits
or proceedings, at law or in equity or otherwise against
the Reorganized Company or its successors or assigns
or against any of the assets or property of the
Reorganized Company or its successors or assigns,
directly or indirectly, on account of or based upon any
right, claim or interest of any kind or nature
whatsoever which any such person, firm, governmental
entity or corporation may have in, to or against the
Debtor, the Reading Trustees, or any of their assets or
properties . . . by reason or on account of any
obligation or obligations incurred by the Debtor or any
of its Trustees in these proceedings, except the
obligations imposed on the Reorganized Company by
the Plan or by this Order or reserved for resolution or
adjudication by this Order.
In re Reading Co., Memorandum and Order 2004, Bankr.
No. 71-823 (E.D. Pa. Dec. 23, 1980) (Consummation Order
5
and Final Decree). With this injunction in place, the
Reading Company emerged from bankruptcy on January 1,
1981.
At the same time that the Reading Railroad's Trustees
were drawing up Reading's final plan of reorganization,
major developments were taking place in Congress. On
December 11, 1980, three weeks before the Reading
Railroad's plan consummation date, CERCLA became law,
effective immediately. The statute imposed retroactive
liability on any person who, prior to the statute's passage,
had disposed of, transported, or arranged for the disposal
of hazardous substances. In re Penn Cent. Transp. Co., 944
F.2d 164, 167 (3d Cir. 1991). It granted the Environmental
Protection Agency ("EPA") broad powers to enforce this
mandate. United States v. Alcan Aluminum. Corp., 964 F.2d
252, 258 (3d Cir. 1992).
CERCLA's embrace would encompass Conrail and the
nation's railroads. See 126 Cong. Rec. 26,061-62 (1980)
(letter to Senator Howard W. Cannon from Richard Briggs,
Association of American Railroads) (describing CERCLA as
a threat to the railroad industry); Superfund: H.R. 4571,
5290 Before the Subcomm. On Transp. & Commerce of the
House Interstate & Foreign Commerce Comm., 96th Cong.
1st Sess. 132 (1980) (statement of Barbara Blum, Deputy
Administrator, EPA) (identifying railroads as one type of
violator whom CERCLA would address). The EPA
demonstrated its awareness of the new law and its
immediate applicability to the Reading bankruptcy by
notifying Reading prior to discharge that the EPA would
treat a hazardous waste site in McAdoo, Pennsylvania, as a
CERCLA site. Fifth Report to the Court on the Progress of
Cleanup at McAdoo, Pa., In re Reading Co., Bankr. No. 71-
828 (E.D. Pa. Dec. 23, 1980). However, neither the EPA nor
the United States filed any claims in the Reading
bankruptcy; nor did they make any mention in those
proceedings of other hazardous waste sites or of the
potential for additional hazardous waste liability.
This appeal arises from the clash of CERCLA liability with
the discharge granted to Reading as a result of its
bankruptcy, a clash which occurred at a fifty acre site on
the south bank of the Schuylkill River, opposite
6
Douglassville, Pennsylvania. Since 1941, a business,
eventually known as Berks Associates, Inc., had operated a
solvent recovery and oil recycling business on the property.
On October 31, 1980, 41 days prior to CERCLA's passage,
the EPA identified Douglassville as a potentially hazardous
site.2
The EPA was already familiar with Douglassville because
of problems that had occurred there in the early 1970s. In
November 1970, heavy rains caused storage lagoons at
Douglassville to fail. Two to three million gallons of waste
sludge escaped into the Schuylkill River. The Department of
the Interior, acting pursuant to the Clean Water Act, 33
U.S.C. § 1251 et. seq., responded to the spill. Two years
later, Hurricane Agnes caused a major flood of the
Schuylkill, washing more sludge into the river. The EPA
responded, invoking the oil spill provisions of the Clean
Water Act. As part of the clean-up, the EPA transported
sludge from the Douglassville site, using boxcars supplied
by the Reading Railroad, which had a rail line serving the
facility.
On June 12, 1986, acting pursuant to CERCLA § 104(e),
42 U.S.C. § 9604(e), the EPA requested information from
Reading about Douglassville. On June 29, 1988, the EPA
designated Reading a potentially responsible party ("PRP"),
alleging that between July 6, 1965, and March 12, 1976,
Reading had either generated or transported shipments of
waste oil to Douglassville. Then, on July 31, 1991, acting
pursuant to CERCLA § 106, 42 U.S.C. § 9606, the United
States ordered thirty-six PRPs to undertake remedial
actions at the Douglassville site. The list of PRPs included
Conrail, but not Reading. On the same day, the United
States brought an action under CERCLA § 107(a), 42 U.S.C.
§ 9607(a), against the same group of PRPs for response
costs incurred in cleaning up the Douglassville site and for
a declaration of future costs. United States v. Berks Assoc.,
_________________________________________________________________
2. Further EPA activity took place at the Douglassville site in April, 1982,
when the EPA began actively investigating the location. On September 8,
1983, the EPA added Douglassville to CERCLA's National Priorities List,
a list of the nation's worst environmental sites. Solvent recovery and oil
recycling operations at the Douglassville site ceased in 1985.
7
Inc., Civ. Action No. 91-4868, 1992 WL 68346 (E.D.Pa.
Apr.1, 1992).
Conrail and the other primary defendants then brought a
third-party action against the Reading Company and six
hundred other PRPs, seeking contribution for any liability
from the Douglassville site. Reading in turn sought an
injunction from the district court, on the basis that any
liability, which it may have had, had been discharged in
bankruptcy.
The district court granted Reading's request for injunctive
relief. In re Reading Co., 900 F.Supp. 738, 741 (E.D. Pa.
1995). The court held that the word "contribution" as used
in § 113(f) should be given its plain meaning so that
Conrail's action, by one PRP seeking recovery from another
PRP, could only proceed as a claim for contribution under
CERCLA § 113(f), 42 U.S.C. § 9613(f). Id. at 748. Moreover,
because the usual meaning of "contribution" requires
common liability over to a third party, Reading's liability to
Conrail was dependent on whether Reading was potentially
liable to the United States. Id. The district court held that
any such liability had been discharged by the bankruptcy
consummation order because all the necessary elements of
a CERCLA claim existed when the plan was consummated
and the United States had constructive knowledge that the
claim existed at that time. Id. at 745. As a result, the
district court concluded that Reading was not liable to
Conrail for contribution. Both Conrail and the United
States appealed.
II. JURISDICTION AND STANDARD OR REVIEW
The district court exercised jurisdiction under 28 U.S.C.
§§ 1331 and §1334 (repealed 1978) and 42 U.S.C. § 9613.
We take jurisdiction from the district court's final order
pursuant to 28 U.S.C. § 1291. This appeal presents issues
of statutory interpretation, subject to plenary review. Manor
Care, Inc. v. Yaskin, 950 F.2d 122, 124 (3d Cir. 1991). The
lone exception is the district court's factual finding of
knowledge, see discussion infra, Part III.B., which we
review for clear error. See Sheet Metal Workers, Local 19 v.
2300 Group, Inc., 949 F.2d 1274, 1278 (3d Cir. 1991); Riehl
v. Travelers Ins. Co., 772 F.2d 19, 24 (3d Cir. 1985).
8
III. DISCUSSION
A. The Nature of Conrail's Claim
The core question posed by this appeal is whether
Conrail can make a claim against Reading for the costs of
the Douglassville clean-up. To answer this question, we
must determine the nature of the cause of action that
Conrail possesses and whether that cause of action is
dependent on Reading's liability to the United States for
costs of the Douglassville clean-up. Conrail's third party
complaint against Reading alleged four different causes of
action: (1) cost recovery under 42 U.S.C. § 107(a)(4)(B), (2)
contribution under 42 U.S.C. § 113(f), (3) common law
contribution, and (4) common law restitution. We will first
address the validity of the common law claims.
Like the district court, we find that CERCLA preempts
Conrail's common law theories. See In re Reading Co., 900
F.Supp. at 744 n.6. As the Supreme Court has explained in
preemption analysis "our sole task is to ascertain the intent
of Congress." California Federal Sav. and Loan Ass'n v.
Guerra, 479 U.S. 272, 280 (1987). Congress may manifest
its intent when it expressly preempts state regulation, when
it implicitly preempts state regulation by so occupying the
field with comprehensive federal regulation that it leaves no
room for state law, or, again implicitly, when there is an
actual conflict between state and federal law. Conflict may
arise either because "compliance with both federal and
state regulations is a physical impossibility," or because the
state law stands "as an obstacle to the accomplishment and
execution of the full purposes and objectives of Congress."
Id. at 280-81. We have held that, in enacting CERCLA,
Congress did not explicitly preempt all state law, nor did it
create a comprehensive scheme of regulation leaving no
room for supplementation. Manor Care, Inc. v. Yaskin, 950
F.2d 122, 125-26 (3d Cir. 1991). We must therefore
consider the third basis for preemption, actual conflict.
Unlike other areas where we have declined to find an
actual conflict between CERCLA and state regulation, see
Witco Corp. v. Beekhuis, 38 F.3d 682, 688-90 (3d Cir. 1994)
(finding no conflict between CERCLA statute of limitations
9
for contribution and Delaware state law limiting time period
for claims against decedent's estate); Manor Care, 950 F.2d
at 127 (finding no conflict between CERCLA and cost
recovery provisions of New Jersey Spill Compensation and
Control Act), we do find a conflict here between Conrail's
common law claims for contribution and restitution and the
remedies expressly provided in the statute. The conflict
arises because the state law remedies obstruct the intent of
Congress. Guerra, 479 U.S. at 281. As we explain more
fully below, when Congress expressly created a statutory
right of contribution in CERCLA § 113(f), 42 U.S.C.
§ 9613(f), it made that remedy a part of an elaborate
settlement scheme aimed at the efficient resolution of
environmental disputes. Permitting independent common
law remedies would create a path around the statutory
settlement scheme, raising an obstacle to the intent of
Congress. We conclude therefore that Conrail's common law
claims are preempted by CERCLA § 113(f).
We next turn to Conrail's statutory claims. Conrail
contends that it possesses two separate and distinct causes
of action, one under § 107(a)(4)(B) and the other under
§ 113(f). Reading argues on the other hand that Congress's
creation of an express provision in § 113(f), governing
contribution, superseded the judicially created private right
of action that existed under § 107(a)(4)(B). For this reason,
Reading contends that Conrail cannot assert a
§ 107(a)(4)(B) claim when the provisions of§ 113(f) have
come into effect. We agree that, in an action which presents
a claim for apportionment of clean-up costs, § 113(f)
trumps § 107(a)(4)(B).
This interaction between § 113(f) and § 107(a)(4)(B)
presents a question of statutory interpretation. We begin
our review therefore with an examination of the language of
the statute. Section 107 establishes CERCLA's basic
framework under which persons are liable for past
environmental harms. It sets out four prerequisites for cost
recovery:
(1) the defendant falls within one of the four categories
of "responsible parties";3
_________________________________________________________________
3. Under 42 U.S.C. § 9607(a), these categories are:
(1) the owner and operator of a vessel or a facility,
10
(2) the hazardous substances are disposed at a "facility";4
(3) there is a "release"5 or threatened release of
_________________________________________________________________
(2) any person who at the time of disposal of any hazardous
substance owned or operated any facility at which such hazardous
substances were disposed of,
(3) any person who by contract, agreement, or otherwise arranged
for disposal or treatment, or arranged with a transporter for
transport for disposal or treatment, of hazardous substances owned
or possessed by such person, by any other party or entity, at any
facility or incineration vessel owned or operated by another party or
entity and containing such hazardous substances; and
(4) any person who accepts or accepted any hazardous substances
for transport to disposal or treatment facilities, incineration vessels
or sites selected by such person, from which there is a release, or
a threatened release which causes the incurrence of response costs,
of a hazardous substance . . ..
4. Under 42 U.S.C. § 9601(8), a facility is defined as:
(A) any building, structure, installation, equipment, pipe or pipeline
(including any pipe into a sewer or publicly owned treatment works),
well, pit, pond, lagoon, impoundment, ditch, landfill, storage
container, motor vehicle, rolling stock, or aircraft, or (B) any site or
area 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 any vessel.
5. Under 42 U.S.C. § 9601(22), a "release" is defined as:
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 contaminant), but excludes (A)
any release which results in exposure to persons solely within a
workplace, with respect to a claim which such persons may assert
against the employer of such persons, (B) emissions form the engine
exhaust of a motor vehicle, rolling stock, aircraft, vessel, or pipeline
pumping station engine, (C) release of source, byproduct, or special
nuclear material from a nuclear incident, as those terms are defined
in the Atomic Energy Act of 1954, if such release is subject to
requirements with respect to financial protection established by the
Nuclear Regulatory Commission under section 170 of such Act, or,
for the purposes of section 9604 of this title or any other response
action, any release of source byproduct, or special nuclear material
from any processing site designated under section 7912(a)(1) or
7942(a) of this title, and (D) the normal application of fertilizer.
11
hazardous substances from the facility into the
environment;
(4) the release causes the incurrence of "response costs."6
42 U.S.C. § 9607; United States v. Alcan Aluminum Corp.,
964 F.2d 252, 258-59 (3d Cir. 1992). Where these
requirements are met, § 107 also establishes four general
categories of damages for which parties are liable. Among
these, § 107(a)(4)(B) provides that a PRP's liability shall
include "any other costs of response incurred by any other
person consistent with the national contingency plan." 42
U.S.C. § 9607(a)(4)(B).7
The "any other costs of response" language in
§ 107(a)(4)(B) forms the basis for Conrail's claim for
recovery under that section. We note that pre-SARA,
Conrail could make a viable claim for contribution under
§ 107(a)(4)(B). As originally enacted, CERCLA lacked any
express mechanism by which one party could recover from
another for paying more than its pro rata share of the costs
of a clean-up. See United Technologies v. Browning-Ferris
Industries, Inc., 33 F.3d 96, 100 (3d Cir. 1994). Courts filled
this gap by interpreting § 107(a)(4)(B) as providing a private
right of action by which a party, who had expended
resources on cleanup efforts, could obtain contribution
from others. See Key Tronic Corp. v. United States, 511 U.S.
809, 816 n.7 (1994) (noting interpretation); United States v.
New Castle County, 642 F.Supp. 1258, 1269 (D. Del. 1986)
(recognizing cause of action). Until the passage of SARA in
1986, the judicially-created expansion of § 107(a)(4)(B)
served as the sole means by which parties could obtain
contribution.
SARA, however, in § 113(f), 42 U.S.C. § 9613(f), expressly
provided for contribution. The section states:
_________________________________________________________________
6. Under 42 U.S.C. § 9601(25), the terms "respond" or "response" are
defined to mean "remove, removal, remedy, and remedial action; all such
terms (including the terms ``removal' and ``remedial action') include
enforcement activities related thereto."
7. As written, the four categories of damages appear to relate only to
§ 107(a)(4). Courts have consistently ignored this drafting error, and it is
well established that the liability categories apply to all four categories of
PRPs under § 107(a).
12
Any person may seek contribution from any other
person who is liable or potentially liable under section
9607(a) [§ 107(a)] of this title, during or following any
civil action under section 9606 of this title or under
section 9607(a) of this title. . . . Nothing in this
subsection shall diminish the right of any person to
bring an action for contribution in the absence of a
civil action under section 9606 of this title or section
9607 of this title.
42 U.S.C. § 9613(f)(1).
The meaning of the plain language of this section is
supported by SARA's legislative history, which states that a
principal goal of § 113(f) was to "clarif[y] and confirm[ ] the
right of a person held jointly and severally liable under
CERCLA to seek contribution from other potentially liable
parties, when the person believes that it has assumed a
share of the cleanup or cost that may be greater than its
equitable share under the circumstances." S.Rep.No.11,
99th Cong., 1st Sess. 44 (1985), reprinted in 2 Legislative
History of the Superfund Amendments and Reauthorization
Act of 1986 at 636 (1990). In passing § 113(f), Congress
acted to codify existing federal common law and to replace
the judicially crafted measure with an express statutory
remedy.
Thus, the language of § 113(f), permitting contribution,
replaced the judicially created right to contribution under
§ 107(a)(4)(B). We find support for this conclusion in the
comprehensive scheme that SARA created. SARA's
modifications encourage the efficient resolution of
environmental disputes by creating a settlement system in
which potential damages increase dramatically for parties
who refuse to settle. See generally United States v. Charter
Int'l Oil Co., 83 F.3d 510 (1st Cir. 1996) (describing
scheme). The first part of the system grants protection from
contribution actions to settling parties for actions arising
from "matters addressed" in a consent decree. 42 U.S.C.
§ 9613(f)(2). The second part limits the settlement's effect to
a reduction in the aggregate liability of the remaining PRPs.
Because settlement reduces the total amount recoverable
from the remaining, non-settling parties only by the
amount of settlement, non-settling PRPs remain liable for
13
the balance of the aggregate environmental liability. Id.Consequently, PRPs, who choose to settle, gain protection
from contribution, enjoy potentially favorable settlement
terms, and retain the ability to seek contribution from other
defendants. PRPs, who choose not to settle, are barred from
seeking contribution from the settling PRPs and thus face
potentially disproportionate liability. This system gives the
United States obvious and important leverage to encourage
quick and effective resolution of environmental disputes.
If a party seeks contribution under § 113(f)(1) from a
settling party, the protections of § 113(f)(2) and (f)(3) are
immediately applicable. SARA's system operates as
intended. But if a party should instead seek contribution
under § 107(a)(4)(B), that would throw the proverbial
monkey wrench into the works. If a party could end run
§ 113(f)(2) and (3) by suing a settling party under
§ 107(a)(4)(B) for "costs of response," the settlement scheme
would be bypassed. The incentive to early settlement would
disappear, and the extent of litigation involved in a CERCLA
case would increase dramatically. Consent agreements
would no longer provide protection, and settling parties
would have to endure additional rounds of litigation to
apportion their losses. This undesirable alternative suggests
all the more clearly that Congress intended to replace
§ 107(a)(4)(B)'s implied contribution remedy when it enacted
§ 113(f).
Against this authority, Conrail proposes two sources in
support of its separate § 107 contribution action. It first
points to language in § 113(f), which refers to "a civil action"
under § 107(a). The fact, however, that § 113(f)(1) mentions
the availability of a civil action under § 107(a) does not a
fortiori indicate that Congress intended to permit an action
for contribution to be brought either under § 107(a) or
under § 113(f)(1), at the discretion of the litigant. After all,
a "civil action" can be initiated for direct costs, as well as
for contribution.
Conrail's second argument is based on a comment in Key
Tronic Corp. v. United States, 511 U.S. 809 (1994), where in
dictum the U.S. Supreme Court observed: "the statute
[CERCLA] now expressly authorizes a cause of action for
contribution in § 113 and impliedly authorizes a similar
14
and somewhat overlapping remedy in § 107." Id. at 815-
816. To the extent that the Supreme Court refers to an
"overlap," we construe this overlap to consist of the fact
that some courts have held that a landowner may bring a
direct action under § 107(a)(4)(B) to recover its own clean-
up costs from a polluter. Accord, Rumpke of Indiana, Inc. v.
Cummins Engine Co., 107 F.3d 1235, 1242 (7th Cir. 1997);
AM Int'l, Inc. v. Datacard Corp. Inc., 106 F.3d 1342, 1347
(7th Cir. 1997) (holding that a landowner, who paid less
because it knew it was buying into an expensive cleanup,
was "a little less ``innocent' than the landowner described in
Akzo" but still might recover under § 107(a)(4)(B) for
cleanup of contamination on its property due to a third
party spill); Akzo Coating, Inc. v. Aigner Corp., 30 F.3d 761,
765 (7th Cir. 1994) (hypothesizing that "a landowner forced
to clean up hazardous materials that a third party spilled
onto its property or that migrated there from adjacent
lands" might, as a private party, have a direct cost recovery
action under § 107(a)); United Technologies, 33 F.3d at 100.
Like our sister courts, we believe that § 107(a)(4)(B) retains
this role. See New Castle County v. Halliburton NUS Corp.,
___ F.3d ___ [typescript at 16] (3d Cir. 1997). The fact,
however, that a direct action might be brought under
§ 107(a) does not open the door for a PRP to bring an action
for contribution under that same section. Indeed, the fact
that § 113(f)(1) specifically permits an action for
contribution to be brought "in the absence of a civil action
under . . . section [107]" reenforces our conclusion that
Congress intended § 113 to be the sole means for seeking
contribution--at whatever time in the cleanup process the
party, seeking contribution, decides to pursue it.
We rely therefore on CERCLA's plain meaning to hold
that § 113(f) replaces the judicially created cause of action
under § 107(a)(4)(B) to the extent that a party seeks
contribution. See Halliburton NUS Corp., ___ F.3d ___, 1997
WL 217627 (3d Cir. 1997); Redwing Carriers, Inc. v.
Saraland Apartments, 94 F.3d 1489, 1496 (11th Cir. 1996);
United States v. Colorado & Eastern Railroad Co., 50 F.3d
1530, 1534-36 (10th Cir. 1995); United Technologies Corp.,
33 F.3d at 101-03; Akzo, 30 F.3d at 764-65; Amoco Oil Co.
v. Borden, Inc., 889 F.2d 664, 672 (5th Cir. 1989). Having
reached this determination, we will proceed to the next step
15
in our analysis: whether Conrail's § 107(a)(4)(B) claim falls
within § 113(f)'s ambit.
As its plain language indicates, § 113(f) is concerned with
contribution. Although "contribution" is nowhere defined
within CERCLA, it is a term with a familiar and readily
acceptable meaning. Black's Law Dictionary defines
"contribution" as the recovery of "portional shares of
judgment from other joint tort-feasors whose negligence
contributed to the injury and who were also liable to the
plaintiff. . . . The sharing of a loss or payment among
several[;] [t]he act of any one or several of a number of co-
debtors, co-sureties, etc., in reimbursing one of their
number who has paid the whole debt or suffered the whole
liability, each to the extent of his proportionate share."
Black's Law Dictionary 297 (5th ed. 1979). As the Court of
Appeals for the Seventh Circuit has described it,
contribution denotes a claim "by and between jointly and
severally liable parties for an appropriate division of the
payment one of them has been compelled to make." Akzo,
30 F.3d at 764; see also Colorado & Eastern, 50 F.3d at
1535-36; United Technologies, 33 F.3d at 101. We have
found nothing that counsels against this reading.
Accordingly we will adopt it.
In view, therefore, of the language of § 113(f), we have
little difficulty holding that Conrail is in fact seeking
contribution from Reading and that Conrail must seek that
remedy under § 113(f). See Colorado & Eastern, 50 F.3d at
1536 ("In our case, [the] claim . . . must be classified as one
for contribution"); United Technologies, ("[a]pplying this
definition, the instant action clearly qualifies as an action
for contribution under section 9613(f)(1)"); Akzo, 30 F.3d at
764 (explaining that if a party "liable in some measure for
the contamination . . . [alleges] that the costs that it has
incurred should be apportioned equitably amongst itself
and the others responsible . . ., [t]hat is a quintessential
claim for contribution"). In its third-party complaint against
Reading, Conrail, in its § 107(a) claim, seeks
reimbursement for "all" response costs and, in its § 113(f)
claim, seeks reimbursement of its "share of contribution"
for response costs. Clearly, Conrail is seeking contribution
from Reading for all potential liability Conrail may owe to
16
the United States. To the extent that, in either statutory
claim, this is Conrail's aim, Conrail's claim is one for
contribution. We hold that such a claim must be brought
under § 113(f), not under § 107(a).
B. The Effect of Reading's Bankruptcy on
Conrail's § 113(f) Claim
How then has Reading's bankruptcy discharge affected
Conrail's claim for contribution. The law of this circuit
regarding the discharge of claims in bankruptcy has been
established in a series of cases, many of which involve § 77
railroad reorganizations. The leading case is Schweitzer v.
Consolidated Rail Corp., 758 F.2d 936 (3d Cir. 1985). In
Schweitzer, a group of employees sued Reading after its
reorganization for asbestos-related injuries under the
Federal Employers' Liability Act, 45 U.S.C. § 51 et seq..
Reading invoked its bankruptcy discharge to bar the
employees' claims, pointing out that the plaintiff-employees
were exposed to the asbestos well before the plan
consummation date. We rejected Reading's claim to
absolute protection, noting that the language of § 77
provides for the discharge of all "claims" against the debtor.
We interpreted this language to mean that the employees'
claims would only be discharged if their causes of action
existed at the time of plan consummation. 758 F.2d at 941.
We explained that "a bankruptcy claim must be based on
state or federal law that, wholly apart from bankruptcy,
created substantive obligations." Id. (citation omitted). We
looked to federal tort law to determine when the claim
arose. Noting that identifiable, compensable injury was a
basic element of a tort claim, we held that no cause of
action accrued until that element had been satisfied.
Because the plaintiffs' injuries did not become manifest
until after the reorganization, their claims did not exist
until after plan consummation, and for that reason the
claims were not discharged. Id. at 942; see also In re
Central R.R. Co., 950 F.2d 887 (3d Cir. 1991) (following
Schweitzer); Zulkowski v. Consolidated Rail Corp., 852 F.2d
73 (3d Cir. 1988) (same); cf. In re M. Frenville Co., 744 F.2d
332 (3d Cir. 1984) (applying Schweitzer analysis to claim
for contribution and indemnity arising after automatic stay
under Bankruptcy Code).
17
In Schweitzer, we also discussed the concept of a
"contingent" claim, that is, a claim which would enable a
person to be a creditor in the bankruptcy action even
though that person had no present cause of action against
the debtor. We found statutory support for such a claim in
the language of § 77(b), which defined claims to include
"interests of whatever character." 758 F.2d at 942. We cited
In re Radio-Keith-Orpheum Corp., 106 F.2d 22 (2d Cir.
1939), as providing an example of a contingent claim.
There, the Second Circuit barred the contingent claim of a
landlord against the debtor/guarantor of a lease. The court
found that because an express contract of guarantee
existed, the landlord could not stand idly by while the
guarantor went into bankruptcy. The court determined that
the claim on the guarantee had been discharged. Id. at
942-43. Schweitzer, however, was a tort claim for personal
injury; there was no guarantee, no legal relationship, and
no contingent claim that could be discharged.
We have followed Schweitzer in cases involving
environmental damage. The first such case was In re Penn
Cent. Transp. Co., 944 F.2d 164 (3d Cir. 1991) ("Paoli
Yard"). In Paoli Yard, the United States brought suit against
Conrail, the Southeastern Pennsylvania Transportation
Authority ("SEPTA"), and Amtrak as a result of a release of
environmental contaminants at the Paoli Rail Yard. Conrail
petitioned to implead the Penn Central Corporation ("PCC"),
the reorganized entity that emerged from the § 77
reorganization of the Penn Central Transportation Company
("PCTC"). SEPTA and the United States also brought claims
against PCC. As Reading has done in the present case, PCC
argued that its § 77 reorganization barred the United
States' claim.
Applying Schweitzer, we held that the petitioners' claims
were not barred. We first looked to see if a claim existed
under CERCLA prior to the consummation date. We held
that no claim existed because CERCLA had not been
passed at the time of the reorganization:
On October 24, 1978, the reorganization of PCTC was
consummated and the injunction against the filing of
future lawsuits . . . was entered. We note, however,
that at the moment of the bankruptcy discharge and
18
the inception of the injunction, CERCLA had not yet
been passed by Congress. Indeed CERCLA was not
enacted until 1980. Consequently, at the time of the
Consummation Order, there was no statutory basis for
liability to be asserted against PCTC by the petitioners.
Just as the employees in Schweitzer had no
recognizable tort causes of action under the FELA prior
to the employer railroad's relevant consummation
dates, the petitioners here could not have brought
claims under CERCLA prior to the Consummation
Date.
Id. at 167.
The Paoli Yard court then turned to the possibility of
contingent claims. As in Schweitzer we found that there
were no contingent claims to be discharged because of the
absence of a legal relationship.
[I]t was not until the passage of CERCLA that a legal
relationship was created between the petitioners and
PCC relevant to the petitioners' potential causes of
action such that an interest could flow. Because this
legal relationship did not evolve until after the
Consummation Date, the petitioners did not have
contingent claims against PCTC. Accordingly, our
decision in Schweitzer leads us to the conclusion that
the petitioners' asserted claims under CERCLA did not
constitute dischargeable claims within the meaning of
section 77 and thus survive the discharge of the
debtor.
Id. at 168.
Other Third Circuit cases are consistent with Paoli Yard
and Schweitzer. In In re Penn Central Transp. Co., 771 F.2d
762 (3d Cir. 1985) ("Pinney Dock"), the plaintiffs brought
antitrust actions against PCC and PCTC for pre-
reorganization conspiracies. We examined the nature of the
plaintiffs' antitrust claims and found that they existed at
the time of the reorganization. Consequently, the claims
were presumed discharged by § 77, absent other
considerations.8 We expressly distinguished Pinney Dock's
_________________________________________________________________
8. We later rejected the plaintiffs' claims of fraudulent concealment and
inadequate notice. Id. at 768-72.
19
facts, where all elements of the claim arose before
reorganization, from Schweitzer, where one element of the
claim, the manifestation of the injury, did not appear until
after consummation. Id. at 767.
In our most recent decision on the subject, we applied
the same principles. See In re Penn Cent. Transp. Co., 71
F.3d 1113 (3d Cir. 1995) ("Bessemer"), cert. denied, ___ U.S.
___, 116 S.Ct. 1851 (1996). Here, the Bessemer Railroad
and USX Corporation sought contribution from PCTC for
judgments entered against them in antitrust conspiracies.
PCTC raised the shield of its § 77 reorganization, and we
applied the Paoli Yard/Schweitzer analysis. We first looked
to nonbankruptcy law to determine when the claims
accrued. We noted that the plaintiffs sought contribution.
Id. at 1115. The event triggering contribution occurred after
the date of PCTC's 1978 Consummation Order. As in
Schweitzer, the claim did not yet exist at the time of
reorganization and thus was not barred. Moreover, as in
Schweitzer, the plaintiffs lacked any contingent claim that
might have been dismissed because there was no legal
relationship between the parties. The joint rate-making
agreement signed by the parties did not confer a right of
indemnification, so there was no intent to look to PCTC for
indemnity or contribution. Absent such an agreement, the
necessary legal relationship was lacking. Id. at 1116.
These cases establish the framework for our § 77
discharge analysis. First, we must determine whether the
CERCLA claim had accrued at the time of the
reorganization. If so, then it was discharged. Pinney Dock,
771 F.2d at 766. To determine whether a claim existed, we
look to the substantive area of law governing the underlying
claim. See Bessemer, 71 F.3d at 1114. If a claim had not
accrued, then we must determine whether the claimant
possessed an interest rising to the level of a contingent
claim that would be discharged. Schweitzer, 758 F.2d at
942.
Applying these principles to Conrail's contribution claim
yields a relatively straightforward answer. Under Paoli Yard,
Conrail's § 113 claim was not discharged because SARA
had not yet been enacted. In Paoli Yard, we rejected a
CERCLA claim against PCTC because "at the moment of the
20
bankruptcy discharge and the inception of the injunction,
CERCLA had not yet been passed by Congress. . . .
Consequently, at the time of the Consummation Order,
there was no statutory basis for liability to be asserted
against PCTC by the petitioners." 944 F.2d at 167. This
rule applies to the current case. SARA was not passed
until 1986. Consequently, at the time of Reading's
consummation order, there was no statutory basis for
contribution liability.
Reading attempts to avoid this conclusion by arguing
that § 113(f) permits a contribution action based on
prospective liability. See 42 U.S.C. § 9163(f) ("any person
may seek contribution from any other person who is liable
or potentially liable under section 9607(a) of this title . . ..
Nothing in this subsection shall diminish the right of any
person to bring an action for contribution in the absence of
a civil action . . ..") (emphasis added). Reading also notes
that courts, finding an implied right of action under
§ 107(a)(4)(B), interpreted that section as extending to cases
of potential liability. See, e.g., City of Philadelphia v. Stepan
Chemical Co., 544 F. Supp. 1135 (E.D. Pa. 1982) (early case
finding private right of action).
Adopting either of Reading's arguments would lead to a
harsh result. Both would sanction Conrail for failing to
allege claims that in December 1980 had no recognized
legal form. Section 113's language on potential liability had
not been enacted in 1980. Moreover, although we could
interpret § 107(a)(4)(B)'s private right of action as emerging
fully formed with the passage of CERCLA, the courts did
not for several years interpret § 107(a) as containing such
a cause of action. If we accepted Reading's position, we
would penalize Conrail for failing to register a claim which
would not be judicially recognized for two years. See Stepan
Chemical, 544 F. Supp. at 1141-43. For these reasons, we
will apply Paoli Yard and hold that Conrail's § 113(f)
contribution claim did not yet exist at the time of Reading's
§ 77 reorganization. Thus, it was not discharged.
This ruling on discharge does not, however, end matters.
Although Conrail's contribution claim was not discharged
by Reading's bankruptcy, the claim nevertheless fails as a
matter of law. Conrail's contribution claim depends on
21
Conrail and Reading both being liable to a third party, in
this case to the United States. Because, for the reasons we
state below, we find that the United States's claim was
discharged by Reading's bankruptcy, Conrail's contribution
action, based on Reading's common liability with Conrail to
the United States, cannot proceed.
As a threshold matter, the United States argues that we
need not reach the issue of Reading's liability to the United
States. The United States claims that the sole issue raised
by this appeal is whether the contribution claim was
discharged in bankruptcy. The United States asks that we
remand this case so that the derivative nature of the
contribution claim and its potential failure can be resolved
by the district court. We reject this contention for two
reasons. First, as a matter of judicial efficiency, remand
would be wasteful. The district court reached both issues,
holding that Conrail's § 113(f) contribution is a derivative
claim and that the United States' claim was discharged by
bankruptcy. Both are matters of statutory interpretation,
presenting questions of law subject to plenary review by
this court. See Manor Care, 950 F.2d at 124. Rather than
remanding to the district court so that it can reexamine the
conclusions it has already reached, we will address the
issues. Second, although an absence of joint liability may
be a defense, when there is no question that joint liability
is lacking, a necessary element to establish contribution
cannot be proven. The claim for contribution must then, as
a matter of law, fail. Consequently, the question of
Reading's liability to the United States under § 107 is
entirely germane to our current discussion.
We held in Part III.A, supra, that § 113(f) uses the term
contribution in its traditional, common law sense. This
means that CERCLA contribution, like common law
contribution, requires some form of joint liability. See David
B. Lilly Co. v. Fisher, 18 F.3d 1112, 1123 (3d Cir. 1994);
Green v. United States, 775 F.2d 964, 971 (8th Cir. 1985);
Restatement (Second) of Torts § 886A(1) (1977) ("when two
or more persons become liable in tort to the same person
for the same harm, there is a right of contribution among
them, even though judgment has not been recovered
against all or any of them").
22
CERCLA § 113(f) captures the requirements of joint
liability in its statutory language: "Any 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 section 9607(a) of this title." 42 U.S.C. § 9613(f).
Conrail suggests, however, that this provision establishes a
new form of statutory contribution that spreads liability
beyond traditional common law principles. Quoting
Sylvester Bros. Dev. Co. v. Burlington N.R. Co., 133 B.R.
648, 653 (D.Minn. 1991),9 Conrail argues that common
liability by two or more defendants to one common
government agency is not necessary under § 113(f). We
disagree. Contribution, by its own definition, requires a
common liability for the same injury. For example, the
Uniform Contribution Among Tortfeasors Act provides
"where two or more persons become jointly or severally
liable in tort for the same injury to person or property or for
the same wrongful death, there is a right of contribution
among them even though judgment has not been recovered
against all or any of them." Uniform Contribution Among
Tortfeasors Act (1955 Revised Act) § 1, 12 U.L.A. 194. We
read the language of § 113(f) as adopting the same
traditional sense of contribution. In permitting a party to
seek contribution from "any other person who is liable or
potentially liable" under § 107(a), it is inherent in the
concept of contribution that the persons commonly liable
be liable to the same entity. Otherwise, contribution could
become an endless circle of attempts to seek
reimbursement from unrelated parties.
Because § 113(f)(1) reflects the traditional concept of
contribution, its language does not permit contribution
among liable parties who do not have a common derivation
of liability. Section 113(f) parallels the scope of common law
contribution, which
_________________________________________________________________
9. Conrail's quoted language from Sylvester ("This provision [CERCLA
§ 113(f)(1)] does not expressly require common liability to a governmental
agency, as would be the case under common law contribution." 133 B.R.
at 653) is arguably dictum because the court reached this conclusion
only after it had already determined that the State of Minnesota's claim
against the debtor had not been discharged in bankruptcy and that a
common law right to contribution existed.
23
applies to all "joint tortfeasors," in the sense of two or
more persons who are liable to the same person for the
same harm. It is not necessary that they act in concert
or in pursuance of a common design, nor is it
necessary that they be joined as defendants.
Restatement (Second) of Torts § 886A, cmt. b. (1977).
Applying this traditional meaning of contribution to the
current case, we conclude that Reading's liability to Conrail
depends on Reading's liability to the United States. To be
liable for contribution, Reading must be liable to the United
States under § 107(a).
Conrail points out that there are two relevant bases of
liability under § 107(a). As provided in § 107(a)(4)(A), a PRP
is liable in contribution for "all costs of removal or remedial
action incurred by the United States Government or a State
or an Indian tribe not inconsistent with the national
contingency plan . . .." Or, under § 107(a)(4)(B), a party is
liable for "any other necessary costs of response incurred
by any other person consistent with the national
contingency plan." 42 U.S.C. § 9607(a)(4)(B).
Conrail contends that, because Reading can be liable to
Conrail under § 107(a)(4)(B) for costs incurred by Conrail,
contribution is not dependent on Reading's liability to the
United States under § 107(a)(4)(A). But Conrail is mixing
apples and oranges. It is describing a direct action for
cleanup costs and arguing that the possibility of such an
action demonstrates that common liability is not necessary
for contribution. We do not accept this circular argument
as valid.
As we have demonstrated in Part III.A., to the extent that
Conrail seeks apportionment of the expenses of cleanup, it
must do so under § 113(f). Reading's § 113(f) liability for
contribution depends on its liability to the United States.
Having come to this conclusion, we must then examine the
effect of Reading's § 77 reorganization on the United
States's claim against Reading. Applying the Schweitzer/
Paoli Yard analysis, we find that all four CERCLA elements
making up the United States' claim existed at the time of
Reading's § 77 reorganization. The United States' claim
against Reading had therefore accrued, and it was
discharged by the consummation order.
24
We set out the elements of a § 107(a) CERCLA claim in
Part III.A., supra. As to the four elements, there is no
dispute that Reading was a "responsible party," that
hazardous substances were disposed of at the Douglassville
"facility," or that a "release" occurred. The only issue is
whether the United States incurred response costs prior to
December 31, 1980. It did.
Under the law of this circuit, "if a particular government
action qualifies as a ``removal action' under the definition
contained in CERCLA, the government's costs are
recoverable under the unambiguous language of § 107,
regardless of what statutory authority was invoked by EPA
in connection with its action." United States v. Rohm &
Haas, 2 F.3d 1265, 1274-75 and n.15 (3d Cir. 1993)
(emphasis added). A removal action involves
the cleanup or removal of released hazardous
substances from the environment, such actions as may
be necessary taken in the event of the threat of release
of hazardous substances into the environment, such
actions as may be necessary to monitor, assess, and
evaluate the release or threat of release of hazardous
substances, the disposal of removed material, or the
taking of such other actions as may be necessary to
prevent, minimize, or mitigate damage to the public
heal or welfare or to the environment.
42 U.S.C. § 9601(23).
In both 1970 and 1972, federal environmental agencies,
acting pursuant to the Clean Water Act, 33 U.S.C. § 1321,
undertook cleanups of massive releases from the
Douglassville site. These cleanups meet the definition of a
"removal action." The United States never recovered its
"response costs" for these efforts. Consequently, on the date
of Reading's § 77 reorganization, all four CERCLA elements
were met. The United States possessed an actual claim
against Reading.
The United States has not challenged any of these
elements on appeal, choosing instead to advance a novel
interpretation of Schweitzer. The United States suggests
that Schweitzer always requires a legal relationship between
the claimant and the debtor before a claim can be barred.
25
The United States then metamorphoses the legal
relationship requirement into a test turning on whether the
government had knowledge of the potential claim. This is
simply wrong. Schweitzer requires a legal relationship only
for the discharge of a contingent claim in bankruptcy. No
such relationship is needed for an accrued claim. The
United States' CERCLA claim had accrued at the time of
the reorganization. The question of a legal relationship is
therefore irrelevant. See Paoli Yard, 944 F.2d at 167-68(discussing legal relationship only for contingent claim);
Schweitzer, 758 F.2d at 943 (same); see also In re
Remington Rand Corp., 836 F.2d 825, 833 (3d Cir. 1988)
(applying Schweitzer; holding government contract claim
discharged where claim was contingent and relationship
arose from government audit revealing claim).
Moreover, even if we were to accept the United States's
argument and assume that some degree of knowledge is a
prerequisite for discharge of an accrued claim (and under
Schweitzer it is not), we would still hold that the claim was
discharged. The question of knowledge is a question of fact,
subject to review only for clear error. See Riehl v. Travelers
Ins. Co., 772 F.2d 19, 24 (3d Cir. 1985) (describing
knowledge of toxic dumping as an issue of fact); see also
Consumers Produce Co., Inc. v. Volante Wholesale Produce,
Inc., 16 F.3d 1374, 1383 (3d Cir. 1993) (reviewing finding of
constructive knowledge of breach of trust for clear error);
Brock v. Claridge Hotel & Casino, 846 F.2d 180, 188 (3d
Cir. 1988) (reviewing finding of knowledge of legal violation
for clear error). The district court made factualfindings that
the United States had knowledge of its claim prior to the
bankruptcy discharge: the United States knew the
Douglassville site was an environmental trouble spot and
Reading Railroad was connected to it; by October 31, 1980,
the EPA had identified the site as potential hazardous
waste site; federal officials had twice responded to cleanup
needs at the site; EPA knew Reading Railroad had operated
a rail line to the site; in 1972 EPA had ordered Reading
Railroad to haul waste from the site; and ICC tariffs,
available as part of the bankruptcy proceedings, showed
that Reading transported hazardous materials to the site. In
re Reading Co., 900 F.Supp. at 745-46. In making these
findings, the district court also relied on the length of the
26
Reading Railroad's bankruptcy, the government's
substantial participation in it, and the large amount of
publicity that surrounded CERCLA's passage, along with
EPA's advocacy of the statute. Id. The court's finding of
knowledge merits deference. With ample support in the
record, we cannot say its holding was clearly erroneous.
Because of this finding, the United States would lose on the
knowledge issue even if we were to conclude that knowledge
was necessary.
We hold therefore that under our decisions in Schweitzer
and Paoli Yard, the United States' CERCLA claim against
Reading for environmental clean-up at the Douglassville
site was discharged in the § 77 reorganization. Reading is
not liable to the United States under § 107(a)(4)(A), and
Reading is therefore not a "person who is liable or
potentially liable under [§ 107(a)] of this title," 42 U.S.C.
§ 9613(f)(1). Conrail's claim for contribution under § 113(f)
fails as a matter of law.
At oral argument, Conrail mentioned for the first time
that it had spent over $1 million on remedial measures at
the Douglassville site. Because of the lateness of Conrail's
assertion of any such direct expense, we will not analyze
the nature of Conrail's claims to ascertain if Conrail is in
fact asserting a claim that is more than one for
contribution. See, e.g., United States v. Voigt, 89 F.3d 1050,
1064 n.4 (3d Cir. 1996) (holding that failure to raise an
issue until it is brought up at oral argument constitutes a
waiver). For that reason, we do not need to consider
whether, under the guidelines we have set out in New
Castle County v. Halliburton NUS Corp., Conrail can
maintain a direct claim under § 107(a)(4)(B) in addition to a
claim for contribution.
IV. CONCLUSION
We hold therefore that Reading's § 77 reorganization bars
any claim by Conrail for § 113(f) contribution from Reading
for the Douglassville site. In reaching this conclusion, we
have not elevated bankruptcy law over CERCLA, nor do we
perceive a clash between the two systems. Each performs
its respective function. Our opinion merely demonstrates
27
that CERCLA claims are treated like any other claim in
bankruptcy. Because Reading's liability to the United States
for the Douglassville site was discharged in its § 77
reorganization, we will affirm the order of the district court.
A True Copy:
Teste:
Clerk of the United States Court of Appeals
for the Third Circuit
28