Petition for Writ of Certiorari — Pneumo Abex Corp. v. High Point, Thomasville & Denton Railroad
Supreme Court brief1998
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In The
Supreme Court of the United States
October Term, 1997
¢
PNEUMO ABEX CORPORATION, WHITMAN
CORPORATION, CITY OF PORTSMOUTH, VIRGINIA,
a municipal corporation, and PORTSMOUTH
REDEVELOPMENT AND HOUSING AUTHORITY,
Petitioners,
versus
HIGH POINT, THOMASVILLE AND DENTON
RAILROAD CO., NORFOLK SOUTHERN RAILWAY
CO.; NORFOLK & WESTERN RAILWAY CO.;
C X CORPORATION; CSX TRANSPORTATION, INC.;
and FRUIT GROWERS EXPRESS CO., INC.,
Respondents.
+
On Petition For Writ Of Certiorari
To The United States Court Of Appeals
For The Fourth Circuit
e
PETITION FOR WRIT OF CERTIORARI
¢
JosepH G. Homsy*
Zevnik Horton GurBorD
McGovern PALMER
& FOGNANI
77 West Wacker Drive
Thirty-Third Floor
Chicago, Illinois 60601
(312) 977-2500
*Counsel of Record for Petitioners
(Additional Counsel On Inside Cover)
JoHN W. Roserts
ADAM BaBICH
Lea D. LEADBEATER
Mary BetH S. Pauka
ZEVNIK Horton GursorpD
McGovern PALMER
& FOGNANI
77 West Wacker Drive
Thirty-Third Floor
Chicago, Illinois 60601
(312) 977-2500
Counsel for Pneumo Abex
Corporation and Whitman
Corporation
RICHARD J. Lazarus
600 New Jersey Avenue,
N.W.
Washington, D.C. 20001
(202) 662-9129
Of Counsel
Susan Taytor HANsEN
Coorer SponG & Davis
Central Fidelity Bank
Building
High and Crawford Streets
Portsmouth, Virginia 23705
(757) 397-3481
Counsel for Portsmouth
Redevelopment and Housing
Authority
Nancy Bennetr CHERRY
City Attorney’s Office
City of Portsmouth, Virginia
Post Office Box 820
Portsmouth, Virginia 23705
(757) 393-8731
Counsel for City of Portsmouth,
Virginia
ee ee - =
QUESTION PRESENTED
The Comprehensive Environmental Response,
Compensation and Liability Act (“CERCLA”) imposes strict
liability for the costs of cleaning up hazardous substances that
were released into the environment on any person who
“arranged for disposal or treatment” of such hazardous
substances. “Disposal” and “treatment” are defined by
reference to the definitions of those terms in the Resource
Conservation and Recovery Act, which governs the handling of
solid and hazardous waste.
The question presented for review is:
Whether a person, who arranges for recycling of used
materials that contain hazardous substances and are unfit for
their original purpose, is an arranger for “disposal or treatment”
of those hazardous substances within the meaning of CERCLA,
when the recycling process results in the release of hazardous
substances into the environment.
PARENT COMPANIES AND
NON-WHOLLY OWNED SUBSIDIARIES
Whitman Corporation, the City of Portsmouth, Virginia, a
municipal corporation, and the Portsmouth Redevelopment
and Housing Authority. These petitioners have no parent
companies or non-wholly owned subsidiaries that have issued
shares to the public.
Pneumo Abex Corporation. The following company is a
parent company of Pneumo Abex Corporation that has issued
shares to the public: M & F Worldwide Corporation.
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TABLE OF CONTENTS
TABLE OF AUTHORITIES ......cscccececccceeeens vi
oy a ee on eee eee eee ee l
Pe | Eee eee re: ee ee l
a we tet ls Bi’ a Bg } Re eee l
STATEMENT OF THE CASE ...........--500-000-- l
REASONS FOR GRANTING THE WRIT ...........-. 9
I. The Fourth Circuit’s Decision Is a Radical
Reinterpretation of “Discarded Material” — The Key
Phrase that Governs EPA Jurisdiction over Hazardous
Waste — and Creates an Arbitrary Exception from
Ce RIS he ves vec kee see tus Shae es 11
A. The Fourth Circuit Erroneously Considered
Factors Such as “Intent” and “Value” to
Determine that Material Destined for Recycling
OS a Ee ere eee 11
B. The Fourth Circuit’s Interpretation of “Discarded
Material” Will Damage RCRA Enforcement and
PI 8550 a BA 8 aE eA Si 13
C. The Fourth Circuit’s Opinion Is Contrary to the
Fundamental Principles of CERCLA Liability. . 16
D. The Fourth Circuit’s Decision Impairs EPA’s
Ability to Clean Up Existing Superfund Sites
and Will Lead to More Superfund Sites in the
PR io ieee check Cn se bck ass seeks oh 19
ili
Il. The Court Should Review the Fourth Circuit's
Decision in Order to Resolve Conflict Between the
COCUNR os oc wv od aa a ee 21
A. The Fourth Circuit’s Holding That Scrap
Materials Destined for Recycling Are Not
“Discarded” Under RCRA Contradicts Decisions
of the D.C. and Eleventh Circuits. ........... 21
B. The Fourth Circuit’s Opinion Contradicts the
Fundamental Principle That the Sale of Material
Unfit for Its Original Purpose Is an Arrangement
for Treatment or Disposal Under CERCLA. ... 23
(A RUNS. cad <a e ud eRe baa se eGa ee Ras 25
AT a8 REV eR ER ea ewe RR RES App. |
Pneumo Abex Corp. v. High Point, Thomasville and
Denton R.R. Co., 142 F.3d 769 (4th Cir. 1998) .. App. 1
Pneumo Abex Corp. v. Bessemer & Lake Erie R.R. Co.,
921 F. Supp. 336 (E.D. Va. 1996) ........... App. 18
Pneumo Abex Corp. v. Bessemer & Lake Erie R.R. Co.,
936 F. Supp. 1250 (E.D. Va. 1996) .......... App. 49
Pneumo Abex Corp. v. High Point, Thomasville and
Denton R.R Co., Nos. 97-1593, -1594, -1599,
(4th Cir. May 27, 1998) (order denying
FORMAN 555 bois eh i ASR ENTER ES ONS Oe App. 105
Resource Conservation and Recovery Act of 1976
§ 1004(3), (5), (27), (34), 42 U.S.C. § 6903(3),
CS CF CSD 5a Se i ei ed AA App. 112
iV
Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended, § 101(14), (29),
42 U.S.C. § 9601(14), (29) (1994) ......... App. 113
Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended, § 106(a),
42 US.C. § 9606(a) (1994) 20. cece eess App. 115
Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended, § 107(a), (b),
42 U.S.C. § 9607(a), (b) (1994) ............ App. 116
U.S. Environmental Protection Agency, Region III
CERCLA § 106 Administrative Order ....... App. 119
U.S. Dept. of Justice Letter to Clerk of the United
States Court of Appeals for the Fourth
GE cb wih web eth ee vee aba Shia App. 197
U.S. Environmental Protection Agency, Region III
Letter to CSX Transportation, Inc.,
AS eG Ee er ee a ee ree App. 200
aint il ll eter aanncenc Oe
TABLE OF AUTHORITIES
CASES
3550 Stevens Creek Assoc. v. Barclays Bank, 915 F.2d 1355
(ee Gar Ieee os 6 i ce ee 18, 19
A & W Smelter and Refiners v. Clinton, 146 F.3d 1107
Coe Ge De od oe ch NT 17, 23
AM International v. International Forging Equipment
Corp., 982 F.2d 989 (6th Cir. 1993) .... 17, 18, 19,24
American Mining Congress v. United States EPA,
907 F.2d 1179 (D.C. Cir. 1990) (AMC IJ) ... 12,21, 22
American Petroleum Inst. v. United States EPA,
FOOT 2s Foe GPR. PO ire oe eee ES 21
B.F. Goodrich v. Betkoski, 99 F.3d 505 (2d Cir. 1996) .... 3
Cadillac Fairview v. United States, 41 F.3d 562
eg 2k nL SP RORGI op IRAN yar a cs rere 18, 23
California v. Summer del Caribe, 821 F. Supp. 574
GUa RAe SOPOT © oS vy cha cee iene ties ee 24
Catellus v. United States, 34 F.3d 748
SEPM Tas. SPPD Se oe PSs Beek Ls eka 18, 24
Chatham Steel Corp. v. Brown, 858 F. Supp. 1130
ide CAR TPO So fe ci ees re EeESs oa has 24
Chesapeake & Potomac Tel. Co. v. Peck Iron & Metal
Co., 814 F. Supp. 1269 (E.D. Va. 1992) .......... 24
vi
Chevron U.S.A. v. Natural Resources Defense
Council, 467 U.S. 837 (1984) ............... 10, 11
Connecticut Coastal Fishermen's Ass'n v. Remington
Arms Co., 989 F.2d 1305 (2d Cir. 1993) .......... 22
Ekotek Site PRP Comm. v. Self, 881 F. Supp. 1516
Ee, SO ROD eee eo RN ROSIE 24
Florida Power & Light Co. v. Allis Chalmers Corp.,
O73 F.261313 CHR Cw 199) ic ii cei 18, 24
Gould v. A & M Battery & Tire Serv., No. 3 CV-91-
1714, 1996 U.S. Dist. LEXIS 11352
CAA, SO SUN Bos PD 8 RE PAROS hb oes 24
Key Tronic Corp. v. United States, 511 U.S. 809 (1994) 2,3
Louisiana-Pacific Corp. v. ASARCO, 24 F.3d 1565
OE ce Uae Khe ae b es Vee Shey eka eden 23
Meghrig v. KFC Western, 516 U.S. 479 (1996) ......... 2
Military Toxics Project v. EPA, 146 F.3d 948
Pers Welln SEE. ore ca S WEE eh EN Ce RECS We 4
Pennsylvania v. Union Gas Co., 491 U.S. 1 (1989) ..... 16
Shell Oil Co. v. EPA, 950 F.2d 741
A MEE We 8 ede CaS awh wae ca a wavusas 21
United States v. Bestfoods, 118 S. Ct. 1876 (1998) ...... 16
United States v. ILCO, 996 F.2d 1126
a NL 1 Beh Se cen eae ane ear 12, 22
Vii
United States v. Summit Equip. & Supplies,
805 F. Supp. 1422 (N.D. Ohio 1992) ............. 24
STATUTES
UAC CIAO 8
Resource Conservation and Recovery Act of 1976
(“RCRA”), 42 U.S.C. § 6901, et seq. (1994) .... passim
42 U.S.C. § 6901 (RCRA § 1002) i... cc. 4
42 U.S.C. § 6903 (RCRA § 1004) .. 1,3, 4,5, 7, 12,17
42 U.S.C. § 6921 (RCRA § 3001) ........... 4,5, 12
42 U.S.C. § 6926 (RCRA § 3006) ............ 13, 15
42 U.S.C. § 6928 (RCRA § 3008) ................ 5
42 U.S.C. § 6973 (RCRA § 7003) .......... 5, 13, 15
Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended (“CERCLA”),
42 U.S.C. § 9601, et seg. (1994) ............. passim
42 U.S.C. § 9601 (CERCLA § 101)........ 1,3, 5,17
42 U.S.C. § 9606 (CERCLA § 106)............... 6
42 U.S.C. § 9607 (CERCLA § 107)........ LEE
19, 20, 25
42 US.C. § 9613: (CERCLA § 113). 2... ..065055.. 7
Vili
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REGULATIONS
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Se Se i EOE 60 oS 5 ee Se oh he Hs ce wk 14
ieee A 0 ed Ci i eas va be aw a 14
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Ne ee tO 8 bicker A ASOis WEA Ae ob cee ee cack 14
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Per I RPE oe oC i cows kv as eeecb cee 12
ees PO OPT NOP Pee on rk See ee kc 16
oe we MO, IROOM ob ak acs ass bias aes 13
eee I is Sisk ee Si ye cade e eke 15
ie POs IPPON OED ec ac cv vb eka icavis 12,14
een UN NE SE oi. eae wae owe & 16
er Cs WE: MM REOOD Cools coe ie Seca cubes 16
ix
OS Fou: Reg. 42026 99S) 5 A ERS 16
H.R. Rep. No. 1491, 94th Cong., 2d Sess. 2 (1976),
reprinted in 1976 U.S.C.C.A.N. 6238, 6240 ....... 22
Hearing of the Transp. and Hazardous Materials
Subcomm. of the House Energy and Commerce
Comm., FED. NEws SERVICE, March 16, 1992 (102d
Cong., 2d Sess., Testimony of Richard Fortuna,
Exec. Dir. of the Haz. Waste Treatment Council) ... 20
Ailtenk oR
Rare oa
OPINIONS BELOW
The opinion of the court of appeals, Pneumo Abex Corp. v.
High Point, Thomasville and Denton R.R. Co., 142 F.3d 769
(4th Cir. 1998), is reproduced at App. 1. The opinions of the
district court, Pneumo Abex Corp. v. Bessemer & Lake Erie
R.R. Co., 921 F. Supp. 336 (E.D. Va. 1996), and Pneumo Abex
Corp. v. Bessemer & Lake Erie R.R. Co., 936 F. Supp. 1250
(E.D. Va. 1996), are reproduced at App. 19 and App. 49,
respectively.
JURISDICTION
The judgment of the United States Court of Appeals for the
Fourth Circuit was entered on April 29, 1998. App. 1. The
court denied petitioners’ timely petition for rehearing on May
27, 1998. App. 105. This Court has jurisdiction to issue the
requested writ of certiorari pursuant to 28 U.S.C. § 1254(1)
(1994).
STATUTES INVOLVED
Sections 101(14), 101(29) and 107 of the Comprehensive
Environmental Response, Compensation and Liability Act of
1980, as amended, 42 U.S.C. §§ 9601(14), 9601(29), 9607
- (1994), are reproduced at App. 114-116. Section 1004(3), (5),
(27), (34) of the Resource Conservation and Recovery Act of
1976, 42 U.S.C. § 6903(3), (5), (27), (34) (1994), is reproduced
at App. 112-13.
STATEMENT OF THE CASE
This case concerns cleanup liability for a Superfund site
located in Portsmouth, Virginia, which is contaminated with
lead and other metals from scrap metal sent to the site by the
respondent railroads for processing. Petitioners are engaged in
a cleanup at that site under a consent decree with the United
2
States Environmental Protection Agency (“EPA”). EPA also
issued an administrative order to the respondents designating
them as liable parties and requiring them to contribute to the
cleanup effort.' Petitioners brought suit under the
Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended (“CERCLA”), 42 U.S.C. §
9601, et seq. (1994), to require the respondents to contribute to
the cost of the cleanup. On appeal from the district court’s
finding of respondents’ liability, the Fourth Circuit held that the
respondents did not arrange for “disposal” or “treatment”
because their scrap metal was not “discarded,” a key term used
in the Resource Conservation and Recovery Act of 1976
(“RCRA”), 42 U.S.C. § 6901, et seg. (1994). Petitioners seek
review of the Fourth Circuit’s decision that the respondent
railroads are not liable under the CERCLA and RCRA
terminology. As will be discussed, the meaning of these terms
is of fundamental importance to the legal and administrative
enforcement of these vital environmental statutes.
A. Statutory Background
The court of appeals ruling in this case raises issues of
statutory construction arising under both CERCLA and RCRA.
These comprehensive statutes were enacted to protect the
environment. CERCLA is designed to effectuate the cleanup of
existing contaminated sites, while RCRA’s primary purpose is
to ensure the proper handling of waste so as to prevent the
creation of such sites. Meghrig v. KFC Western, 516 U.S. 479,
483, 485 (1996). CERCLA authorizes EPA to command
private parties to clean up hazardous waste sites. Key Tronic
Corp. v. United States, 511 U.S. 809, 814 (1994). In addition,
' EPA has suspended (but has not withdrawn) its
administrative order due to the Fourth Circuit’s ruling in this case.
App. 200-201.
AID BOG TS LF betel
BT AG LON GE AE iy es IN ted hs AA ah in ARP pA DAA alg Bo GRE SI i de AD
3
private parties who themselves clean up a site may seek
recovery of their costs from other liable parties. /d.
Congress intended that all those who benefit financially
from a commercial activity internalize the cleanup costs
associated with that activity as a cost of doing business. B.F.
Goodrich v. Betkoski, 99 F.3d 505, 514 (2d Cir. 1996).
Accordingly, Congress imposed liability for cleanup costs on
four categories of entities: (/) owners or operators of polluting
facilities; (2) persons who owned or operated such facilities at
the time hazardous substances were disposed; (3) persons “who
by contract, agreement, or otherwise arranged for disposal or
treatment,” or arranged for transport, of hazardous substances:
and (4) transporters who selected disposal or treatment sites.
CERCLA § 107(a)(1)-(4), 42 U.S.C. § 9607(a)(1)-(4). Thi:
case concerns the third category of liable party — those who
arranged for “disposal” or “treatment.” CERCLA § 107(a)(3),
42 U.S.C. § 9607(a)(3).
CERCLA uses many of the same statutory terms as RCRA,
and incorporates certain definitions by express reference to
RCRA. In particular, CERCLA provides that the terms
“disposal” and “treatment,” relevant to CERCLA arranger
liability, shall have the meaning provided in RCRA. CERCLA
§ 101(29), 42 U.S.C. § 9601(29). In its definition of
“treatment,” RCRA refers to “hazardous waste;” in its definition
of “disposal,” RCRA refers to “solid waste or hazardous waste.”
RCRA § 1004(3), (34), 42 U.S.C. § 6903(3), (34). For
example, “treatment” includes processes that alter the character
of “hazardous waste” to render it “amenable for recovery.”
> “Treatment” is any process designed to “change the
physical, chemical, or biological character or composition of any
hazardous waste so as to neutralize such waste or so as to render
such waste nonhazardous, safer for transport, amenable for
4
RCRA § 1004 (34), 42 U.S.C. § 6903 (34).
“Hazardous waste” is a “solid waste” that may pose a
“substantial present or potential hazard to human health or the
environment.” RCRA § 1004(5), 42 U.S.C. § 6903(5). RCRA
defines “solid waste” as “garbage. . . and other discarded
material, including solid, liquid, semisolid, or contained
gaseous material,” with certain exceptions not relevant here.
RCRA § 1004(27), 42 U.S.C. § 6903(27) (emphasis added); see
also RCRA § 1002(a)(2), 42 U.S.C. § 6901(a)(2) (RCRA was
designed to stem the “rising tide of scrap, discarded and waste
materials” resulting from industrial operations).’
The term “discarded” is the core term which defines
RCRA’s “gatekeeper” concept of solid waste and hazardous
waste. It determines the ultimate scope of RCRA’s
comprehensive civil regulatory and criminal enforcement
programs. For instance, EPA’s authority to remedy
recovery, amenable for storage, or reduced in volume.” RCRA §
1004(34), 42 U.S.C. § 6903(34).
“Disposal” is “the discharge, deposit, injection, dumping,
spilling, leaking, or placing of any solid waste or hazardous waste
into or on any land or water so that such solid waste or hazardous
waste or any constituent thereof may enter the environment or be
emitted into the air or discharged into any waters...” RCRA §
1004(3), 42 U.S.C. § 6903(3).
* EPA promulgated narrower regulatory definitions of
“hazardous waste” and “solid waste” that designate particular
waste subject to EPA’s stringent regulatory program under
subchapter III of RCRA. RCRA § 3001, 42 U.S.C. § 6921. These
regulatory wastes are thus a subset of the statutory wastes defined
in RCRA § 1004(5), (27), 42 U.S.C. § 6903(5), (27), over which
EPA has authority in the first place. Military Toxics Project v.
EPA, 146 F.3d 948 (D.C. Cir. 1998).
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contamination under RCRA extends to “solid waste and
hazardous waste.” RCRA § 7003, 42 U.S.C. § 6973. EPA’s
authority to regulate handling, treatment and storage of
dangerous materials extends to “hazardous waste.” RCRA §§
1004(5), 3001, 42 U.S.C. §§ 6903(5), 6921. RCRA’s felony
criminal enforcement provisions also key on “hazardous waste.”
RCRA § 3008, 42 U.S.C. § 6928. In order to be a “hazardous
waste,” material must first be a “solid waste.” RCRA §
1004(5), 42 U.S.C. § 6903(5). Because EPA’s authority under
RCRA extends only to materials that are “solid waste,” the
meaning of “discarded” is of enormous importance to EPA’s
statutory mission under RCRA.
B. Facts
From 1927 to 1978 the Abex foundry in Portsmouth,
Virginia processed scrap metal railroad parts and recast the
scrap metal into new parts. During that time, railroads used
metal parts called journal bearings on their rail cars to reduce
friction. In accordance with the railroad industry specifications,
journal bearings had two parts, a lead lining and a brass back,
consisting of lead, copper, zinc, nickel and antimony, all of
which are hazardous substances unuer CERCLA. CERCLA §
101(14), 42 U.S.C. § 9601(14); 40 C.F.R. § 302.4; App. 22.
During use, the journal bearings became scorched, broken
and worn to the point that the railroads could no longer use
them. These unusable journal bearings were regularly removed
and replaced with new bearings. The railroads accumulated the
scrap journal bearings and delivered them to the Abex foundry
in their own rail cars. In exchange for the scrap, the railroads
received a credit toward the price of new journal bearings to be
purchased from the Abex foundry. App. 8-9, 22-23.
The foundry melted down the scrap journal bearings to
recover the lead linings from the backs and to remove dirt,
6
grease and metal impurities. The impurities were skimmed off
as dross and then placed on the back lot of the foundry property
along with dust from equipment for controlling air emissions
from the reclamation process. The molten metal was poured
into sand molds to form the backs of new bearings. The scrap
lining metal was similarly processed and then used to line new
backs. When the sand from the molds eventually dried out, it
was washed to reclaim bits of metal and then placed on the back
lot of the foundry property along with the dross and dust. The
railroads regularly inspected the foundry operations and
processes as well as the reclaimed bearings for conformance
with industry specifications. App. 8-9, 15, 23, 91.
C. EPA’s Involvement
In the mid-1980’s, after discovering elevated levels of lead,
copper, zinc, nickel and antimony in soil at the foundry, the
EPA identified the foundry and surrounding properties (“the
site”) as a Superfund site by placing it on the National Priorities
List. In 1986, Abex began performing cieanup activities at the
site, including soil excavation, sampling and analysis, in
accordance with administrative orders issued by EPA and the
state environmental agency. App. 9-10, 23-24.
In 1993 and 1994, EPA notified the respondent railroads
who had sent scrap metal to the Abex foundry that they also
were responsible for cleanup under CERCLA. Each time, the
railroads declined to cooperate with EPA. In 1995, petitioners
the City of Portsmouth, Virginia, (“the City”) and the
Portsmouth Redevelopment and Housing Authority (“PRHA”),
each of whom own property within the site, and Abex’s
corporate successor, Pneumo Abex Corporation (“Pneumo
Abex”), entered into a consent decree to perform the entire
permanent remedy selected for the site. That remedy is
currently underway. In 1996, EPA issued an administrative
order under section 106 of CERCLA, 42 U.S.C. § 9606,
ne aac alagege eer areas omen
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requiring that the railroads contribute to the permanent remedy
for the site.’ App. 9-10, 23-24, 93-95, 119.
D. Proceedings Below
Petitioners Phneumo Abex, Whitman Corporation, the City
and the PRHA brought a CERCLA action in the United States
District Court for the Eastern District of Virginia against the
railroads that had sent scrap metal parts to the Abex foundry,
seeking contribution for a fair share of cleanup costs.
Jurisdiction in the district court was based on CERCLA section
113(b), 42 U.S.C. § 9613(b). On cross-motions for summary
judgment, the district court held the railroads liable for having
arranged both for the disposal and for the treatment of
hazardous substances under CERCLA section 107, 42 U.S.C. §
9607. App. 48.
The district court determined at the outset that the scrap
metal parts were “hazardous substances” under CERCLA. App.
32. Further, the district court held that “the sale and subsequent
processing of the worn bearings fall within the definition of
treatment” because “the processing at the Site reduced the waste
in volume from whole, worn bearings and castings to residual
amounts of the constituent elements” and also “rendered the
constituent elements of the worn journal bearings amenable for
recovery.” App. 36; RCRA § 1004(34), 42 U.S.C. § 6903(34)
(defining “treatment” as any process designed to render
hazardous waste “amenable for recovery” or “reduced in
volume”). In addition, the district court held that the railroads
arranged for the ultimate disposal of the constituent elements of
the scrap metal parts, either through the emission of particulate
* As previously noted, due to the Fourth Circuit’s ruling in
this case, EPA recently suspended its administrative order. App.
200-201.
8
matter from the foundry or by the placing of the sand once used
as molds on the back lot of the Site. App. 38. The court found
that the scrap parts were not “useful products” but instead were
disposed because they were unusable for their original purpose
when they were sent to the Abex foundry. App. 35.
Following the district court’s decision on summary
judgment, all of the defendants except the respondents settled
with the plaintiffs. The district court then held a bench trial to
consider the appropriate share of the costs to be allocated to the
remaining defendant railroads, each of which had declined to
settle with either EPA or the plaintiffs. The court concluded
that the respondents, which had sent the largest volume of scrap
to the foundry, should pay 40.1% of the cleanup costs. App.
103.
The Fourth Circuit reversed, holding that the respondents
are not liable for having arranged for treatment or disposal
under CERCLA. The court ruled that “treatment” as used in
CERCLA applies only to materials that qualify as “discarded”
as that term is used in RCRA. App. 13. The court then
determined that the materials at issue here, scrap metal parts,
were not “discarded” based on (1) the intent of the parties to the
recycling transaction that the materials were to be reused
entirely, (2) the value of the materials sold, (3) the usefulness of
the materials in the condition in which they were sold, and (4)
the state of the product at the time of transferral, i.e., whether
the hazardous material was contained or loose and leaking.
App. 14.
The plaintiffs petitioned for rehearing and, in that context,
the U.S. Department of Justice filed a letter with the Fourth
Circuit noting that the decision presents issues of “considerable
importance to the federal government.” App. 199. The Fourth
Circuit denied rehearing on May 27, 1998. App. 111.
EE ERE TE NCO SE gE NO Ea AE BE
OO ena a
ae KRABI BEY
9
REASONS FOR GRANTING THE WRIT
The decision of the court of appeals in this case conflicts
with the rulings of other courts of appeal concerning the scope
of two of this nation’s most important environmental protection
laws. The Fourth Circuit’s opinion disregards EPA’s long-
standing interpretation of the term “discarded,” which defines
the range of materials subject to RCRA. Moreover, the opinion
conflicts with the D.C. and Eleventh Circuits on the meaning of
“discarded” under RCRA and with the Ninth Circuit on the test
for arranger liability under CERCLA.
Congress enacted both CERCLA and RCRA ir. order to
protect the public and our natural environment from the dangers
presented by the management of solid and hazardous wastes and
the treatment and disposal of hazardous substances. A central
threshold issue faced by EPA in implementing each of these
laws has been the Agency’s determination regarding when
recycling activities should be covered by the statutes.
EPA must, in both statutory contexts, balance its desire to
promote recycling with its recognition that these activities may
present risks to health and the environment. If recycling were
not governed by these statutes, CERCLA liability for cleanup
and waste management responsibilities under RCRA could be
avoided simply by conveying discarded materials to another
who claimed an intent to reuse potentially valuable hazardous
constituents. Indeed, a great number of the hazardous waste
sites identified for cleanup under both RCRA and CERCLA are
the result of recycling activities.
> Recycling operations account for “nearly one-third of the
61 imminent hazard actions filed to date under Section 7003 of
RCRA, and 20 of the first 160 interim priority sites listed under
the Comprehensive Environmental Response, Compensation and
10
In enforcing RCRA, EPA has achieved this balance by
consistently interpreting the term “discard” to include recyclable
materials unless they are immediately recycled in a continuous
process. This interpretation has likewise been adopted by the
courts. Similarly, settled judicial precedent distinguishes
between the sale of a product still useful for its original purpose,
which falls outside CERCLA, and the recycling of material no
longer useful for its original purpose, which triggers CERCLA
liability.
The Fourth Circuit’s ruling completely ignored EPA’s
administrative interpretation and disrupted settled judicial
precedent. The court ruled that CERCLA liability turned on the
meaning of “discarded material,’ used in RCRA, and then,
contrary to Chevron U.S.A. v. Natural Resources Defense
Council, 467 U.S. 837 (1984), substituted its own view of the
meaning of this key term for that of the expert agency charged
with RCRA’s implementation. The court of appeals, as a result,
has cast a cloud of legal uncertainty over numerous pending
government enforcement actions, government cost recovery
actions, and private cost recovery actions under CERCLA.
Even more dramatically, the court of appeals has called into
question the jurisdictional scope of RCRA itself, including its
entire civil regulatory and criminal enforcement programs, as
well as those EPA-authorized state hazardous waste programs
that invariably utilize “discarded material” as their jurisdictional
touchstones.
This Court’s review is warranted because of the profound
importance of the legal issues, the circuit conflict created by the
decision, and the failure of the court of appeals to follow this
Court’s precedent requiring deference to the Agency’s
interpretation. Because the court of appeals’ ruling seriously
Liability Act (Superfund).” 48 Fed. Reg. 14472, 14474 (1983).
ht heb
1]
disrupts EPA’s authority under both RCRA and CERCLA, and
in light of the involvement and interest of EPA in this case, the
Court may wish to invite the Solicitor General of the United
States to express the views of the United States prior to acting
on this petition.
I. The Fourth Circuit’s Decision Is a _ Radical
Reinterpretation of “Discarded Material” — The Key
Phrase that Governs EPA Jurisdiction over Hazardous
Waste — and Creates an Arbitrary Exception from
CERCLA Liability.
A. The Fourth Circuit Erroneously Considered
Factors Such as “Intent” and “Value” to
Determine that Material Destined for Recycling Is
Not “Discarded.”
The Fourth Circuit ignored this Court’s decision in
Chevron by failing to defer to EPA’s reasonable interpretation
of “discard” and by instead injecting into the statutory analysis
its own judicially created list of subjective “factors.” See
Chevron U.S.A. v. Natural Resources Defense Council, 467
U.S. 837 (1984). The Fourth Circuit’s task was to construe the
phrase “arranged for disposal or treatment . . . of hazardous
substances” under CERCLA section 107(a)(3), 42 U.S.C. §
9607(a)(3). The Fourth Circuit first held that a hazardous
substance must also be “discarded,” within the meaning of
RCRA, for a person to have arranged for its treatment under
CERCLA, because CERCLA refers to RCRA for the definition
of “treatment.” App. 13. The court then seriously misstepped
in disregarding both judicial precedent and the Agency’s
interpretation of the meaning of “discaru” under RCRA.
Wholly missing from the Fourth Circuit’s analysis was the
slightest acknowledgment of either the applicability of this
Court’s decision in Chevron or the relevance of EPA’s
12
authoritative construction 0” the statutory term “discard.”
Indeed, the court of appeals failed to note even the existence of
EPA’s longstanding, comprehensive regulatory program. EPA
has carefully considered, and articulated in a series of
rulemakings, the extent to which zecycling activities should fall
within RCRA’s regulatory scope. See, e.g, 48 Fed. Reg. 14472
(1983); 50 Fed. Reg. 614 (1985), 62 Fed. Reg. 25998 (1997).
On each of those occasions, the Agency repudiated the very
analysis embraced by the Fourth Circuit.
As interpreted by the EPA Administrator, a material that is
no longer fit for its original purpose, and is destined for
recycling, is “discarded” unless it is retained by the generating
industry for immediate reuse in a continuous process. American
Mining Congress v. United States EPA, 907 F.2d 1179, 1186
(D.C. Cir. 1990) (“AMC ITI’) (discussing EPA’s interpretation
of “discarded”); United States v. ILCO, 996 F.2d 1126, 1131
(11th Cir. 1993) (same). This longstanding administrative and
judicially approved interpretation maintains EPA’s discretion to
regulate (or conditionally exempt from regulation) most
recyclable material, except for byproducts of industrial
processes that will never become part of the waste disposal
problem because they are immediately reused.®
In contrast, the Fourth Circuit’s narrow reading of
“discarded” insulates most recyclable materials entirely from
the RCRA regulatory system, and the vagueness of the court’s
interpretation complicates enforcement and compliance. The
Fourth Circuit’s new test for “discard” is based on:
° Among the universe of materials which are hazardous
waste under RCRA § 1004(5), 42 U.S.C. § 6903(5), EPA has
discretion to choose particular waste to be governed by the
stringent regulatory program under subchapter III of RCRA.
RCRA § 3001, 42 U.S.C. § 6921.
Riga hie eaten i Abe Gi Cat do SO ae
13
the intent of the parties to the contract as to whether
the materials were to be reused entirely or reclaimed
and then reused, the value of the materials sold, the
usefulness of the materials in the condition in which
they were sold, and the state of the product at the time
of transferral (was the hazardous material contained or
leaking/loose).
App. 14. The Fourth Circuit interpreted “discarded” without
reference to or consideration of the EPA Administrator’s views
and without consideration for the effect a vague or narrow
definition would have on the RCRA regulatory and criminal
enforcement programs. As a result, in deciding a CERCLA
case, the court adopted a definition of “discarded” that entirely
disrupts years of agency enforcement and judicial action under
CERCLA and RCRA.
B. The Fourth Circuit’s Interpretation of “Discarded
Material” Willi Damage RCRA Enforcement and
Administration.
The term “discarded” goes to the heart of EPA’s authority
under multiple aspects of RCRA, and thus the Fourth Circuit’s
opinion will have broad negative impacts on (/) the RCRA
regulatory program, (2) criminal enforcement under RCRA, (3)
EPA’s response to “imminent and substantial endangerments”
under RCRA section 7003, 42 U.S.C. § 6973, and (4) state
administration of hazardous waste programs that EPA has
authorized to operate in lieu of the federal program under
RCRA section 3006, 42 U.S.C. § 6926.
EPA has consistently and repeatedly exercised its authority
to regulate recyclables under RCRA. See, e.g., 61 Fed. Reg.
62005, 62151 (1996) (discussing need to improve regulation of
hazardous waste recycling); 40 C.F.R. §§ 260.30 (admin-
istrative variances from Subtitle C regulations for certain
i4
recyclables); 260.40 (regulating hazardous waste recycling);
261.1-261.4 (exceptions to Subtitle C regulations for certain
recyclables); 261.6 (requirements for recyclable materials);
266.70 (regulating recyclable materials that are reclaimed to
recover precious metals); and dozens of other regulations that
utilize these by reference. Indeed, when exempting particular
scrap metals from the RCRA subchapter III regulatory program,
EPA specifically declined to extend the exemption to “obsolete
scrap metal (scrap which is composed of worn cut metal or a
metal product that has outlived its original use, such as... .
railroad cars ...)...” 62 Fed. Reg. 25998, 26011 (1997).’
Under the Fourth Circuit’s decision, EPA would not have
had the authority to promulgate these and many other
regulations.* With its multi-factored interpretation of
“discarded,” the Fourth Circuit upsets RCRA’s regulatory
scheme by appropriating to the judiciary on a case-by-case basis
a determination which Congress intended to be an
administrative, science-based function.
Because the definition of “discarded materi!” governs
criminal liability under RCRA as well as the regulatory
program, the court of appeals’ reinterpretation of RCRA’s key
jurisdictional phrase will have wide ramifications, as criminal
defendants assert new defenses based, for example, on their
” See note 3, supra (EPA may exercise its discretion not to
regulate under subchapter III materials which are wastes within the
statutory definition of solid waste).
* For example, the court’s consideration of whether
hazardous substances are “delivered in a contained form” to
determine whether they are “discarded” is clearly contrary to EPA
regulations, which apply to discarded material regardless of how it
is contained. See, e.g., 40 C.F.R. pt. 265, subpt. I (regulating and
conditioning the use of containers).
15
intent that dangerous waste be entirely used up in a reclamation
process. Likewise, the Fourth Circuit’s interpretation of
“discard” undercuts EPA’s ability to require persons to respond
to imminent hazards because its authority is limited to hazards
resulting from solid waste (that is, discarded material). RCRA
§ 7003, 42 U.S.C. § 6973.
Further, the court of appeals’ reinterpretation of
“discarded” will complicate EPA’s oversight of state-
implemented hazardous waste programs under RCRA section
3006, 42 U.S.C. § 6926. States that enact laws and regulations
that are consistent with the federal program may, upon EPA
authorization, implement their programs “in lieu of” the federal
program. /d. The Fourth Circuit’s opinion could prompt state
legislatures to insulate recyclable waste from state regulation.
Under RCRA section 3006(e), however, EPA must withdraw
authorization from state programs that are not “consistent with”
and “equivalent to” the federal RCRA program, which does
regulate recyclables. 42 U.S.C. § 6926(e).
The factors relied upon by the Fourth Circuit in construing
“discarded” are utterly inconsistent with EPA’s construction of
the term over years of enforcing and administering RCRA.
EPA has repeatedly explained that, under its interpretation of
“discarded”:
the only absolute bar on the Agency’s authority to
define recycled secondary materials as solid wastes is
to “materials that are destined for immediate reuse in
another phase of the industry’s ongoing production
process” and that have not yet “become part of the
waste disposal problem.”
61 Fed. Reg. 2338, 2341 (1996) (quoting AMC JJ) (emphasis
16
added).’ As the U.S. Department of Justice wrote in its letter to
the Fourth Circuit concerning rehearing in this case:
Many spent, used, or worn products that contain
hazardous substances are discarded when they have
become unusable for the purpose for which they were
manufactured and sent to sites for reclamation or
other recycling.
App. 198.
The Fourth Circuit’s opinion is a radical reinterpretation of
a basic, jurisdictional concept that is inconsistent with EPA’s
interpretation and that will disrupt compliance with and
enforcenient of RCRA.
C. The Fourth Circuit’s Opinion Is Contrary to the
Fundamental Principles of CERCLA Liability.
The Fourth Circuit’s use of subjective “factors” to evaluate
“arranger” liability under CERCLA is contrary to the plain
meaning and intent of CERCLA. It is also contrary to the very
authorities upon which the court of appeals purportedly relies.
CERCLA provides liability for those who arrange for the
treatment or disposal of hazardous substances in order to ensure
that “everyone who is potentially responsible for hazardous-
waste contamination may be forced to contribute to the cost of
cleanup.” United States v. Bestfoods, 118 S. Ct. 1876, 1881 n.1
(quoting Pennsylvania v. Union Gas Co., 491 U.S. 1, 21 (1989)
(plurality opinion of Brennan, J.)).
” See also 63 Fed. Reg. 42110, 42113 (1998), 63 Fed. Reg.
28556, 28580 (1998); 62 Fed. Reg. 26041, 26051 (1997); 60 Fed.
Reg. 57747, 57752 (1995).
asa ee a ee ais cena
17
CERCLA’s language and purpose establish the
fundamental principle that the sale of material unfit for its
original purpose is an arrangement for disposal. See A & W
Smelter and Refiners v. Clinton, 146 F.3d 1107 (9th Cir. 1998)
(holding that the sale of material no longer usable for a person’s
principal business triggers “arranger” liability under CERCLA);
cf. AM International v. International Forging Equipment C. orp.,
982 F.2d 989, 999 (6th Cir. 1993) (holding that there is no
arrangement for disposal where material remains useful for its
original intended purpose).
Where, as in this case, such material is subject to a
“process. . . designed to change [its] physical . . . character . . .
So as to render such waste . . . amenable for recovery,” the sale
is also an arrangement for treatment. CERCLA § 101(29), 42
U.S.C. § 9601 (29), RCRA § 1004(34), 42 U.S.C. § 6903 (34).
In this case, it is undisputed that the scrap was unfit for its
original purpose. App. 33, 36. At the foundry, the scrap was
melted down in order to change its “physical character” and to
render it “amenable for recovery.” App. 35-36. Non-
recoverable materials, including some of the lead, entered the
environment. App. 23.
Contrary to the Fourth Circuit’s opinion, none of the
judicial decisions cited by that court supports a recycling
exemption from CERCLA arranger liability. Moreover, the
very decisions cited by the Fourth Circuit in this case
consistently imposed liability on recyclers such as the
respondents and exempted from liability only those who, unlike
respondents, sold products useful for their original intended
purposes without prior processing.
In Cadillac Fairview, cited by the Fourth Circuit,'° the
'° See App. 14.
18
Ninth Circuit held rubber companies liable under CERCLA for
sending unusable, contaminated styrene for processing and
recycling, even though the contaminated styrene had “value on
the market.” Cadillac Fairview v. United States, 41 F.3d 562,
566 (9th Cir. 1994). The Ninth Circuit explained that the
defendants were not manufacturers of contaminated styrene,
which was merely a by-product of their rubber manufacturing
business. Jd. Likewise, in Catellus, also cited by the court of
appeals,'' the Ninth Circuit determined that sellers of scrap
batteries for processing and recycling were potentially liable
under CERCLA, notwithstanding the batteries’ residual market
value. Catellus v. United States, 34 F.3d 748 (9th Cir. 1994).
Nor does the Fourth Circuit’s ruling find any support in
Florida Power & Light Co. v. Allis Chalmers Corp., 893 F.2d
1313 (11th Cir. 1990) (sale of newly manufactured transformers
does not constitute disposal), AM International v. International
Forging Equipment Corp., 982 F.2d 989, 999 (6th Cir. 1993)
(no arranger liability for the sale of a production facility where
chemicals remaining therein were still useful for their original
purpose), or in 3550 Stevens Creek Assoc. v. Barclays Bank,
915 F.2d 1355, 1358 (9th Cir. 1990) (placement of asbestos as
part of building structure does not constitute disposal). In each
of those cases, unlike here, the exempted defendants were
simply conveying materials that remained useful for their
original purpose without any further processing."
'! See App. 15.
'2 The Fourth Circuit misinterprets the rulings in these
cases in other respects as well. The Catellus court neither
discussed the parties’ “intent” nor otherwise focused on “the intent
of parties to sale” (App. 14-15), except to note that the waste at
issue, which the court held would trigger CERCLA liability, was
“intended for recycling.” Catellus, 34 F.3d at 753. The Stevens
Creek court did not even purport to consider arranger liability
19
D. The Fourth Circuit’s Decision Impairs EPA’s
Ability to Clean Up Existing Superfund Sites and
Will Lead to More Superfund Sites in the Future.
The Fourth Circuit’s narrow view of CERCLA arranger
liability is likely to cause severe damage to this important
federal program. The court’s recycling loophole to CERCLA
liability will frustrate the law’s overriding objectives of
achieving expeditious cleanup and of assigning liability to all
parties, like respondents, who shared the benefits of economic
activity associated with the environmental contar:\ination now
requiring cleanup. Even worse, the court of appeals’ ruling
threatens to promote the development of more Superfund sites
by allowing recycling, resource recovery, and reclamation
activities to escape RCRA regulation in the first instance.
The Fourth Circuit’s decision constrains EPA’s ability to
require generators to clean up the numerous other Superfund
sites across the nation that are extensively contaminated by
recycling processes. Indeed, the Fourth Circuit’s decision has
caused EPA to suspend its order requiring the respondent
railroads to contribute to the cleanup in this very case. App.
200-201. Given the possibility of escaping liability altogether
under the Fourth Circuit’s subjective factors, fewer generator
defendants will be willing to agree with EPA to undertake
cleanups. Moreover, owner/operator parties will be more
reluctant to agree to perform cleanups because it will be more
difficult for them to spread cleanup costs among other parties
under CERCLA section 107(a)(3) at all, but instead addressed only
prior owner and operator liability under CERCLA section
107(a)(2). App. 14; Stevens Creek, 915 F.2d at 1358. Moreover,
in AM International, the Sixth Circuit did not consider whether the
chemicals at issue were “contained when sold.” App. 16; AM
International v. International Forging Equipment Corp., 982 F.2d
989, 999 (6th Cir. 1993).
20
who profited from the economic activity that caused the
contamination.
This stifling of CERCLA enforcement is no small matter.
As the Department of Justice emphasized in its letter to the
Fourth Circuit on petition for rehearing, “[n]umerous Superfund
sites on the National Priorities List in need of clean up (40
C.F.R. Part 300, Appendix B) are sites of former reclamation
and other recycling activities.” App. 198. Indeed, thirteen of
the fifty worst sites on CERCLA’s National Priority List are the
result of recycling-related activities.'’ Among the 1,211
Superfund sites, 239, or twenty percent, were created by
activities related to recycling, including unregulated recycling
and unregulated disposal of recycling residues.'* Moreover,
forty-four states have at least one Superfund site caused by
activities related to recycling.'’ EPA has concluded that
“recycling operations account for some of the most notorious
hazardous damage incidents.” 48 Fed. Reg. 14472, 14474,
14505 (1983) (summarizing, in Appendix B, damage incidents
involving the recycling of hazardous wastes).
With its newly created notion of the meaning of “discard,”
the Fourth Circuit has caused the very problem that EPA has
sought to avoid during the past two decades. Because those
who arrange for their materials to be recycled will, under the
Fourth Circuit’s reading, often not be subject to arranger
liability under CERCLA section 107(a)(3), they will have no
'? Hearing of the Transp. and Hazardous Materials Sub-
comm. of the House Energy and Commerce Comm., FED. NEWS
SERVICE, March 16, 1992 (102d Cong., 2d Sess., Testimony of
Richard Fortuna, Exec. Dir. of the Haz. Waste Treatment Council).
eM.
ele
21
economic incentive to ensure that those wastes are responsibly
managed. The upshot will be more sites contaminated with
hazardous substances requiring cleanup. Both RCRA and
CERCLA will fail in their shared missions to safeguard health
and the environment.
Il. The Court Should Review the Fourth Circuit’s Decision
in Order to Resolve Conflict Between the Circuits.
A. The Fourth Circuit’s Holding That Scrap
Materials Destined for Recycling Are Not
“Discarded” Under RCRA Contradicts Decisions
of the D.C. and Eleventh Circuits.
The Fourth Circuit’s subjective and aberrant multi-factor
analysis for determination of whether material is “discarded”
directly conflicts with the holdings of the D.C. and Eleventh
Circuit Courts of Appeal.
The D.C. Circuit has long deferred to EPA in holding that
materials destined for recycling are “discarded” unless they are
“destined for beneficial reuse or recycling in a continuous
process by the generating industry itself.” See American Mining
Congress v. United States EPA, 907 F.2d 1179, 1186 (D.C. Cir.
1990) (AMC ID); see also American Petroleum Inst. v. United
States EPA, 906 F.2d 729, 741 n.16 (D.C. Cir. 1990) (whether
a “method of waste treatment . . . results in the production of
something of value, namely, reclaimed metals” is “immaterial”
to whether the substance being treated is waste under RCRA);
Shell Oil v. United States EPA, 950 F.2d 741, 756 (D.C. Cir.
1991) (“EPA acted reasonably in incorporating resource
recovery within [RCRA’s] regulatory definition of treatment”).
In AMC II, the D.C. Circuit deferred to EPA’s listing of various
materials generated from a metal smelting operation as
hazardous waste because materials are “discarded” unless they
are “immediately reused in another phase of the industry’s
22
ongoing production process.” AMC II, 907 F.2d at 1186.
The Eleventh Circuit also has deferred to EPA in holding
that materials destined for recycling are “discarded” even if they
have value for recycling. See United States v. ILCO, 996 F.2d
1126, 1131 (11th Cir. 1993). In JLCO, lead parts destined for
recycling were “discarded” although the lead parts were
“valuable feedstock.” Jd. In deferring to EPA’s interpretation
of “discarded,” the Eleventh Circuit held that the lead parts’
“secondary character as recyclable material is irrelevant” to
whether they are “discarded.” Jd. at 1132.
In addition, the Eleventh and Second Circuits have
recognized that Congress intended for “discarded material” to
include “not only the waste by-products of the nation’s
manufacturing processes . . . but also the products themselves
once they have served their intended purposes and are no longer
wanted by the consumer.” /JLCO, 996 F.2d at 1132 (quoting
H.R. Rep. No. 1491, 94th Cong., 2d Sess. 2 (1976), reprinted in
1976 U.S.C.C.A.N. 6238, 6240); Connecticut Coastal
Fishermen's Assoc. v. Remington Arms Co., Inc., 989 F.2d 1305
(2d Cir. 1993) (same). In Connecticut Coastal, the Second
Circuit reviewed EPA’s determination that the materials at
issue, lead shot, were “discarded” and therefore solid waste
under RCRA. The Second Circuit deferred to EPA’s reasonable
interpretation that the materials were discarded because they
had been left to accumulate and no longer served their original
intended purpose. Connecticut Coastal, 989 F.2d at 1316.
Here, the railroads’ scrap was not immediately recycled by
the railroads themselves. Instead, when the scrap metal parts
could no longer serve their original purpose, they were
accumulated by the railroads and then transported miles away
to the foundry, which processed the scrap. App. 22. Both the
Fourth Circuit’s decision that the respondents’ scrap was not
“discarded” based on subjective “factors” and the court’s failure
Si a ai on
23
to defer to EPA thus conflict with the decisions of other circuit
courts of appeal and warrant certiorari review.
B. The Fourth Circuit’s Opinion Contradicts the
Fundamental Principle That the Sale of Material
Unfit for Its Original Purpose Is an Arrangement
for Treatment or Disposal Under CERCLA.
Whether a material is useful for its original purpose
distinguishes “waste” from a “useful product” in determining
arranger liability under CERCLA. This principle pervades the
case law on this issue at both the appellate and district court
levels.
The Ninth Circuit has held that material no longer usable
for a person’s principal business is a waste and that the sale of
such material subjects that person to “arranger” liability under
CERCLA. See A & W Smelter and Refiners v. Clinton, 146
F.3d 1107, 1998 U.S. App. LEXIS 13462 at *18 (9th Cir.
1998). In A & W Smelter, the substance at issue was ore that the
smelter had stored in piles and had mixed with slag. /d. at *17.
The Ninth Circuit held that “[i]f the ore was mixed with enough
slag so that it was no longer usable for A&W’s principal
business, then it was waste” and the smelter would be liable
under CERCLA. /d. at *18; see also Louisiana-Pacific Corp.
v. ASARCO, Inc., 24 F.3d 1565, 1575 n.6 (9th Cir. 1994)
(distinguishing a person’s “principal business products” from
hazardous substances that trigger CERCLA liability).
All appellate decisions to reach this issue, including the
decisions cited by the Fourth Circuit, have consistently imposed
arranger liability on recyclers such as the respondents and
protected from liability only those who sold products useful for
their original intended purposes. See, e.g., Cadillac Fairview v.
United States, 41 F.3d 562, 566 (9th Cir. 1994) (holding the
defendant liable under CERCLA for sending unusable,
~~
24
contaminated styrene for processing, even though the
contaminated styrene had “value on the market”); Catellus vy.
United States, 34 F.3d 748, 752 (9th Cir. 1994) (holding sellers
of scrap batteries for processing liable under CERCLA, despite
the scrap batteries’ value); Florida Power & Light Co. v. Allis
Chalmers Corp., 893 F.2d 1313, 1319 (11th Cir. 1990) (holding
that manufacturer of new products was not liable); AM
International Inc. v. International Forging Equipment Corp.,
982 F.2d 989, 999 (6th Cir. 1993) (finding no arranger liability
for the sale of a production facility where the chemicals
remaining therein were still useful for their original purpose). '®
The Fourth Circuit’s decision is thus contrary to those of
other courts finding persons liable under CERCLA for
transactions in which the material at issue was no longer useful
for its original purpose. It is not disputed that the respondent
railroads’ scrap journal bearings were no longer useful for their
Original purpose. That is, of course, the very reason those
bearings were sent to the foundry for recycling. The Fourth
Circuit stands starkly alone in ruling that arranging for recycling
of scrap metal does not constitute an arrangement for “disposal
or treatment” of a hazardous substance under CERCLA section
'° The district courts also follow this principle. “Every
court that has ruled on the issue has held that if a product has no
value for the purpose for which it was manufactured and it
contains a hazardous substance, then the sale is an arrangement to
dispose of the hazardous substance.” Gould v. A & M Battery &
Tire Serv., No. 3 CV-91-1714, 1996 U.S. Dist. LEXIS 11352
(M.D. Pa. July 15, 1996); see also Ekotek Site PRP Comm. y. Self,
881 F. Supp. 1516 (D. Utah 1995); Chatham Steel Corp. v. Brown,
858 F. Supp. 1130 (N.D. Fla. 1994); California v. Summer del
Caribe, 821 F. Supp. 574 (N.D. Cal. 1993); United States v.
Summit Equip. & Supplies, 805 F. Supp. 1422 (N.D. Ohio 1992);
Chesapeake & Potomac Tel. Co. v. Peck Iron & Metal C. 0., 814 F.
Supp. 1269 (E.D. Va. 1992).
BS a aaa ca are ra cen ance
25
107(a)(3), 42 U.S.C. § 9607(a)(3).
In sum, plenary review by this Court is warranted because
of the profound importance of the legal issues presented, the
circuit conflict created by the Fourth Circuit’s decision, and the
Fourth Circuit’s failure to defer to EPA’s authoritative
interpretation of the relevant statutory provisions. Because of
the broad implications of the court of appeals’ ruling for EPA’s
implementation of both CERCLA and RCRA and the
government’s stated interest in this case, the Court may wish to
invite the views of the United States prior to acting on the
petition.
CONCLUSION
For the foregoing reasons, the petition for a writ of
certiorari should be granted.
Respectfully submitted,
Joseph G. Homsy*
ZEVNIK HORTON GUIBORD
MCGOVERN PALMER &
FOGNANI
77 West Wacker Drive
Thirty-Third Floor
Chicago, Illinois 60601
(312) 977-2500
*Counsel of Record for
Petitioners
Susan Taylor Hansen
COOPER SPONG & DAvis
Central Fidelity Bank
Building
High and Crawford Streets
Portsmouth, Virginia 23705
(757) 397-3481
Counsel for Portsmouth
Redevelopment and Housing
Authority
Nancy Bennett Cherry
CITY ATTORNEY’S OFFICE
City of Portsmouth, Virginia
P.O. Box 820
Portsmouth, Virginia 23705
(757) 393-8731
Counsel for City of
Portsmouth, Virginia
Richard J. Lazarus
600 New Jersey Avenue, N.W.
Washington, D.C. 20001
(202) 662-9129
Of Counsel
26
John W. Roberts
Adam Babich
Lea D. Leadbeater
Mary Beth S. Pauka
ZEVNIK HORTON GUIBORD
MCGOVERN PALMER &
FOGNANI
77 West Wacker Drive
Thirty-Third Floor
Chicago, Illinois 60601
(312) 977-2500
Counsel for Pneumo Abex
Corporation and Whitman
Corporation
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App. 1
PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
PNEUMO ABEXx CORPORATION;
WHITMAN CORPORATION; CITY OF
PORTSMOUTH, VIRGINIA, a municipal
corporation; PoRTSMOUTH
REDEVELOPMENT AND HousiING
AUTHORITY,
Plaintiffs-Appellees,
v.
HicH Point, THOMASVILLE AND
DENTON RAILROAD COMPANY,
Defendant-Appellant,
NorFOLK SOUTHERN RarLway
Company; Norroitk & WESTERN
Rartway COMPANY,
Defendants & Third Party
Plaintiffs-Appellants,
and
CSX CorporaTION; Erte LACKAWANNA,
INCORPORATED; CONSOLIDATED Ral.
CORPORATION; GREENLEASE HOLDING
CompPANy; LAKE TERMINAL Rar.
Company; New York, SUSQUEHANNA
& WesTERN RamLROAD Company; USX
CorPORATION; JOHN C. HOLLAND, Jr.;
CamsriA & INDIANA RAILROAD
ComPANY; FLoripa East Coast
Rartway CompPaANy,
Defendants,
lett tt i i eee eee ee eee
No. 97-1593
App. 2
CSX TRANSPORTATION, INCORPORATED;
FLtoripA East Coast INDUSTRIES,
INCORPORATED; Fruit GROWERS Express
Company, INCORPORATED; PITTSBURGH
& Lake Erie Rattroap COMPANY,
INCORPORATED; RICHMOND,
FREDERICKSBURG & POTOMAC RAILROAD
Company, INCORPORATED; UNION
RaiLROAD COMPANY, INCORPORATED;
BrsSEMER AND LAKE Erte RAILROAD
Company, INCORPORATED,
Defendants &
Third Party Plaintiffs,
KAUFMAN & Cano es, P.C.,
Party in Interest,
v.
Tre RUNNYMEDE CORPORATION;
Ho.tLAND INVESTMENT AND
MANUFACTURING COMPANY,
INCORPORATED; AMERICAN PREMIER
UNDERWRITERS, INCORPORATED; WIMcO;
Wiwco MeTtALs, INCORPORATED;
Witmat Ho wpincs, INCORPORATED;
TRIANGLE INDUSTRIES, INCORPORATED;
InLiInois CENTRAL RarLRoAD COMPANY,
Third Party Defendants.
VIRGINIA MANUFACTURERS ASSOCIATION;
AMERICAN AUTOMOBILE
MANUFACTURERS ASSOCIATION;
INSTITUTE OF SCRAP RECYCLING
INDUSTRIES, INCORPORATED,
Amici Curiae.
App. 3
PNEUMO ABEX CORPORATION;
WHITMAN CorPORATION; CITY OF
PORTSMOUTH, VIRGINIA, A MUNICIPAL
CORPORATION; PORTSMOUTH
REDEVELOPMENT AND HousiING
AUTHORITY,
Plaintiffs-Appellees,
v.
CSX TRANSPORTATION, INCORPORATED;
Fruit Growers Express COMPANY,
INCORPORATED,
Defendants & Third Party
Plaintiffs-Appellants,
and
CSX CorporaTION; Erte LACKAWANNA,
INCORPORATED; CONSOLIDATED RaIL
CORPORATION; GREENLEASE HOLDING
Company; HicH Point, THOMASVILLE
AND DENTON RAILROAD COMPANY;
LAKE TERMINAL Rar_ Company; New
YorkK, SUSQUEHANNA & WESTERN
RarLROAD Company; USX
CorRPORATION; JOHN C. HOLLAND, JR.;
CampriA & INDIANA RAILROAD
Company; FLoripa East Coast
Rattway ComPANy,
Defendants,
a
No. 97-1594
App. 4
Fioripa East Coast INbusTRIEs,
INCORPORATED; NORFOLK SOUTHERN
Rartway Company, Norroik &
WESTERN Rartway COMPANY;
PirtspuRGH & Lake Erte Rai_roap
COMPANY INCORPORATED; RICHMOND,
FREDERICKSBURG & Potomac RAILROAD
CompPaANy, INCORPORATED; UNION
RAILROAD COMPANY, INCORPORATED;
BrSSEMER AND LAKE Erie RAILROAD
CompPaANy, INCORPORATED,
Defendants &
Third Party Plaintiffs,
KAUFMAN & Cano es, P.C.,
Party in Interest,
V.
THE RUNNYMEDE CORPORATION;
HOLLAND INVESTMENT AND
MANUFACTURING COMPANY,
INCORPORATED; AMERICAN PREMIER
UNDERWRITERS, INCORPORATED; WIMCO;
Wimwco MertTALs, INCORPORATED;
Witmat Ho.pincs, INCORPORATED;
TRIANGLE INDustTrRIES, INCORPORATED;
ILuinois CENTRAL RAILROAD COMPANY, )
Third Party Defendants. )
VIRGINIA MANUFACTURERS ASSOCIATION; )
AMERICAN AUTOMOBILE
MANUFACTURERS ASSOCIATION;
INSTITUTE OF SCRAP RECYCLING
INDUSTRIES, INCORPORATED,
Ml i i i i ee ee ee ee ee ee ee ee ee ee ee Le Le Le Le Le Le ee a ee oe
Amici Curiae.
i
App. 5
PNEUMO ABEX CORPORATION;
WHITMAN CorporatTION; City oF
PORTSMOUTH, VIRGINIA, A MUNICIPAL
CORPORATION; PORTSMOUTH
REDEVELOPMENT AND HousiING
AUTHORITY,
Plaintiffs-Appellants,
v.
HicH Point, THOMASVILLE AND
DENTON RarLRoAD CompPaNy,
Defendant-Appellant,
CSX TRANSPORTATION, INCORPORATED;
Fruir Growers Express Company,
INCORPORATED; NorFOLK SOUTHERN
Rartway Company; Norroik &
WeEsTERN Raitway Company,
Defendants & Third Party
Plaintiffs-Appellees,
and
CSX Corporation; Erte LACKAWANNA
INCORPORATED; CONSOLIDATED Ral.
CORPORATION; GREENLEASE HOLDING
Company; Lake TERMINAL Ran.
Company; New York, SUSQUEHANNA
& Western Rarcroap Company; USX
CORPORATION; JOHN C. HoLianp, Jr.;
Campria & INDIANA RAILROAD
Company; FLoripa East Coast
Rartway Company,
Defendants,
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
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)
)
)
)
)
)
)
)
)
)
)
)
)
)
No. 97-1599
App. 6
Froripa East Coast INDUSTRIES, )
INCORPORATED; PittsBuRGH & LAKE _)
Erte RatLRoAD COMPANY, )
INCORPORATED; RICHMOND, )
FREDERICKSBURG & Potomac RAILROAD )
Company, INCORPORATED; UNION )
RAILROAD COMPANY, INCORPORATED; )
BrESSEMER AND Lake Erte RAILROAD +)
CompPpaANyY, INCORPORATED, )
Defendants & )
Third Party Plaintiffs,
KAUFMAN & Cano es, P.C., )
Party in Interest, )
)
v. )
)
“4
)
)
THe RUNNYMEDE CORPORATION;
Ho.LLAND INVESTMENT AND
MANUFACTURING COMPANY,
INCORPORATED; AMERICAN PREMIER
UNDERWRITERS, INCORPORATED; Wimco; )
Wimco METALs, INCORPORATED; )
Wiumat Ho pincs, INCORPORATED; )
TRIANGLE INDUSTRIES, INCORPORATED; )
ILurnors CENTRAL RAILROAD COMPANY, )
Third Party Defendants.
VIRGINIA MANUFACTURERS ASSOCIATION; )
AMERICAN AUTOMOBILE
MANUFACTURERS ASSOCIATION;
INSTITUTE OF SCRAP RECYCLING
INpusTRIES, INCORPORATED,
Ne eee ee”
Amici Curiae.
Ce ee ee
App. 7
Appeals from the United States District Court for the
Eastern District of Virginia, at Norfolk. Raymond A.
Jackson, District Judge. (CA-94-716-2)
Argued: Jan. 27, 1998.
Decided: April 29, 1998.
Before LUTTIG, Circuit Judge, GOODWIN, United
States District Judge for the Southern District of West
Virginia, sitting by designation, and MICHAEL, Senior
United States District Judge for the Western District of
Virginia, sitting by designation.
Reversed and remanded by published opinion, Senior
Judge Michael wrote the opinion, in which Judge Luttig
and Judge Goodwin joined.
COUNSEL
ARGUED: Kevin Allan Gaynor, VINSON & ELKINS,
L.L.P., Washington, D.C., for Appellants. Joseph Gerard
Homsy, ZEVNIK, HJORTON, GUIBORD & MCGOVERN,
Chicago. Illinois, for Appellees. ON BRIEF: George C.
Hopkins, S. Scott Gaille, VINSON & ELKINS, L.L.P.,
Washington, D.C.; Joseph M. Spivey, Ill, HUNTON &
WILLIAMS, Richmond, Virginia, for Appellants. John W.
Roberts, Sr., Lea D. Leadbeater, ZEVNIK, HORTON,
GUIBORD & MCGOVERN, Chicago, Illinois; James A.
Gorry, Ill, TAYLOR & WALKER, P.C., Norfolk, Virginia,
for Appellees. Channing J. Martin, Christopher D.
Pomeroy, WILLIAMS, MULLEN, CHRISTIAN & DOB-
BINS, Richmond, Virginia; Carol C.\Wampler, VIRGINIA
MANUFACTURERS ASSOCIATION, Richmond, Virginia;
App. 8
Julie C. Becker, AMERICAN AUTOMOBILE MANUFAC-
TURERS ASSOCIATION, Washington, D.C., for Amici
Curiae Associations. J. Thomas Wolfe, R. Michael
Sweeney, INSTITUTE OF SCRAP RECYCLING INDUS-
TRIES, INC., Washington, D.C., for Amicus Curiae Insti-
tute.
OPINION
MICHAEL, District Judge:
Since the enactment in 1980 of the Comprehensive
Environmental Response, Compensation, and Liability
Act (CERCLA), litigation over the cost of clean up of
polluted sites has grown steadily. The courts have strug-
gled to interpret and refine the enforcement and liability
scheme laid out by the Act. This case joins the growing
number of suits raising questions about the limits of
liability for environmental pollution.
Between 1927 and 1978, Pneumo Abex Corporation’s
predecessor, Abex Corporation, operated a railroad parts
foundry in Portsmouth, Virginia (“the Foundry”). Pur-
suant to contracts for sale (“conversion agreements”),
railroads shipped used journal bearings to the Foundry
for processing into new journal bearings. Journal or
wheel bearings are used on railroad cars to hold lubricat-
ing oil against the axle to reduce friction. They are com-
prised of a lead lining (“babbitt”) and a bronze or brass!
! Both bronze and brass are copper alloys, usually made
with tin or zinc. Bronze is a somewhat stronger alloy.
ofa
App. 9
“back.” Pursuant to the conversion agreements, the rail-
roads shipped the wheel bearings to the Foundry and
received credit for the weight of wheel bearings against a
purchase of new wheel bearings (after a deduction for
weight attributed to dirt and grease). Among the sellers
of journal bearings to the Foundry were the defendant-
appellants: Norfolk Southern Railway Company, Norfolk
& Western Railway Company, CSX Corporation, CSX
Transportation, Incorporated, and Fruit Growers Express
Company, Incorporated. These sellers were responsible
for approximately 80.1% of journal bearings sold to the
Foundry for reuse. Other sellers of wheel bearings settled
with the defendants prior to trial.
Upon receipt, the Foundry heated the dirty wheel
bearings in a low-temperature furnace to “sweat off” the
dirt, grease, and any impurities and to separate the back
from the lining. As the metal melted, impurities floated to
the top and could be skimmed off. This slag was collected
from the furnaces and placed on the back lot of the
Foundry’s property. The three furnaces used to heat
metal at the Foundry also produced smoke and fumes.
Employees were, at one point, required to wear air filters.
A dust collector drew in the dust from the melting pro-
cess and deposited it in large steel drums. These drums
were also emptied of the dust onto the back lot.
After the Foundry closed in 1978, the EPA sampled
the soil in the Foundry lot and, over the course of several
years, found elevated levels of lead, zinc, copper, tin, and
antimony in the soil (all metals that were used to create
the wheel bearings). The EPA designated the site as a
Superfund Site. Beginning in 1986, Abex began response
activities at the site pursuant to state and federal EPA
App. 10
orders. EPA estimates that the permanent remedy will
cost at least $21 million. The current defendants and
several other parties were contacted by the EPA as
“potentially responsible parties” under the CERCLA.?
While other potentially responsible parties cooperated
with the EPA in clean up efforts, the defendants in the
instant case refused to contribute to the response costs,
asserting that they are not liable for the response costs
under CERCLA. The plaintiffs sued for contribution
under Sections 107 and 113 of CERCLA. The district court
dismissed the 113 action as redundant. It then allocated
responsibility and costs under Section 107. The defen-
dants challenge the district court’s finding that they are
liable for the contamination of the site under CERCLA,
that Pneumo Abex has standing to proceed under section
107, that section 107 is the proper vehicle for a suit for
contribution by Pneumo Abex, and that the allocation of
response costs is equitable.
STANDARD OF REVIEW
We review de novo the grant of summary judgment by
the district court and the dismissal of the section 113
claim. Shaw v. Stroud, 13 F.3d 791, 798 (4th Cir. 1994); West
v. Clarke Murphy, Jr. Self-Employed Pension Plan, 99 F.3d
2 While CERCLA does not define “potentially responsible
party,” the courts have understood it to refer to a party who may
be covered by the statute at the time that said party is sued
under the statute. See, e.g., OHM Remediation Servs. v. Evans
Cooperage Co., Inc., 116 F.3d 1574, 1582 (5th Cir. 1997); Redwing
Carriers, Inc. v. Saraland Apartments, 94 F.3d 1489, 1496 (11th Cir.
1996).
OO
App. 11
166, 167 (4th Cir. 1996). We review for abuse of discretion
the grant of standing to sue under Section 107 of
CERCLA and the equity of the award. United States v.
R.W. Meyer, Inc., 932 F.2d 568, 571 (6th Cir. 1991); Cox v.
Shalala, 112 F.3d 151 (4th Cir. 1997).
DISCUSSION
Covered Persons under CERCLA
In 1980, Congress enacted the Comprehensive Envi-
ronmental Response, Compensation, and Liability Act to
provide for the clean up of hazardous waste from pol-
luted sites throughout the United States. Pub. L. No.
96-510, 94 Stat. 2767 (codified at 42 U.S.C. §§ 9601-9675
(1995)); United Technological Corp. v. United States E.P.A.,
821 F.2d 714, 717 (D.C.Cir. 1987). Congress amended
CERCLA with the Superfund Amendments and Reau-
thorization Act of 1986 (SARA), Pub. L. No. 99-499, 100
Stat. 1613, 1615 (codified as amended in scattered sections
of 42 U.S.C.). The legislation, as amended, provides, first,
a mechanism for clean up of sites polluted with hazard-
ous waste and, second, a mechanism by which a govern-
mental entity or private party may recover the cost of
clean up from all parties responsible for the pollution of
the site. 42 U.S.C. § 9607; 42 U.S.C. § 9613(f); Walls v.
Waste Resource Corp., 823 F.2d 977, 980-81 (6th Cir. 1987).
The cost of cleaning a site permanently is called the
“response cost.” Under CERCLA four classes of “covered
persons” may be liable for response costs:
(1) the owner and operator of a vessel or a
facility,
App. 12
(2) any person who at the time of disposal of
any hazardous substance owned or oper-
ated any facility at which such hazardous
substances were disposed of,
(3) any person who by contract, agreement, or
otherwise arranged for transport for dis-
posal 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 dis- |
posal or treatment facilities, incineration !
vessels or sites selected by such person, ,
from which there is a release, or a threat-
ened release which causes the incurrence of
response costs, of a hazardous substance.
42 U.S.C. § 9607(a). The four categories of covered per-
sons delineated by the statute reach back through the
causal chain from those who ultimately dispose of a
hazardous substance to those who transport and generate
it. OHM Remediation Servs., Inc. v. Evans Cooperage, Inc.,
116 F.3d 1574, 1578 (5th Cir. 1997), citing, B.F. Goodrich Co.
v. Murtha, 958 F.2d 1192, 1198 (2d Cir. 1992). Moreover, as
OHM Remediation Services explains, “Because the Act
imposes strict liability, Bel! Petroleum, 3 F.3d [889,] . . . 897
[(5th Cir. 1993)], plaintiffs generally need not prove cau-
sation, only that the defendant is a ‘covered person.’ ”
116 F.3d at 1578, quoting, United States v. Alcan Aluminum
Corp., 990 F.2d 711, 721 (2d Cir. 1993).
;
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App. 13
The appellees in the case before the court contend
that parties who arrange for the treatment of hazardous
substances, whether or not such substances are waste, are
covered persons who are liable under the statute. Appel-
lants argue, on the other hand, that the statute encom-
passes only those parties who arrange for the treatment
or disposal of hazardous substances which are also waste.
The court finds that the appellees read the statute too
broadly. Section 9601 of CERCLA states, “The term ]
‘treatment’ shall have the meaning provided in section
1004 of the Solid Waste Disposal Act [42 U.S.C.A.
§ 6903].”5 42 U.S.C. § 9601(29). The Solid Waste Disposal
Act (SWDA) definition of “treatment” presupposes dis-
card. SWDA states, “The term ‘treatment,’ when used in
connection with hazardous waste, means any method,
technique or process, including neutralization, designed
to change the physical, chemical, or biological character
or composition of any hazardous waste so as to neutralize
such waste or so as to render such waste nonhazardous,
safer for transport, amenable for recovery, amenable for
storage, or reduced in volume.” Had the authors of
CERCLA intended not to adopt the presupposition of
SWDA, they were certainly capable of defining “treat-
ment” otherwise. However, as the legislature chose to use
the SWDA definition of treatment, and the presupposi-
tion inherent in the definition, it is not the role of this
court to substitute another definition. Therefore, “treat-
ment . . . of hazardous substances” as used in CERCLA
* This section also provides that the definitions of
“disposal” and “hazardous waste” may be found in SWDA.
However, as such definitions are not at issue in the instant case,
the court restricts its analysis to the term “treatment.”
App. 14
refers to a party arranging for the processing of discarded
hazardous substance or processing resulting in the dis-
card of hazardous substances.
In determining whether a transaction was for the
discard of hazardous substances or for the sale of valu-
able materials, courts focus on several factors: the intent
of the parties to the contract as to whether the materials
were to be reused entirely or reclaimed and then reused,
the value of the materials sold, the usefulness of the
materials in the condition in which they were sold, and
the state of the product at the time of transferral (was the
hazardous material contained or leaking /loose). See, Flor-
ida Power & Light Co. v. Allis Chalmers Corp., 893 F.2d 1313,
1317 (11th Cir. 1990) (finding no liability based on the
intent of the parties and the fact that transformers were a
valuable commodity, despite the fact that transformers
contained hazardous substances); AM International Inc. v.
International Forging Equipment Corp., 982 F.2d 989, 999
(6th Cir. 1993) (focusing on the value and usefulness of
the materials sold and the intended purpose to find no
liability for sellers of chemicals); United States v. Petersen
Sand & Gravel, 806 F.Supp. 1346, 1354 (N.D.Ill. 1992)
(focusing on the usefulness of the product, the valuable
consideration, and the intent that the product would be
entirely used up for the purpose for which it was sold to
find no liability); Stevens Creek v. Barclays Bank of Califor-
nia, 915 F.2d 1355 (9th Cir. 1990) (focusing on constructive
use of asbestos in construction of building to find no
liability); Cadillac Fairview v. United States, 41 F.3d 562 (9th
Cir. 1994) (holding seller of styrene liable because party’s
intent in transaction was for buyer to process styrene and
remove hazardous materials from it so that styrene could
App. 15
be reused); Catellus v. United States, 34 F.3d 748 (9th Cir.
1994) (focusing on intent of parties to sale of batteries to
determine that seller might be liable). However, “there is
no bright line between a sale and a disposal under
CERCLA. A party’s responsibility . . . must by necessity
turn on a fact-specific inquiry into the nature of the
transaction.” Petersen, supra, 806 F.Supp. at 1354.
Careful consideration of the factors delineated by the
case law and of the process of creating new wheel bear-
ings from the used wheel bearings sent to the Foundry
indicates that the conversion agreements between the
Foundry and the appeliants were not transactions for
disposal. The used wheel bearings transported to the
Foundry were dirty and broken when they arrived. More-
over, the bearings were melted down in a process which
produced both dust and slag (both of which were
dumped in the back lot with the sand at the location later
found to be contaminated). However, slag and dust
would be produced even if virgin materials were used to
make the new bearings. Unlike the processing of styrene
in Cadillac Fairview v. United States, 41 F.3d 562 (9th Cir.
1994), the removal of contaminants was not the purpose
of the transaction in the instant case. The bearings were
processed because they were worn out or broken. The
removal of the dirt and grease was incidental to rermold-
ing new bearings, just as it would have been incidentai to
the molding of new bearings from virgin materials.
Moreover, the dirt and grease were not the hazardous
materials, the metals themselves were. In this way, the
case before the court more closely resembles cases in
which a party sells to another a material which becomes
App. 16
hazardous in its use, but is contained when sold. For
example, in AM International Inc. v. International Forging
Equipment Corporation, the Sixth Circuit held that the
owner of chemicals did not “dispose” of the chemicals
when they were sold in drums to the buyer who then
allowed the building in which the drums were stored to
deteriorate. 982 F.2d 989, 999 (6th Cir. 1993). Similarly,
here, the hazardous substance - the metals — were in a
contained form when delivered for sale.
The intent of both parties to the transaction was that
the wheel bearings would be reused in their entirety in
the creation of new wheel bearings. The Foundry paid the
appellants for the bearings; the appellants did not pay the
Foundry to dispose of unwanted metal. While there was a
grease and dirt deduction taken from the price the Foun-
dry paid for the used wheel bearings, that deduction was
to account for weight, not reclamation costs. The Foundry
refused to pay for any weight not attributable to the
bearings themselves. The parties contemplated that the
bearings were a valuable product for which the Foundry
paid a competitive price. For these reasons, we hold that
appellants are not “covered persons” under CERCLA.
Contribution Action Properly under Section 9613 or 9607
On remand, the district court, although it will dis-
miss the appellants from the suit, must apportion liability
among the remaining parties to the suit. That apportion-
ment process should be guided by section 9613 rather
than section 9607. Section 9607 allows “any person” to
recover all response costs from any responsible parties,
whose liability is then generally joint and several. OHM
App. 17
Remediation Servs., Inc. v. Evans Cooperage, Inc., 116 F.3d
1574, 1578 (5th Cir. 1997); United States v. Alcan Aluminum
Corp., 964 F.2d 252, 268 (3d Cir. 1992); Rumpke of Indiana,
Inc. v. Cummins Engine Co., Inc., 107 F.3d 1235, 1240 (7th
Cir. 1997); United States v. Colorado & Eastern RR Co., 50
F.3d 1530, 1535 (10th Cir. 1995); United Technologies v.
Browning-Ferris Indus., Inc., 33 F.3d 96, 100 (1st Cir. 1994);
United States v. Rohm & Haas Co., 2 F.3d 1265, 1280 (3d Cir.
1993). Section 9613, added by SARA in 1986, creates a
cause of action for contribution from “any other person
who is liable or potentially liable.” 42 U.S.C. § 9613(f)(1)
(emphasis added). The courts have held consistently that
section 9613 must be used by parties who are themselves
potentially responsible parties. See, New Castle County v.
Halliburton, 111 F.3d 1116, 1120 (3d Cir. 1997); Redwing
Carriers, Inc. v. Saraland Apartments, 94 F.3d 1489, 1496
(11th Cir. 1996); United States v. Colorado & Eastern R.R.
Co., 50 F.3d 1530, 1536 (10th Cir. 1995); United Technologies
Corp. v. Browning-Ferris Indus., Inc., 33 F.3d 96, 99 (1st Cir.
1994); Akzo Coatings, Inc. v. Aigner Corp., 30 F.3d 761, 764
(7th Cir. 1994); Amoco Oil Co. v. Borden, Inc., 889 F.2d 664,
672 (Sth Cir. 1989).4 As the case before the court involves
* Under section 9613, liability is allocated among other
potentially responsible parties and the potentially responsible
plaintiff “using such equitable factors as the court determines
are appropriate.” 42 U.S.C. § 9613(f)(1). See also Rumpke of
Indiana, [supra,] 107 F.3d at 1240 (section 9613 allocates fault
among potentially responsible persons); Colorado & Eastern,
[supra,] 50 F.3d at 1536 & n. 5 (discussing equitable factors to be
considered when resolving section 9613 claims).” New Castle
County, supra, 111 F.3d at 1121-22. Unlike a section 9607
defendant, a section 9613 party need not demonstrate that the
harm at the polluted site is divisible, he need only present
App. 18
entirely potentially responsible parties, such parties must
seek contribution under section 9613.
The opinion below is reversed and the case is
remanded.
REVERSED AND REMANDF2)
equitable considerations to guide the allocation of liability. New
Castle County, supra, 111 F.3d at 1121 n. 6, citing, Redwing
Carriers, supra, 94 F.3d at 1513.
App. 19
IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF VIRGINIA
Norfolk Division
PNEUMO ABEX CORPORATION, et al.,
Plaintiffs,
v. CIVIL ACTION NO. 2:94cv716
BESSEMER AND LAKE ERIE
RAILROAD COMPANY, INC., et al.,
Defendants.
MEMORANDUM OPINION AND ORDER
(Filed Mar. 25, 1996)
INTRODUCTION
Plaintiffs initiated this action pursuant to sections 107
and 113 of the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, 42 U.S.C.
§§ 9607, 9613 (1988 & Supp. 1993), as amended by the
Superfund Amendments and Reauthorization Act of 1986
(“CERCLA” or “the Act”), and the Declaratory Judgment
Act, 28 U.S.C. § 2201(a) (1994). Plaintiffs seek recovery of
costs allegedly incurred in responding to releases or
threatened releases of allegedly hazardous substances at
or from the Pneumo Abex Superfund Site (“Site”).
In Conference Order No. 2, filed October 23, 1995, the
Court recognized voluntary party organizations. These
groups were the Railroad Defendants, the Landowner
Defendants, the Miscellaneous Defendants, and the
Remaining Defendants (those Defendants not in a group).
Since the filing of the order, some of the parties have
changed groups. The Court will recognize Defendant
App. 20
Cambria and Indiana Railroad Company as a member of
the Railroad Defendants,! and the Court now will recog-
nize Defendant Trian Group, Limited Partnership as a
member of the Miscellaneous Defendants. Therefore,
there are no more Remaining Defendants. Also, on
November 21, 1995, the Court dismissed, without preju-
dice, Railroad Defendant Florida East Coast Industries.
The Court ordered that the parties file all motions to
dismiss and for summary judgment by January 8, 1996.2
The Railroad Defendants filed a motion for summary
judgment on January 9, 1996 on the issue of their liability
under § 107(a)(3) of CERCLA.? On January 9, 1996,
Defendant Richmond, Fredericksburg & Potomac Rail-
road Company (“RF&P”) filed a motion for partial sum-
mary judgment on the issue of whether Plaintiffs may
recover under § 107(a) or are limited to an action for
contribution under § 113(f).4 On January 30, 1996, Defen-
dant RF&P supplemented its brief in support of the
* Montour Railroad Company and Norfolk and Portsmouth
Belt Line Railroad are no longer a part of the Railroad
Defendants.
? The Court briefly extended this deadline because of
inclement weather at the beginning of the year along the East
Coast of the United States.
3 The Miscellaneous Defendants joined this motion.
* Bessemer and Lake Erie Railroad Company, The Lake
Terminal Railroad Company, Norfolk Southern Railway
Company, Norfolk and Western Railway Company, Union
Railroad Company, Inc., and the Miscellaneous Defendants
joined this motion. Florida East Coast Railway Company and
Highpoint, Thomasville & Denton Railroad Company filed
similar motions and adopted RF&P’s brief.
App. 21
motion. The Court also considered the facts and argu-
ments in this supplemental correspondence. On January
9, 1996, Defendants Bessemer and Lake Erie Railroad
Company, The Lake Terminal Railroad Company, and
Union Railroad Company, Inc. filed a motion for partial
summary judgment regarding the liability of Plaintiffs
Pneumo Abex Corporation, the City of Portsmouth, and
the Portsmouth, Redevelopment and Housing Authority
pursuant to § 107(a). Pneumo Abex Corporation and
Whitman Corporation filed a motion for summary judg-
ment on January 11, 1996 on the liability of the Railroad
Defendants,* Consolidated Rail Company, Greenlease
Holding Company, and Trian Group, Limited Partner-
ship” under § 107(a). The Court has received responses
from all parties. The matters are now ripe for judicial
determination.
° In this opinion, the term “Plaintiffs” refers only to
Pneumo Abex Corporation and Whitman Corporation unless
otherwise indicated.
® Plaintiffs do not seek summary judgment against USX
Corporation, Montour Railroad Company, and Norfolk and
Portsmouth Belt Line Railroad. On March 5, 1996, Plaintiffs and
USX Corporation filed a joint motion for the Court to accept a
settlement between these parties. Montour Railroad Company
and Norfolk and Portsmouth Belt Line Railroad are not
Defendants in the Second Amended Complaint, but the Court
listed them as Railroad Defendants.
7 In Plaintiffs’ motion for summary judgment regarding
liability under § 107 of CERCLA, Plaintiffs refer to all these
defendants collectively as the Railroad Defendants, although
the appellation is inaccurate for the Court's purposes.
: App. 22
For the reasons that follow, the Court GRANTS
Plaintiffs’ motion for summary judgment against the Rail-
road Defendants remaining in this litigation and Consoli-
dated Rail Corporation. Furthermore, the Court DENIES
the Railroad Defendants’ motion for summary judgment
and Richmond, Fredericksburg & Potomac Railroad Com-
pany’s motion for partial summary judgment.
I. FACTUAL BACKGROUND
From 1927 to 1978, the predecessors of Plaintiff
Pneumo Abex Corporation (“Abex”) operated a railroad
parts foundry in Portsmouth, Virginia. Railroad com-
panies sold used scrap journal bearings® and other scrap
metal railcar and engine parts to the foundry. Abex
alleges that Defendants or their corporate predecessors
are all former customers of the foundry. Railroad com-
panies accumulate the journal bearings which they have
taken out of service and then sell them to foundries such
as Abex. The foundry processed the parts and produced
new parts for the railroads. The Association of American
Railroads (“AAR”) established specifications for journal
bearings. Railroad inspectors determine when railroad
companies need to replace journal bearings because they
are broken or worn.
8 A journal bearing is a metal part designed to hold oil
against railroad car axles for lubrication and consists of two
parts, a back and a babbitt. The back contains tin, lead, zinc,
copper, nickel and antimony. The babbitt is the soft metal lining,
composed of mostly lead, that makes direct contact with the
axle. The babbitt wears down over time as a result of friction.
App. 23
To produce new parts for its customers, Abex placed
the broken or worn journal! bearings into a pot or furnace
and heated them to remove any remaining portions of the
lead linings, dirt, and grease. Abex next placed the bear-
ings in a furnace to melt them down for re-casting. Abex
added tin, lead, zinc, and copper to the molten scrap to
comply with the AAR’s specifications. Both of these fur-
naces were vented to the outside. (Pls.’ Mem. at 6-7.) This
process produced emissions of fine particulate material.
(Record of Decision Amendment, prepared by the United
States Environmental Protection Agency (“EPA”), August
1994 [hereinafter “ROD Amend.”] at 12.) Abex poured the
molten material into sand molds to form the backs of
journal bearings. After the backs hardened and Abex
machined them, Abex lined the backs with the scrap
lining metal (babbits) that it had separated from the scrap
journal bearings initially. (Pls.’ Mem. at 7.) Abex reused
the sand until the sand lost its capacity to form molds.
After washing the sand to reclaim bits of brass, Abex
placed the sand on the back lot of its property. (Id.)
According to the “Memorandum in Support of the
Motion of Plaintiffs Pneumo Abex Corporation and
Whitman Corporation for Summary Judgment” (“Plain-
tiffs’ Memorandum”), the EPA began testing the soil at
the Site in the mid-1980s and found that it contained
elevated levels of the metals contained in journal bear-
ings. More specifically, the EPA found lead, copper, zinc,
nickel, tin and antimony. (Pls.’ Mem. at 11.) In 1986 and
1992, the EPA ordered removal of soil from the Site
pursuant to § 106 of CERCLA; Plaintiffs Pneumo Abex
and Whitman incurred the removal costs. The EPA noti-
fied several of the Railroad Defendants and Plaintiffs that
App. 24
they were potentially responsible parties under § 107(a)
and invited them to negotiate a consent degree. (Pls.’
Mem. at 12, Ex. 18.) Only Plaintiffs negotiated a decree,
and the United States and Plaintiffs lodged the Consent
Decree with this Court on January 4, 1996.
The Consent Decree provides that Abex will finance
and perform all of the work at the Site with the exception
of a few tasks to be performed by Plaintiffs, the City of
Portsmouth (the “City”) and the Portsmouth Redevelop-
ment and Housing Authority (the “PRHA”). (Consent
Decree at 13, 18.) The work that Abex will perform/
supervise and finance is essentially all the remedial work
at the Site. In their respective areas of competency, the
City and the PRHA, inter alia, will assist Abex adminis-
tratively in the remediation, rezone the area surrounding
the Site from residential to commercial or light industrial,
purchase or acquire through condemnation some resi-
dences, and build a permanent City facility in the area.
(Id. at 18-20.) Within thirty (30) days of lodging the Con-
sent Decree, Abex agrees to “establish and maintain
financial security in the amount of $20,000,000 (the
approximate current estimated cost of the remedy) in the
form of a Letter of Credit.” (Id. at 48.) Within thirty (30)
days of the effective date of the decree, Pneumo Abex
agrees to reimburse the United States for past response
costs in the amount of $1,170,131.37. (Id. at 55.) Abex also
agrees to reimburse the United States for all future
response costs not inconsistent with the National Contin-
gency Plan. (Id.)
App. 25
Il. LEGAL STANDARD
Suminary judgment is appropriate when the court
determines that no genuine issue of material fact exists
and that the moving party is entitled to judgment as a
matter of law. Fep. R. Civ. P. 56(c). Once a party has
properly filed evidence supporting the motion for sum-
mary judgment pursuant to Federal Rule of Civil Pro-
cedure 56(c), the burden shifts to the nonmoving party to
set forth specific facts showing genuine issues for trial.
See Celotex Corp. v. Catrett, 477 U.S. 317, 322-24 (1986);
accord Sylvia Dev. Corp. v. Calvert County, Md., 48 F.3d 810,
817 (4th Cir. 1995). “[T]he plain language of Rule 56(c)
mandates the entry of summary judgment . . . against a
party who fails to make a showing sufficient to establish
the existence of an element essential to that party’s case,
and on which that party will bear the burden of proof at
trial.” Celotex Corp., 477 U.S. at 322. The court must view
the record as a whole and in the light most favorable to
the nonmoving party. Terry's Floor Fashions, Inc. v. Bur-
lington Industries, Inc., 763 F.2d 604, 610 (4th Cir. 1985). It
must draw any permissible inference from the underlying
facts. Tuck v. Henkel Corp., 973 F.2d 371, 374 (4th Cir. 1992),
cert. denied, 113 S. Ct. 1276 (1993). However, it need
consider only reasonable inferences from the evidence.
Thompson Everett, Inc. v. Nat'l Cable Advertising, L.P., 57
F.3d 1317, (4th Cir. 1995) (citing Ford Motor Co. v.
McDavid, 259 F.2d 261, 266 (4th Cir.), cert. denied, 358 U.S.
908 (1958)).
App. 26
Ill. DISCUSSION
The motions for summary judgment essentially raise
two issues. First, Plaintiffs and Defendants move for sum-
mary judgment on the issue of whether Defendants are
liable as arrangers, often also known as generators, of the
disposal or treatment of hazardous substances under
§ 107(a)(3). The second issue, which Defendants raise, is
whether Plaintiffs, as potentially responsible parties
(“PRPs”), may maintain an action for recovery under
§ 107(a) or whether they are limited to an action for
contribution under § 113(f).
To establish a prima facie case for cost recovery
under CERCLA, Plaintiffs must prove the following four
elements:
(1) that the site in question is a “facility” as
defined in 42 U.S.C. § 9601(9); (2) that the defen-
dant is a responsible person under § 9607(a); (3)
that the release or threatened release of a haz-
ardous substance has occurred; and (4) that the
release or threatened release has caused the
plaintiff to incur response costs.
Chesapeake & Potomac Tele. Co. v. Peck Iron & Metal Co., 814
F. Supp. 1269, 1274 (E.D. Va. 1992) (citing Ascon Properties,
inc. v. Mobil Oil Co., 866 F.2d 1149, 1152-53 (9th Cir.
1989)). Defendants have not challenged the existence of
three of the essential elements for recovery of costs under
CERCLA. All parties agree that the Site is a “facility” as
defined in § 101(9) of CERCLA, that the release or threat-
ened release of hazardous substances has occurred, and
that Plaintiffs have incurred response costs. However,
most of the motions for summary judgment debate the
second element, which requires Plaintiffs to prove that
Te a
App. 27
Defendants are responsible persons under § 107(a) of
CERCLA. Plaintiffs allege that the Railroad Defendants
and others are liable as arrangers of the disposal or
treatment of hazardous substances, namely, worn journal
bearings and castings.
A. Defendants’ Liability as Arrangers/Generators
Section 107 of CERCLA establishes strict liability for
arrangers of the disposal or treatment of hazardous sub-
stances. United States v. Monsanto Co., 858 F.2d 160, 166-67
(4th Cir. 1988), cert. denied, 490 U.S. 1106 (1989). Subsec-
tions 107(a)(3) and (4) of CERCLA provide in relevant
part as follows:
any person who by contract, agreement, or oth-
erwise arranged for the 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 incinera-
tion vessel owned or operated by another party
or entity and containing such hazardous sub-
stances, ...
. shall be liable 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; [and]
—
any other necessary costs of response
incurred by any other person consistent
with the national contingency plan. .
CERCLA §§ 107(a)(3), (4)(A), (4)(B), 42 U.S.C.
§§ 9607(a)(3), (4)(A), (4)(B) (1988 & Supp. 1993). The
App. 28
Railroad Defendants contend they are not liable under
§ 107 for three reasons. First, they argue that did not
arrange for “disposal or treatment” of worn journal bear-
ings and castings. Second, they argue that the worn bear-
ings and castings were “useful products” and thus could
not serve as the basis of liability under CERCLA. Lastly,
they argue that the worn bearings and castings were not
“hazardous substances.” The Court views these three rea-
sons, however, as one basic argument about the natuze of
the transactions between the Railroad Defendants and
Abex. Essentially the Railroad Defendants are arguing
that they sold useful products to Abex and thus the
bearings and castings should not be deemed “hazardous
substances.” The Railroad Defendants similarly argue
that the sale properly may not be characterized as “dis-
posal or treatment” because they sold useful, raw mate-
rials to Abex for use in its manufacturing process. The
Court addresses these arguments in the reverse order
from the order presented by the Railroad Defendants,
and, as the Court explains below, it finds this reasoning
unpersuasive.
1. Hazardous Substances
The Court first determines whether the worn journal
bearings and castings were hazardous substances.
CERCLA defines “hazardous substance” to include, iter
[sic] alia, “any element, compound, mixture, solution, or
substance designated pursuant to section 9602 [CERCLA
§ 102] of this title.” CERCLA § 101(14)(B). Section 102 of
CERCLA provides that the Administrator of the EPA
App. 29
shall promulgate regulations designating hazardous sub-
stances, and these designations are listed in a table in
Title 40, Section 302.4 of the Code of Federal Regulations.
The journal bearings that the Railroad Defendants
allegedly sold? to Abex contained the following sub-
stances: tin, lead, zinc, copper, nickel and antimony. (RR
Defs.’ Br. at 6-7.) Lead, copper, zinc, and antimony are
listed as hazardous substances in 40 C.F.R. § 302.4 (1995).
Thus Plaintiffs argue that because the journa: bearings
contained these hazardous substances, the journal bear-
ings themselves were hazardous substances within the
meaning of sections 102 and 107 of CERCLA. The Rail-
road Defendants urge the Court to reject Plaintiffs’ theory
that a substance is hazardous because it contains hazard-
ous substances. Plaintiffs and the Railroad Defendants
cite several cases in support of their respective positions;
however, none of them are directly on point. The United
States Court of Appeals for the Fourth Circuit has not
addressed this issue.
The Railroad Defendants cite B.F. Goodrich Co. v. Mur-
tha, 840 F. Supp. 180 (D. Conn. 1993), in support of their
position that the journal bearings were not hazardous
substances. In that case, the court found that the defen-
dant who disposed of scrap tires was not liable under
CERCLA because “[nJothing offered shows that HS [haz-
ardous substances] in tires contributes to the conditions
° As the Court discusses below, only Miscellaneous
Defendants Greenlease Holding Company and Trian Group,
Limited Partnership resisted Plaintiffs’ motion for summary
judgment by asserting the existence of a genuine issue of
material fact concerning whether they sold scrap materials to
the Site.
App. 30
at either site which give rise to CERCLA liability.” Id. at
186. The Fourth Circuit has addressed this prong of the
Railroad Defendants’ argument, which is one essentially
of causation. The language of the §107(a)(3) “does not
mean that the plaintiff must trace ownership of each
generic chemical compound found at a site. Absent proof
that a generator defendant's specific waste remained at a
facility at the time of release, a showing of a chemical
similarity between hazardous substances is sufficient.”
Monsanto Co., 858 F.2d at 169. Although the court in B.F.
Goodrich Co. granted another defendant's motion for sum-
mary judgment, this case does not directly advance the
Railroad Defendants’ position. In granting that motion
for summary judgment, the court did not address
whether the substance in question was a hazardous sub-
stance, because there was a lack of proof that the sub-
stance even contained any hazardous substances. See B.F.
Goodrich Co., 840 F. Supp. at 187-89. Thus the court did
not have before it a case such as the instant one, in which
substances, namely, journal bearings, that contain hazard-
ous substances, contributed to the contamination at the
Site.
The Railroad Defendants also cite United States v.
New Castle County, 769 F. Supp. 591 (D. Del. 1991), in
support of their position. In that case the court held the
following:
[I]f a defendant’s waste is a non-hazardous sub-
stance, a plaintiff must show that the defen-
dant’s waste is capable of generating or
releasing a hazardous substance at the site in
App. 31
order to show that the defendant’s waste “con-
tains” a hazardous substance within the mean-
ing of CERCLA.
Id. at 597. The court further explained that in order for
the plaintiffs to prevail, they must show that it was more
probable than not that the hazardous substance migrated
from the “non-hazardous substance”!° under the conditions
existing at the site. Id. For the court, the question was not
whether a substance was hazardous by virtue of contain-
ing hazardous substances. Instead the court employed the
“likelihood of release” test, by determining whether a
party could be held liable without proof that those con-
stituent parts could have contributed to the contamina-
tion at the site under the known conditions. See id. at 598
(finding that even if the non-hazardous substance con-
tained a hazardous substance, plaintiffs did not prove
that under the conditions at the site, the hazardous sub-
stance would dissociate from the non-hazardous sub-
stance). By contrast, in the case sub justice, the Railroad
Defendants have not contested Plaintiffs’ allegations that
the constituent parts of the bearings contributed to the
contamination of the site in the instant case. The Railroad
10 The court in New Castle County used the term “non-
hazardous substance,” and this Court uses the term in its
discussion of the case for consistency. The term, however,
carries a perhaps inadvertent legal conclusion. The substance in
the case is non-hazardous in the sense that it is not designated
by name by any of the sources enumerated in CERCLA
§ 101(14). Yet the actual question before this Court is whether a
substance which contains a material that the statute designates
as hazardous converts that “non-hazardous substance” into a
hazardous one for the purpose of determining liability under
CERCLA.
App. 32
Defendants imply that Pneumo Abex has supplied incon-
sistent answers to questions concerning the processes
which led to the contamination of the site. (RR Defs.’ Br.
at 10-11). However, the Railroad Defendants do not chal-
lenge Plaintiffs’ allegations that the hazardous substances
contained in the journal bearings were part of these pro-
cesses, which lead to the contamination. ‘See id. at 11
(“[A]ny releases from the Foundry came from Abex’s
manufacturing processes and not from the worn bearing
or castings before their use in these processes.”).) Plain-
tiffs merely must show that “a generator defendant’s
waste was shipped to a site and that hazardous sub-
stances similar to those contained in defendant's waste
remained present at the time of the release.” Monsanto
Co., 858 F.2d at 179 n.15. With the aid of the Record of
Decision Amendment prepared by the EPA, Plaintiffs
have made this showing. Accordingly, the Court finds the
worn journal bearings and castings were hazardous sub-
stances for the purpose of determining liability under
CERCLA.
2. Userful Products
The Railroad Defendants further argue that the worn
journal bearings and castings were not hazardous sub-
stances because they were “useful products.” The Rail-
road Defendants cite Douglas County v. Gould, Inc., 871 F.
Supp. 1242 (D. Neb. 1994), in support of their position.
The defendant in that case operated a spent lead acid
battery reclamation facility. He removed lead plates from
spent batteries and sold the lead plates to one of the
former owners of the contaminated site which used the
App. 33
lead plates in its secondary smelting operation. The plain-
tiff, the current owner of the site, sued the defendant
because he allegedly arranged for the disposal of the lead
plates. The court in Douglas County framed the issue as
whether
the sale of lead plates by a party whose business it
is to reclaim them from batteries, constitutes an
“arrangement for disposal” under CERCLA... .
[A]n arrangement for disposal occurs when a
party merely wants to get rid of a substance as
opposed to convey a useful product.
Douglas County, 871 F. Supp. at 1246 (emphasis added).
The court distinguished between the potential liability of
a seller of whole spent batteries and a seller of reclaimed
lead from such batteries. Id. at 1247 (discussing Catellus
Dev. Corp. v. United States, 34 F.3d 748 (9th Cir. 1994)). The
court stated, in dicta, that “[h]ad . . . [the defendant's]
reclamation site been contaminated, no doubt the battery
suppliers would have been liable.” Id. at 1247.
In the instant case, the Railroad Defendants and
others were not sellers of reclaimed material; they were
not in the business of selling worn journal bearings and
castings, unlike the defendant in Gould who was in the
business of selling reclaimed lead plates. The Railroad
Defendants and other Defendants are more closely like-
ned to the battery suppliers in Douglas County. The Rail-
road Defendants and others perhaps were fortunate to
find a buyer for the bearings and castings after they no
longer could be used in the capacity for which they had
been manufactured. Yet the facts demonstrate the Rail-
road Defendants’ and others’ primary objective was “to
get rid of a substance[, namely, the worn parts] as
App. 34
opposed to convey a useful product.” Id. at 1246. The
Court recognizes that other district courts have addressed
this issue and come to slightly different conclusions. See,
e.g., United States v. Petersen Sand & Gravel, Inc., 806 F.
Supp. 1346, 1353-55 (N.D. Ill. 1992) (finding defendants
not liable who sold fly ash, a byproduct of coal combus-
tion, “for valuable consideration for the purpose of man-
ufacturing road base, and for manufacturing road base
alone”). This Court does not find that these decisions
effectuate CERCLA’s goals in aggressively addressing the
release or threatened release of hazardous substances.
In evaluating this argument, the Court finds instruc-
tive the case of Chesapeake & Potomac Tele. Co. v. Peck Iron
& Metal Co., 814 F. Supp. 1269, 1274 (E.D. Va. 1992), where
the court analyzed the argument regarding the sale of
spent lead acid batteries. The defendants in that case
contended that they sold raw materials for use in another
company’s manufacturing process and thus properly
could not be characterized as having arranged for dis-
posal of hazardous substances. In rejecting this argument
the court remarked,
If the defendants had sold unused, and still
usable, t «tteries to an entity which used them in
their bu. ness and then drained battery acid and
lead from them - causing damage to the envi-
ronment — their argument would be meritorious.
But the only remaining “use” of the batteries
sold by the generator/recycler defen-
dants . . . was that lead, a hazardous substance,
could be reclaimed from them. As batteries, per
se, they had no use.
App. 35
Id. at 1275. In the instant case, the Railroad Defendants
and others sold worn journal bearings and castings, not
new ones. Their only remaining use was to serve as a part
of a process which led to environmental damage. Thus,
the Court finds that the “useful product” argument in
this case lacks merit.
3. Disposal or Treatment
Finally, the Court determines whether the sale of the
worn journal bearings and castings was an arrangement
for disposal or treatment within the meaning of CERCLA.
Plaintiffs contend that the sale of the worn parts was an
arrangement for both disposal and treatment. Under
§ 101(29) of CERCLA, “disposal” and “treatment” have
the meanings provided for in § 1004 of the Solid Waste
Disposal Act (“SWDA”), 42 U.S.C. § 6903 (1988), as
amended by the Resource Conservation and Recovery
Act of 1976 (“RCRA”). The SWDA defines “treatment”
when used in connection with “hazardous waste” as the
following:
any method, technique, or process, including
neutralization, designed to change the physical,
chemical, or biological character or composition
of any hazardous waste so as to neutralize such
waste or so as to render such waste nonhazar-
dous, safer for transport, amendable [sic] for
recovery, amenable for storage, or reduced in
volume.
SWDA § 1004(34). In this instance, the Court finds that
the sale and subsequent processing of the worn bearings
fall within the definition of treatment “so as to render
App. 36
such waste . . . reduced in volume.” The Railroad Defen-
dants and others sold worn journal bearings and castings
to Abex after these Defendants could no longer use the
materials for the purposes for which they were intended.
Abex cleaned these materials, melted them down, added
various metals, and poured the molten material into sand
molds to create new journal bearings. The sand molds
eventually became laden with heavy metals such, as lead,
antimony, copper, tin, and zinc. (ROD Amend. at 12.)
After the sand molds lost their capacity to serve as molds,
Abex disposed of the sand on the back lot of the Site.
(Pls. Mem. at 7-8.) Thus, the processing at the Site
reduced the waste in volume from whole, worn bearings
and castings to residual amounts of the constituent ele-
ments. Cf. United States v. Pesses, 794 F. Supp. 151, 157
(W.D. Pa. 1992) (finding that processing of scrap mate-
rials to make alloys by melting, shearing, cleaning, crush-
ing, sawing, and other means constituted treatment
~ under CERCLA).
Alternatively, the Railroad Defendants and others
arranged for treatment that rendered the constituent ele-
ments of the worn journal bearings amenable for recov-
ery. Abex removed the lining from the backs, removed
dirt and grease, melted the backs, added tin, lead, copper,
and zinc to the molten material, and poured the molten
material into molds to make new bearings. This process
constituted treatment within the meaning of CERCLA.
See, e.g., Ekotek Site PRP Comm. v. Self, 881 F. Supp. 1516,
1528 (D. Utah 1995) (finding process where used oil was
heated, mixed with sulfuric acid, and blended with var-
ious additives as treatment which rendered waste amen-
able for recovery); Pesses, 794 F. Supp. at 157.
App. 37
The Railroad Defendants and others argue that the
importation of the term “treatment” from the Solid
Waster Disposal Act necessarily also imports the concept
of “hazardous waste.” They further argue that because
§ 1004(5) of the SWDA defines “hazardous waste” as “a
solid waste or combination of solid wastes,” the Court
must find that the hazardous substance was a solid waste
to hold them liable for the arrangement of treatment of a
hazardous substance. The Court, however, does not find
this argument compelling nor consistent with the lan-
guage of CERCLA. “The drafters of CERCLA appear to
have referred to sections 6903(3) and 6903(34) of the
SWDA only to define the actions of ‘disposal’ and ‘treat-
ment,’ not to define the objects of those actions, the
materials to be disposed of or treated.” California v. Sum-
mer Del Caribe, Inc., 821 F. Supp. 574, 579 (N.D. Cal. 1993)
(citation omitted). If the Court were to adopt the Railroad
Defendants’ statutory interpretation, there would exist no
plausible reason to use the term “hazardous substance”
in § 107 of CERCLA when Congress already had defined
the term “hazardous waste” in the SWDA and opted to
import several definitions from the SWDA into CERCLA.
If the court were to accept defendant’s defini-
tion of “disposal”, however, there could be no
“disposal of a hazardous substance” since the
definition of “disposal” would be at odds with
the definition of “hazardous substances”. Sec-
tions of the CERCLA statute regarding the dis-
posal of hazardous substances, therefore, would
have to be either ignored or read to mean only
disposal of hazardous wastes.
CP Holdings, Inc. v. Goldberg-Zoino & Assocs., 769 F. Supp.
432, 437 (D.N.H. 1991). Congress easily could have
App. 38
imported the definition of “hazardous waste” into
CERCLA. Congress did not, however, and the Court must
assume that Congress meant to describe two different
concepts or bases for liability by its use of two different
terms: hazardous wastes and hazardous substances. Com-
pare Summer Del Caribe, 821 F. Supp. at 579 (“Given the
distinct purposes of the acts [the SWDA, preventive and
CERCLA, curative], it follows that they cover different
materials.”) (citing B.F. Goodrich Co. v. Murtha, 958 F.2d
1192, 1202 (2d Cir. 1992) with Moore v. Harris, 623 F.2d 908,
914 (4th Cir. 1980) (“The rebuttal presumption of formal
consistency states that use of different language creates
the inference that Congress meant different things. . . .
However, where the statutory purpose and legislative
history establish that no difference was in fact intended,
the presumption is rebutted.”)
Alternatively, the Court also finds that the Railroad
Defendants and others arranged for the disposal of haz-
ardous substances. The SWDA defines “disposal,” in con-
nection with “hazardous waste,” as the following:
the discharge, deposit, injection, dumping, spill-
ing, leaking, or placing of any solid waste or
hazardous waste into or on any land or water so
that such solid waste or hazardous waste or any
constituent thereof may enter the environment
or be emitted into the air or discharged into any
waters, including ground waters.
SWDA § 1004(3). By selling the worn parts to Abex, the
Railroad Defendants and others arranged for their ulti-
mate disposal, either through the emission of particulate
matter from the furnaces at the foundry or by dumping,
on the back lot of the Site, the sand once used as molds.
App. 39
Cf. Chesapeake & Potomac Tel. Co., 814 F. Supp. at 1275
(“[T]he generator/recycler defendants made the decision
to sell spent lead acid batteries to . . . a facility that
contains lead. Thus, they arranged for the treatment and
disposal of the lead, and fall well within the ambit of
Section 107(a).”). Although the Railroad Defendants and
others may not have played a direct role in transporting
the worn parts-or in the process that lead to the ultimate
disposal, they made the “crucial decision” to sell the
worn parts to a facility that processed hazardous sub-
stances. See, e.g., Chatham Steel Corp. v. Brown, 858 F. Supp.
1130, 1142-43 (N.D. Fla. 1994) (citing United States v. A &
F Materials, 582 F. Supp. 842 (S.D. Ill. 1984)); Allied Towing
v. Great Eastern Petroleum Corp., 642 F. Supp. 1339, 1350
(E.D. Va. 1986) (same). Accordingly, the Court finds that
the Railroad Defendants remaining in the case and Con-
solidated Rail Corporation arranged for the disposal of
hazardous substances by selling worn journal bearings
and castings to Abex.
The Court has found that the worn journal bearings
and castings were hazardous substances and not useful
products. Furthermore, the Court has determined that the
Railroad Defendants and others arranged for the disposal
and treatment of these hazardous substances. With the
exception of Defendants Greenlease Holding Company
and Trian Group, Limited Partnership, whom the Court
discusses below, no Defendant against whom Plaintiffs
seek summary judgment has set forth “specific facts
showing genuine issues for trial” concerning whether
they are responsible persons under § 107(a). Thus, the
App. 40
Court finds as a matter of law that the Railroad Defen-
dants who remain party to this litigation and Consoli-
dated Rail Corporation are responsible persons under
§ 107(a) of CERCLA and thus are liable for costs of
response incurred by Plaintiffs. Accordingly, the Court
GRANTS Plaintiffs’ motion for summary judgment
against these Defendants.
B. PRP’s Recovery of Costs under § 107 versus
§ 113
The second major issue presented by the motions for
summary judgment is whether Plaintiffs as PRPs can
maintain a suit for cost recovery under § 107(a)(4)(B) of
CERCLA or whether their cost recovery action must be
brought under § 113(f)(l). Defendant Richmond, Fre-
dericksburg & Potomac Railroad Company (“RF&P”)
made a motion for partial summary judgment on this
issue.!! Defendant RF&P argues that determination of
this issue is important “because it affects the nature of
liability that may be imposed, the burden of proof, and
statute of limitations that apply.” (RF&P’s Br. at 1.) Fol-
lowing its examination of the Consent Decree in this case,
RF&P supplemented its brief with a letter to the Court to
argue that “[t]he ‘contribution protection’ provided by
‘| The Miscellaneous Defendants, Bessemer and Lake Erie
Railroad Company, Inc., Florida East Coast Railway Company,
High Point, Thomasville, and Denton Railroad Company,
Norfolk Southern Railway Company, Norfolk & Western
Railway Company, The Lake Terminal Rail Company, and
Union Railroad Company, Inc. joined RF&P’s motion for partial
summary judgment.
App. 41
the decree will work a grave injustice on the defendants
if you allow the plaintiffs to obtain a joint and several
judgment for all cost under CERCLA § 107.” (RF&P’s Let.
at 1-2.) Beyond these issues, the Court recognizes that
Defendants fear that Plaintiffs will experience a windfall
if allowed to recover all costs, including its proportional
share, under § 107.
The United States Court of Appeals for the Fourth
Circuit has not addressed whether a PRP can maintain an
action under § 107 and section 113 of CERCLA. RF&P
argues that prior to the enactment of § 113(f) courts
recognized an implied right of contribution under § 107,
but in enacting § 113(f), Congress demonstrated its intent
that the new section provide the only basis of cost recov-
ery for PRPs. In support of their interpretation of the
statute, RF&P argues that all six United States Courts of
Appeals that have considered the issue have determined
that PRPs are limited to actions for contribution under
§ 113.12 (RF&P’s Br. at 16-17.) RF&P also argues that the
majority of United States District courts have held the
same. (RF&P’s Br. at 19-20.) However, the Court does not
find that the weight of authority is as great as RF&P
concludes. For example, in Amoco Oil Co. v. Borden, Inc.,
the court proceeded under § 113 but did not expressly
12 Control Data Corp. v. $.C.S.C. Corp., 53 F.3d 930 (8th Cir.
1995); United States v. Colorado & E. R.R., 50 F.3d 1530 (10th Cir.
1995); United Technologies Corp. v. Browning-Ferris Indus, 33 F.3d
96 (Ist Cir. 1994), cert. denied, 115 S. Ct. 1176 (1995); Azko
Coatings, Inc. v. Aigner Corp., 30 F.3d 761 (7th Cir. 1994); Dant &
Russell, Inc. v. Burlington N. R.R. (In re Dant & Russell, Inc.), 951
F.2d 246 (9th Cir. 1991); Amoco Oil Co. v. Borden, Inc., 889 F.2d
(Sth Cir. 1989).
App. 42
rule out the possibility of a PRP proceeding under § 107.
889 F2nd 664 (5th Cir. 1989). Nothing in the decision
indicates that either party raised the issue. Cf. Dant &
Russell, Inc. v. Burlington N. R.R. (In re Dant & Russell,
Inc.), 951 F.2d 246 (9th Cir. 1991). Examining the other
four opinions which RF&P cites, the Court does not find
their reasoning persuasive.
Furthermore, the United States Supreme Court casts
doubt upon the conclusion that PRPs may not recover
under § 107. In Key Tronic Corp. v. United States, the
Supreme Court deciding the issue of whether attorney's
fees were recoverable costs, stated that “the statute
[CERCLA] now expressly authorizes a cause of action for
contribution in § 113 and impliedly authorizes a similar
and somewhat overlapping remedy in § 107.” 114 S. Ct.
1960, 1965-66 (1994).
Nothing on the face of the statute indicates that an
arranger/generator is liable under § 107 only to the
United States, a state, an Indian tribe, or any other “inno-
cent person.” The statute specifically provides that an
arranger/generator is liable to any other person who has
incurred any other necessary costs of response, consistent
with the national contingency plan. CERCLA
§ 107(a)(4)(B).
Again, the Court finds Chesapeake & Potomac Tele. Co.
v. Peck Iron & Metal Co., 814 F. Supp. 1269, 1277 (E.D. Va.
1992), instructive. In that case the district court found
that nothing in the statute precluded a PRP from initiat-
ing cleanup and suing to recover its costs under § 107. In
addressing the concerns of the defendants in that case
~ that the plaintiff would be able to benefit unjustly, the
App. 43
court reassured the defendants that because it would
retain jurisdiction over the case throughout the contribu-
tion phase, it would ensure equitable apportionment.
[T]he Court addresses this concern not by ignor-
ing the plain language of CERCLA and preclud-
ing C&P [the plaintiff, PRP] from maintaining
its cost recovery action, but by imposing joint
and several liability on the defendants only for
those response costs that are apportioned to the
defendants, as a group, in this case — exclusive
of the costs attributable to C&P. At the contribu-
tion phase of this proceeding, the Court will, as
a first cut at apportioning liability, determine a
“Plaintiff's share” and a “Defendants’ share.”
Id. at 1277-78. This Court agrees in large part with the
court’s interpretation of the statute in Chesapeake and Pot-
omac Tele. Co.
The Court concludes that it is appropriate to permit
Plaintiffs to seek recovery under § 107. However, the
Court likewise finds it appropriate to require Plaintiffs to
pay its equitable portion of the cleanup costs. In allowing
Plaintiffs to proceed under § 107 in this case, the Court is
able to accomplish several of the statute’s goals at once.
First, the Court preserves the statute’s incentives for
PRPs to settle and settle early. In settling with the United
States through the Consent Decree, Plaintiffs have
avoided the costs of litigation with the Government. Fur-
thermore, in allowing Plaintiffs to proceed under § 107,
Defendants are faced with joint and several liability if the
Court determines that the harm is indivisible. United
States v. Monsanto Co., 858 F.2d 160, 171 (4th Cir. 1988),
cert. denied, 490 U.S. 1106 (1989) (citing New York v. Shore
Realty, 759 F.2d 1032, 1042 n.13 (2d Cir. 1985); United
App. 44
States v. ChemDyne, 572 F. Supp. 802, 810-11 (S.D. Ohio
1983)). The burden rests with Defendants to prove that
the harm is divisible and to provide the Court with a
rationale for apportionment. Compare id. at 172 (citing
ChemDyne, 572 F. Supp. at 810) with CERCLA § 113(f)
(which the Railroad Defendants suggest should place the
burden of proof upon Plaintiffs as parties seeking contri-
bution) and United States v. Colorado & E. R.R., 50 F.2d
1530, 1526 (10th Cir. 1995) (citations omitted). The Court
in the instant case will apportion liability by first deter-
mining “Plaintiffs’ share.” Although the Court will net
allow Plaintiffs to recover the entire cost of cleanup,
Plaintiffs’ share will not include any “orphan shares.” For
the purposes of this opinion, an orphan share is defined
as any portion of liability that is not attributable to Plain-
tiffs or an available PRP. A PRP is unavailable if it is not
present in the litigation for whatever reason. The Court
also deems any PRP that is insolvent as being unavail-
able, despite being a party to this litigation. Conse-
quently, Defendants are liable for any orphan shares.
For the foregoing reasons, the Court DENIES Rich-
mond, Fredericksburg & Potomac Railroad company’s
motion for partial summary judgment, which seeks to
limit Plaintiffs to an action for contribution under
§ 113(f)(1) of CERCLA.
Having determined that Plaintiffs may proceed
under § 107(a), the Court finds that Plaintiffs’ claims
under § 113(f)(1) (Count II) are no longer necessary.
Accordingly, the Court DISMISSES Plaintiffs’ claims
pursuant to § 113(f)(1) of CERCLA.
App. 45
C. The Motion for Partial Summary Judgment by
Defendants Bessemer and Lake Erie Railroad
Company, The Lake Terminal Railroad Com-
pany, and Union Railroad Company, Inc. -
Plaintiffs’ Liability under § 107
Defendants Bessemer and Lake Erie Railroad Com-
pany, The Lake Terminal Railroad Company, and Union
Railroad Company, Inc. move this Court pursuant to Rule
56(c) of the Federal Rules of Civil Procedure to find
Plaintiffs Pneumo Abex Corporation, the City of Ports-
mouth, Virginia, and the Portsmouth Redevelopment and
Housing Authority liable under § 107(a) of CERCLA.?5 In
view of the Court's decision to require Plaintiffs to pay an
equitable portion of the cleanup costs it is not necessary
to address this motion for partial summary judgment.
D. Greenlease Holding Company’s Opposition to
Plaintiffs’ Motion for Summary Judgment
On January 22, 1996, Greenlease Holding Company
(“Greenlease”) submitted a memorandum in opposition
to Plaintiffs’ motion for summary judgment to find the
Railroad Defendants and the Miscellaneous Defendants
liable under § 107(a) of CERCLA. In addition to joining
the arguments set out in the Railroad Defendants’ motion
for summary judgment, Greenlease argues that “there is
no evidence in the record to support the plaintiff’s bold
assertion that Greenlease was a customer of the Foun-
dry. ...” (Greenlease Mem. at 4.) Greenlease cites the
deposition of Mr. Elmer Oakes, who was employed at the
13 The Miscellaneous Defendants joined this motion.
en
App. 46
foundry for approximately twenty-two (22) years. The
quoted passages indicate that Mr. Oakes knew that
Greenlease was a customer of one of the plants but not a
customer of the plant in Portsmouth. (Id. at 3-4 (citing Oakes
Dep. at 552).) In its memorandum, Greenlease states that
“Greenville Steel Car Company is the predecessor in
interest to Greenlease for purposes of this litigation.” (Id.
at 3 n.2). Greenlease also argues that it was “unable to
discern a single document referring to Greenville.” (Id. at
4 n.3.) The Court’s review of Exhibit 8 of Plaintiffs’ Mem-
orandum found a “Record of Metal Received” which
names Greenville Steel Car Company as the originator of
the metal. (Pls.’ Ex. 8.) Thus, Greenville appears to be a
customer who sold worn bearings to Abex. Greenlease
further argues, however, that at most, such documenta-
tion would “create a genuine issue of material fact when
contrasted with Mr. Oakes’ testimony.” (Greenlease Mem.
at 4 n.3.) Although Mr. Oakes testified at his deposition
that the records in Exhibit 8 were the records of the
Portsmouth facility, (Oakes Dep. at 589-90), his earlier
testimony contradicts the inference to be drawn that the
record concerning Greenlease means that Greenlease sent
scrap materials to the Site. Thus, there remains a genuine
issue of material fact concerning whether Greenlease is a
PRP. Accordingly, the Court DENIES Plaintiffs’ motion for
summary judgment against Greenlease Holding Company.
E. Trian Group, Limited Partnership’s Opposition
to Plaintiffs’ Motion for Summary Judgment
On January 22, 1996, Trian Group, Limited Partner-
ship (“Trian”) filed a memorandum in opposition to
App. 47
Plaintiffs’ motion for summary judgment. Trian is a suc-
cessor in interest to Central Railroad Company of New
Jersey (“Central Railroad”). Trian argues that the Court
should not grant summary judgment against it because of
the existence of “factual question as to whether Central
Railroad actually sent used journal bearings to the Ports-
mouth Foundry.” (Trian Mem. at 3.) In other words, Trian
disputes that it is a PRP.
Trian cites that testimony of Mr. Oa’ es at his deposi-
tion which may indicate that in 1961 Centrai Railroad
sent its scrap journal bearings to Abex’s Meadville Penn-
sylvania foundry and not the Portsmouth foundry. (Id. at
4-6 (citing Oakes Dep. at 105-106, 216-221, 563 and refer-
ring to Railroad Defendants’ Ex. 6).) Mr. Oakes testified
that Central Railroad was one of the Meadville foundry’s
customers at that time. (Oakes Dep. at 217.) Later in the
deposition, Mr. Oakes testified that he remembered that
the Portsmouth foundry received scrap journal bearings
form Central Railroad, probably during the 1960s or
1970s. (Oakes Dep. at 415-16). Exhibit 8 also includes
documents which indicate that in 1967 Abex received
scrap journal bearings from Central Railroad, but the
records do not indicate which facility received the scrap.
(Pls.’ Ex. 8.)
Just as with Greenlease Holding Company, the Court
is unable to conclude on the record before it that no
genuine of issue of material fact exists concerning
whether Trian is a PRP. Consequently, the Court DENIES
Plaintiffs’ motion for summary judgment against Trian
Group, Limited Partnership.
App. 48
CONCLUSION
The Court finds that the Railroad Defendants remain-
ing in the litigation and Consolidated Rail corporation are
arrangers of the disposal and treatment of hazardous
substances for which Plaintiffs have incurred response
costs at the Site. Thus, these defendants are liable to
Plaintiffs under § 107(a) of CERCLA. For the foregoing
reasons, the Court GRANTS Plaintiffs’ motion for sum-
mary judgment against the above-named Defendants but
DENIES Plaintiffs’ motion for summary judgment
against Greenlease Holding Company and Trian Group,
Limited Partnership. The Court DENIES the Railroad
Defendants’ motion for summary judgment. The Ccurt
also DENIES Richmond, Fredericksburg & Potor=: Kuac'-
road Company’s motion for partial summary judgment.
The Court DEFERS ruling upon the motion for partial
summary judgment of Bessemer and Lake Erie Railroad
Company, The Lake Terminal Railroad Company, and the
Union Railroad Company, Inc. The Court also DIS-
MISSES Count II of Plaintiffs’ complaint, which seeks
recovery under § 113(f)(1) of CERCLA.
The Clerk is DIRECTED to send a copy of this order
to counsel for the parties.
It is so ORDERED.
/s/ Raymond A. Jackson
UNITED STATES DISTRICT
JUDGE
Norfolk, Virginia
March 25, 1996
ink acini a egg tes spline eek ans Seat sinus head por Nene Oe eee ITE OF TT TR EN ae ee ae ee ee
App. 49
IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF VIRGINIA
Norfolk Division
PNEUMO ABEX CORPORATION, et al.,
Plaintiffs,
v. CIVIL ACTION NO. 2:94cv716
BESSEMER and LAKE ERIE
RAILROAD COMPANY, INC., et al.,
Defendants.
MEMORANDUM OPINION AND ORDER
(Filed Sep. 12, 1996)
INTRODUCTION
Plaintiffs initiated this action in 1994 pursuant to
sections 107 and 113 of the Comprehensive Environmen-
tal Response, Compensation, and Liability Act of 1980, 42
U.S.C. §§ 9607, 9613 (1994), as amended by the Superfund
Amendments and Reauthorization Act of 1986
(“CERCLA” or “the Act”), and the Declaratory Judgment
Act, 28 U.S.C. § 2201(a)(1994). Plaintiffs seek recovery of
costs allegedly incurred in responding to releases or
threatened releases of hazardous substances at or from
the Pneumo Abex Superfund Site (“Site”) in Portsmouth,
Virginia. Plaintiffs also seek a declaratory judgment that
Defendants are liable for the costs of implementing the
permanent remedy at the Site. The Site, designated by the
United States Environmental /rotection Agency (the
“EPA”) as Operable Unit 1 (“OU1”), is the area within a
radius of 700 feet of Pneumo Abex Corporation’s
(“Pneumo Abex”) former foundry, and is divided into
four quadrants.
App. 50
By order filed March 25, 1996, the Court found the
Railroad Defendants remaining in the litigation and Con-
solidated Rail Corporation liable as generators under
§ 107(a) of CERCLA. The Court also dismissed Plaintiffs’
claims under § 113 of CERCLA as unnecessary because
the Court had ruled that they could proceed under § 107
even though they are potentially responsible parties
(“PRPs”). The Court held a six-day bench trial to deter-
mine the allocation of liability among the parties. The
parties filed post-trial briefs, as directed, on June 12, 1996.
This matter is now ripe for judicial determination.
I. FACTUAL BACKGROUND
Plaintiffs Pneumo Abex, the City of Portsmouth (the
“City”), and the Portsmouth Redevelopment and Hous-
ing Authority (the “PRHA”) own property within the
Site. Plaintiff Whitman Corporation is the former parent
company of Abex Corporation, the predecessor of
Pneumo Abex. Whitman Corporation has been reimburs-
ing Pneumo Abex for its environmental liability since
Whitman Corporation sold Pneumo Abex in 1988. (R. at
230-31.) Most of the Defendants in this case were cus-
tomers of Pneumo Abex’s foundry in Portsmouth, Vir-
ginia (“Defendants I”) and sent worn journal bearings to
the foundry to be “converted” into new journal bearings.
(See March 25, 1996 Memorandum Opinion and Order for
further explanation.) Plaintiffs also sued Defendants Hol-
land Investment and Manufacturing Company, Inc., John
C. Holland, Jr., and Runnymede Corporation (collectively
known as “the Landowner Defendants”) as landowners
within the Site.
App. 51
According to the EPA, response activity began at the
Site in 1986 when the EPA identified high lead concentra-
tions. (Record of Decision Amendment, prepared by the
United States Environmental Protection Agency, August
1994 [hereinafter ROD Amend.] at 2.) Pursuant to the
Consent Order of August, 1986, Pneumo Abex excavated
and removed contaminated soil at the Site. (Jd.) In Octo-
ber of 1989, Pneumo Abex entered into an administrative
order on consent with the Virginia Department of Waste
Management (“VDWM”) to perform the Remedial Inves-
tigation/Feasibility Study (“RI/FS”) under the VDWM’s
supervision. (Stip. { 23.) Pneumo Abex completed the
RI/FS and submitted the final report to the VDWM in
February of 1992. (Stip. { 24.) Pursuant to the EPA’s
unilateral administrative order of March, 1992, Pneumo
Abex excavated and removed additional contaminated
soil. (ROD Amend. at 2.) However, Pneumo Abex did not
complete the excavation and removal of contaminated
surface soil because some residents wished to remain in
place for the long-term remediation. In September of
1992, the EPA and the Commonwealth of Virginia pub-
lished a Record of Decision (“1992 ROD”) with the final
remedy. (Id.) On October 19, 1993, Pneumo Abex submit-
ted proposed changes to the 1992 ROD based upon new
information from the City on proposed plans for zoning
and land-use, as well as new institutional controls on
future excavation within the Site. (Id. at 2-3.) The EPA
subsequently amended the 1992 ROD and published in
August of 1994 the Record of Decision Amendment
(“Amended ROD”). In December of 1995, the EPA issued
the Explanation of Significant Differences (“ESD”) which
again revised the permanent remedy. (Pls.’ Br. at 10.)
a a as had Oo
App. 52
In January, 1993 and December, 1994, during these
removal activities, the EPA notified, inter alia, Defendants
I and Plaintiffs that they were PRPs under § 107(a), (Stip.
{1 29, 30), and invited them to negotiate a consent
degree.! Plaintiffs were the only parties to negotiate a
consent decree with the United States. In a separate
action, the United States and Plaintiffs herein lodged the
Consent Decree with the Court on March 4, 1996, and the
Court entered it on April 25, 1996. United States v. Pneumo
Abex Corp., Civ. A. No. 2:96cv27 (E.D. Va.).
On May 6, 1996, the EPA issued a unilateral adminis-
trative order pursuant to § 106(a) of CERCLA to Defen-
dants I. (Pls.’ Ex. 446; R. at 508-09, 533-34.) The order
requires Defendants I to contribute to the permanent
remedy at the Site. Section 106(a) of CERCLA allows for
the issuance of an order when “there may be an imminent
and substantial endangerment to the public health or
welfare or the environment because of an actual or threat-
ened release of a hazardous substance from a facility.”
CERCLA § 106(a). The Court has jurisdiction to grant
relief “as the public interest and the equities of the case
may require.” Id. Furthermore § 106 provides that
any person who, without sufficient cause, will-
fully violates, or fails or refuses to comply with,
any order . . . under subsection (a) of this sec-
tion may, in an action brought in the appropriate
1 Defendants remaining in the litigation adduced testimony
to suggest that the EPA never “invited” them to enter into a
consent decree. (R. at 504-07.) As the Court explains below in its
discussion of Plaintiffs’ Share and Defendants’ Share, the
explanation proffered for Defendants’ failure to enter into a
consent decree is unpersuasive.
App. 53
United States district court to enforce such
order, be fined not more than $25,000 for each
day in which such violation occurs or such fail-
ure to comply continues.
CERCLA § 106(b)(1). To date, the EPA has not petitioned
the Court to enforce the order.
Subsequent to the Court’s ruling of March 25, 1996 -
concerning liability, Plaintiffs and a number of Defen-
dants entered into settlement negotiations. Defendants
remaining at the conclusion of the trial were CSX Trans-
portation, Inc., Fruit Growers Express Company, Inc.,
Norfolk Southern Railway Company, Norfolk and West-
ern Railway Company, and High Point, Thomasville and
Denton Railroad Company (“Remaining Defendants”).
Norfolk Southern Railway Company is a subsidiary of
Norfolk Southern Corporation. Norfolk and Western Rail-
way Company is a subsidiary of Norfolk Southern Rail-
way Company. Finally, High Point, Thomasville &
Denton Railroad Company is an affiliate of Norfolk and
Western Railway Company. The Court refers to these
related entities simply as “Norfolk Southern,” unless oth-
erwise indicated. CSX Transportation, Inc. and Fruit
Growers Express Company, Inc. are subsidiaries and/or
affiliates of CSX Corporation. The Court refers to these
entities separately, although witnesses may have referred
to them simply as “CSX.” All other Defendants settled
with -Plaintiffs’ (“Settling Defendants”), and the Court
dismissed Settling Defendants in orders filed May 9, 1996
and September 12, 1996.
App. 54
II. DISCUSSION 3
The parties stipulated that the 1992 ROD estimated
the cost of the clean-up remedy at the Pneumo Abex site
to be $31,962,923.00. The Amended ROD estimated the
cost of the remedy to be $31,507,670.00. Finally, the ESD
estimated the cost to be $21,000,000.00. (Stip. J 31.) The
parties also stipulated that Pneumo Abex has incurred
response costs at the Site and that Defendants have not.
(Stip. {¥ 34, 35.) Thus, the questions remaining are 1)
which of the costs Plaintiffs allegedly have incurred in
connection with the Site are recoverable as response costs
and 2) what portion of those costs Remaining Defendants
must pay.
Plaintiffs presented proof of their alleged costs as
follows:
1) Oversight by the EPA - — $1,740,195.71
2) The City’s costs - 112,034.00
3) The PRHA’s costs - 93,405.85
4) Services related directly to
excavation and removal at
the Site — 5,334,509.00
TOTAL $7,280,144.56.
Of the total amount, Pneumo Abex allegedly has incurred
and paid $7,074,704.00.
A. Divisibility of the Harm
The United States Court of Appeals for the Fourth
Circuit has held that “[w]hile CERCLA does not mandate
the imposition of joint and several liability, it permits it in
App. 55
cases of indivisible harm.” United States v. Monsanto Co.,
858 F.2d 160, 171 (4th Cir. 1988), cert. denied, 490 U.S. 1106
(1989). In this case, Remaining Defendants bear the bur-
den of either establishing that the harm is divisible or
that there exists a reasonable basis for apportionment,
based upon the contribution of each Defendant, of lia-
bility for a single harm. Id. at 171-72. In their post-trial
brief, Remaining Defendants argue that they have estab-
lished that “the area of environmental harm at the Site
attributable to Foundry manufacturing activities is clearly
divisible from the area of environmental harm not related
to the Foundry.” (Defs.’ Br. at 3.) Although faced with the
possibility that the Court could find the harm indivisible,
in their post-trial briefs Remaining Defendants do not
present the alternative argument that there exists a ratio-
nal basis for apportionment of liability.
1. Sources-of Contamination
One of Plaintiffs’ experts, John Rhodes, of GEO Engi-
neering, who managed the Site from the beginning of the
cleanup activities, testified that his firm tried to identify
several sources of lead contamination. The firm consid-
ered air emissions and sand from the foundry, lead paint,
automobile emissions, ash from an incinerator, and
dredge fill material. (R. at 33.) However, the firm was
unable to identify reliably sources other than foundry-
related ones through the use of its chosen method: can-
onical analysis. (R. at 33-34.) Canonical analysis is a sta-
tistical procedure used tc created a “fingerprint” of
known contaminants. (R. at 37.) GEO Engineering gath-
ered soil and dust samples throughout the Site to try to
App. 56
match those samples to the fingerprints, samples of previ-
ously identified contaminants. GEO Engineering
analyzed the samples for l2e4 content and other metals.
(Id.; 1994 ROD at 17.) However, GEO Engineering was
ultimately unable to fingerprint non-foundry-related
sources of lead.
Remaining Defendants also presented the expert tes-
timony of Dr. Swiatoslav Vladmir Kaczmar? in an attempt
to establish that there existed several sources of contam-
ination in addition to the sand from the foundry. (R. at
629-776.) Dr. Kaczmar drew most of his conclusions from
his review of the work performed and reports generated
by GEO Engineering (see, e.g., R. at 686, 716); Dr. Kaczmar
nor his firm collected any soil samples from the Site. (R.
at 727.) In general, Remaining Defendants tried to estab-
lish that ash from the City’s incinerator, dredge spoils,
demolition waste, and miscellaneous fill contributed to
the contamination of the Site. For example, Dr. Kaczmar
2 Dr. Kaczmar has a bachelor’s degree in chemistry,
biology, and water science from Northern Michigan University.
(R. at 629.) He holds a master’s degree from Northern Michigan
University in chemical limnology, the study of the “fate and
transport” of chemicals in aquatic systems. Id.) He also has a
doctorate degree from Michigan State University in
environmental toxicology which includes analytical chemistry,
human toxicology, and fate and transport. (R. at 630.) He has
performed approximately ten (10) Remedial Investigations and
Feasibility Studies as a project manager and supervised
approximately 100.
3 Plaintiffs objected to much of the testimony or opinions
offered by Dr. Kaczmar on two separate grounds. First Plaintiffs
objected to the nzture and scope of his proposed testimony
because Dr. Kaczmar was not a geologist or an engineer, having
App. 57
used several demonstrative exhibits to establish the pat-
tern of development and demolition with the Site from
1889 to 1964. (R. at 647-661.) He testified that demolition
occurred in all four quadrants of the Site, (R. at 661), and
that the demolition left residuals of lead. (R. at 635.)
Similarly, on cross-examination, a witness from the PRHA
testified that demolition had occurred in quadrants II and
IV. (R. at 893-97.) Dr. Kaczmar also testified that there
existed no basis for linking air emissions to the residuals
of lead detected at the Site outside of the foundry-area,
(R. 676), yet later testified that the releases from the
foundry were only insignificant sources of contamination.
(R. at 716.)
The focal point of Dr. Kaczmar’s testimony was that
the use of canonical analysis, as a method for identifying
the materials from the foundry outside of Pneumo Abex’s
lot, could not be supported by the information in the
Remedial Investigation report. (R. at 663.) He emphasized
the portion of the Remedial Inv stigation report which
explained the “opportunity for false positives” and the
problem of relying upon “single observations” of foun-
dry-related lead contamination without a sufficient
number of neighboring samples al > being classified as
held himself out previously as a toxicologist. (R. at 633-40.) The
Court allowed Dr. Kaczmar to testify and indicated that it
would give the testimony due weight, recognizing the witness’s
limitations. (R. at 640.) Second, Plaintiffs objected on the basis
that Dr. Kaczmar did not disclose the offered opinions or bases
thereof in his written report made pursuant to Rule 26(a)(2)(B)
of the Federal Rules of Civil Procedure. Upon reviewing Dr.
Kaczmar’s report, the Court sustained many of these objections.
(E.g., R. at 670-75, 699-700, 701, 704-07, 708-09, 735-36.)
App. 58
foundry-related. (R. at 686.) Dr. Kaczmar testified that
GEO Engineering did not have enough reference points
or fingerprints of known contaminants, thus leaving great
opportunities for misclassification of samples. (R. at 687.)
He testified that GEO Engineering would have needed
“hundreds” of reference points to make canonical anal-
ysis an appropriate methodology at the Site. (R. at 690.)
In response to questions from the Court, however, Dr.
Kaczmar testified that for the last classification or canoni-
cal analysis he performed for polycholorinated biphenyls
(PCBs), he used only six (6) reference points. (R. at 767.)
He also testified that GEO Engineering used four to six
reference points in this case. (R. at 768, 776.) Dr. Kaczmar
also testified to examples within the RI/FS of mis-
classifications within the reference groups such as a
known sample of auto emissions being classified as paint,
miscellaneous fill, and sand from the foundry. (R. at 697.)
He further testified that the misclassifications were “a
very strong basis for just throwing the canonical analysis
right out, at least the application here.” (Id.)
2. Containment of Sand and Air Emissions
from the Foundry
At trial, Plaintiffs presented the first evidence to sug-
gest divisibility of harm. John Rhodes testified that he
made the argument to the EPA that portions of Quadrant
II did not indicate foundry-related contamination and
that Quadrant III did not show any indication of foundry-
related contamination. (R. at 42-43.) Thus he argued “that
at least a portion of quadrants II and III could be carved
out of the site as not related to the foundry.” The EPA
App. 59
rejected this argument within the 700-foot circle, (R. at
44), and found that “it is reasonable to assume the foun-
dry contributed, either through disposal of waste sand or
through air deposition, to lead contamination found in
these areas.” (Pls.’ Ex. 322, 1992 ROD at 101.)
Remaining Defendants also presented testimony
from Mr. Elmer Oakes,* a former employee and plant
manager of Pneumo Abex, that to the best of his recollec-
tion, he only saw sand removed from the back lot twice,
“a couple of pick-up loads to use for fill.” (R. at 942, 955.)
However, he also testified that there was no fence around
the back lot. (R. at 942.) Mr. Rhodes testified that one
mechanism for moving the contaminated sand “that was
of concern throughout the study [the RI/FS] and remains
a concern is wind blowing of foundry sand.” (R. at 221.)
Pneumo Abex’s lot is within the 700-foot circle desig-
nated as the Site, but the Site includes more than Pneumo
Abex’s lot. Remaining Defendants thus argue that they
are not liable for costs associated with the cleanup of the
entire Site, but merely the cleanup within the Pneumo
Abex’s lot.
Dr. Kaczmar also concluded that there existed “no
likelihood of foundry sand being outside the foundry
areas.” (R. at 706.) He reached this conclusion based upon
the following:
1) the information in the Remedial Investiga-
tion report that the foundry’s used sand was
exclusively disposed of, by wheelbarrow,
* Mr. Oakes was employed at the Site from 1946 until its
closing in 1978. (R. at 930-31.)
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App. 60
within the north lot of the foundry, (R. at
706-07),
2) his analysis of aerial photographs which
depicted two major thoroughfares on either
side of the foundry that, in his opinion,
would have precluded anyone from a
wheelbarrow full of material to one of the
residential areas, (R. at 707,) and
3) GOE Engineering’s estimate that over the
fifty years of the foundry’s operation, the
foundry would have generated 140,000
cubic feet of waste sand and that amount
“could fit very easily” within the foundry’s
lot. (R. at 708.)
Dr. Kaczmar also testified about “grain size analysis,”
which involves taking soil samples and sifting the sam-
ples through a series of sieves with each sieve having
progressively smaller openings so that the particles or
grains separate by size. (R. at 702.) According to Dr.
Kaczmar, one then weighs the amount of material that
passes through each of the sieves to determine the size of
the particles in any given sample. (Id.) He also testified
that grain size analysis is a “visual” analysis: “You collect
a sample and its got some big pieces, small pieces, and
some really tiny pieces in it, you car differentiate one
from the other.” (R. at 703-04.) Based upon GEO Engi-
neering’s testing, Dr. Kaczmar concluded that the grain
size of the soil samples for quadrants II and III did not
match the grain size of the samples from the foundry’s
lot. (R. at 705.)
Despite presentation of evidence indicating several
sources of contamination and that the sand remained in
certain portions of the Site, Remaining Defendants failed
App. 61
to provide the Court with a way to separate the harms or
the costs of cleanup. Cf. Northwestern Mutual Life Ins. Co.
v. Atlantic Research Corp., 847 F. Supp. 389, 401 (E.D. Va.
1994) (“Although it is reasonably clear that several
sources, including the lime pit and the Hot Lab, contrib-
uted to the release of hazardous materials at the facility,
there is no way to separate out these harms.”). The EPA
found that the contamination at the Site is foundry-
related. While the EPA’s determination is not dispositive,
the Court finds it more persuasive than Remaining
Defendants’ proof which fails to provide the Court with a
feasible alternative. Thus, the Court finds that the harm
at the Site is indivisible.
B. Apportionment of Liability
Remaining Defendants bear the burden, in the case of
indivisible harm, of providing the Court with a rational
basis for apportionment of liability. In their post-trial
brief, however, Remaining Defendants argue that the bur-
den somehow rests with Plaintiffs: “The spotty data pro-
duced by Abex makes extrapolation of generators’ shares
from the few documents highly speculative. ... Abex, not
the Railroad Defendants should bear the consequences of
its unexplained failure to produce complete records of
shipments to the Foundry for 46 of the Foundry’s 51
years of operation.” (Defs.’ Br. at 20.) The Court recog-
nizes that the parties produced few records to document
the activity at the foundry. The foundry operated from
1927 until 1978; however, the parties produced “relatively
complete” records for five non-consecutive years and
some additional information for a few Defendants who
produced their own records. (R. at 436.) The parties also
App. 62
had the benefit of information provided by Mr. Elmer
Oakes, who was employed at the foundry for approxi-
mately twenty-two (22) years. Despite the paucity of doc-
uments, in order to avoid joint and several liability,
Remaining Defendants had the burden of providing the
Court a rationale for apportionment. Cf. Chesapeake &
Potomac Tele. Co. v. Peck Iron & Metal Co., 814 F. Supp.
1269, 1279-80 (E.D. Va. 1992) (finding that it could not
“reaonably divvy up the environmental harm” for a site
with six years of incomplete records for company which
operated for fifteen years). As the Court explains below,
Remaining Defendants failed to carry this burden; how-
ever, the Court has been able to fashion from all the
evidence a reasonable basis for apportionment.
In this instance, Remaining Defendants are liable for
contamination caused by disposal and/or treatment ot
worn journal bearings. Remaining Defendants attempted
to establish the volume of waste, in the form of worn
journal bearings, each party contributed to the Site. They
offered the testimony and compilation® of data of Mat-
thew Low, an engineer and attorney, whose firm devel-
oped a database of shipments of lead bearing materials
into the foundry. Mr. Low testified that for the years for
which he had data, Defendants I shipped approximately
90% of the non-virgin lead-bearing materials to the Site.
(R. at 590.) He also testified that CSX Transportation, Inc.
and its related entities, Fruit Growers Express Company,
5 Rule 1006 of the Federal Rules of Evidence provides that
“[t]he contents of voluminous writings . . . which cannot
conveniently be examined in court may be presented in the form
of a chart, summary, or calculation.” Fep. R. Evip. 1006.
SRT ee terms oppete
ee eae ee ee
App. 63
Inc., and Norfolk Southern Railway Company and its
related entities shipped approximately 66.85% of the
lead-bearing material into the Site. (See R. at 569, 614-15.)
Remaining Defendants presented and the Court admitted
most, if not all, of the records used by Mr. Low’s firm to
create the database. (R. at 624 (admitting Defendants’
Exhibits 40-124, 153-55).) However, after cross-examina-
tion of Mr. Low, the Court sustained Plaintiffs’ objection
to the admission of Remaining Defendants’ compilation
as an exhibit. (R. at 618-20 (Defendants’ Exhibit 39
refused).) Cross-examination of Mr. Low indicated
numerous inaccuracies and discrepancies between the
compilation and the underlying documents. (R. at
575-615.) For example, on cross-examination, Mr. Low
admitted that in at least four instances, his firm erred in
interpreting the entries in the foundry’s records for
pounds of worn journal bearings shipped to the foundry.
His firm attributed poundage to non-existent entities
when the entries were actually for parties to this litiga-
tion. Plaintiffs’ counsel also pointed out approximately
six other discrepancies in Remaining Defendants’ com-
pilation. In rejecting the compilation, the Court ruled that
although it could accept a summary chart pursuant to
Rule 1006 of the Federal Rules of Evidence, Remaining
Defendants’ compilation did not fairly represent the evi-
dence before the Court: the underlying records. United
States v. Bakker, 925 F.2d 728 (4th Cir. 1991); United States
v. Strissel, 920 F.2d 1162 (4th Cir. 1990); United States v.
Porter, 821 F.2d 968 (4th Cir. 1987).
App. 64
Plaintiffs retained Dr. Kenneth Wise® to estimate,
inter alia, the poundage of worn journal bearings that
each Defendant sent to the foundry. Dr. Wise used docu-
ments from the foundry that indicated the amount of
metal received by the foundry, (Pls.’ Exs. 1-27), bills of
lading to railroads or from truck drivers, invoices for
conversions of worn journal bearings into new journal
bearings, and credit letters. (Pls.’ Exs. 28-234.) Dr. Wise
testified that he had relatively complete information for
the years 1961, 1962, 1964, 1967, and 1968. (R. at 436.) Dr.
Wise also relied upon the deposition of Elmer Oakes and
several other employees of Pneumo Abex, as well as the
affidavit of Mr. Oakes. Dr. Wise used Moody’s Reports to
develop estimates of the amount of material sent by
conversion customers. (R. at 430, Pls.’ Ex. 244.) Dr. Wise
testified that in making his estimate, he considered the
possible bias against companies that were not consistent
users of the foundry over time. (R. at 437.) From Moody's
Reports, he obtained information on the “ton miles|[,] or
the number of freight miles[,] or [the] number of gondola
cars ... to extrapolate for certain companies into years
where Elmer Oakes suggested they would have been
customers of the foundry but which were not covered by
the documents.” (R. at 437.) Dr. Wise testified that accord-
ing to his calculations, which exclude the contributions of
6 Dr. Wise holds a bachelor’s degree in physics from
Harvey White College and a doctorate in economics from
Massachusetts Institute of Technology. (R. at 420.) He has
experience in the lead industry and other metals markets. (R. at
420-22.)
App. 65
Pittsburgh and Lake Erie Railroad Company,” Remaining
Defendants “Fruit Growers Express along with CSX and
Norfolk Southern” delivered 80.1% of the worn journal
bearings to the foundry. (R. at 477.) Plaintiffs did not offer
as an exhibit a summary of Dr. Wise’s projections.
Remaining Defendants objected to Dr. Wise’s projec-
tions because he relied upon records from only a few of
the years at issue. Dr. Wise also testified that he did not
include Third-Party Defendant, Illinois Central Railroad
Company in the calculations. (R. at 472.) Furthermore,
Remaining Defendants questioned many of the assump-
tions upon which Dr. Wise based his conclusions, such as
suggesting that the estimates assumed consistent usage of
the foundry by Defendants as opposed to use of compet-
ing operations, (R. at 469), or use of one of Pneumo
Abex’s foundries in other parts of the country. (R. at 470.)
However, Dr. Wise testified that when he made the esti-
mate, he took into account indications that a railroad was
not using the foundry in Portsmouth at a particular time.
(R. at 470.) He also testified that he made adjustments
according to Mr. Oakes’s testimony about how long a
railroad was a customer of the foundry. (R. at 474.)
The Court finds Dr. Wise’s methodology to be a
reasonable approach for estimating the contributions of
7 Counsel for Defendant Pittsburgh and Lake Erie Railroad
Company indicated that his client had filed for relief under
Chapter 11 of the Bankruptcy Code. The Court released counsel
from the trial pursuant to the automatic stay of Chapter 11. 11
U.S.C. § 362 (1994).
App. 66
Defendants and that it reflects more accurately the avail-
able records than does Remaining Defendants’ compila-
tion as presented by Mr. Low. Furthermore, having
rejected Remaining Defendants’ compilation as unrepre-
sentative of the underlying records, use of Dr. Wise’s
calculations is the only way for the Court to avoid assign-
ing Remaining Defendants with 100% of Defendants’
Share of the liability (minus the amounts of settlements).
Accordingly, the Court assigns Remaining Defendants
80.1% of Defendants’ Share as discussed below in section
III.D.
C. Recoverable Costs / Costs Consistent with the
NCP
Section 107(a)(3)(B) provides that Remaining Defen-
dants are liable for “any other necessary costs of response
incurred by any other person consistent with the national
contingency plan.” Plaintiffs, however, bear the burden of
proving that their response costs are consistent with the
national contingency plan (the “NCP”). United States v.
Northeastern Pharmaceutical & Chem. Co., Inc., 810 F.2d 726,
747 (8th Cir. 1986); United States v. ].M. Taylor, 909 F. Supp.
355, 362 n.8 (M.D.N.C. 1995). Remaining Defendants con-
tend that Plaintiffs have not established that many of
their costs are either necessary or consistent with the
NCP. Remaining Defendants also argue that the applica-
ble statute of limitations bars some of Plaintiffs’ claims.
More specifically, Remaining Defendants challenge Plain-
tiffs’ claims for the cost of oversight by the EPA and the
VDWM, attorneys’ fees, the lost time of the employees of
App. 67
the City and the PRHA, and medical monitoring. Remain-
ing Defendants also charge that Plaintiffs are attempting
to win “multiple recovery” by presenting more than one
bill for a single expense.
The Court begins its analysis with the recognition
that CERCLA does not define the phrase “costs of
response.” CERCLA does, however, define “response.”
The statute defines “response” as “remove, removal, rem-
edy, and remedial action; . . . all such terms . . . include
enforcement activities related thereto.” CERCLA
§ 101(25). CERCLA further defines remove and removal
in § 101(23) and remedy and remedial action in § 101(24).
Thus, it appears that the costs of removal and remedial
actions are
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