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In re Reading Co.

ELR Citation: 27 ELR 21075
Nos. 95-1987, -1988, 115 F.3d 1111/(3d Cir., 06/13/1997) aff'd

The court holds that a debtor railroad, reorganized in bankruptcy, is not liable to an appellant railroad for contribution under §113(f) of the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) with respect to contamination at a Pennsylvania site. The court first holds that CERCLA §113(f) preempts appellant railroad's common-law claims. When Congress expressly created a statutory right of contribution in §113(f), it made that remedy a part of an elaborate settlement scheme aimed at the efficient resolution of environmental disputes. Permitting independent common-law remedies would create a path around the statutory settlement scheme, raising an obstacle to the intent of Congress. Rejecting appellant railroad's argument that it has a §107 claim, the court next concludes that the appellant is seeking contribution from the debtor railroad and must seek that remedy under §113(f). Section 113(f) replaces the judicially created cause of action under §107(a)(4)(B) to the extent that a party seeks contribution. The court further holds that the appellant's §113 claim was not discharged by the debtor's bankruptcy. The Superfund Amendments and Reauthorization Act of 1986 had not yet been enacted. Consequently, there was no statutory basis for contribution liability. The court holds, however, that the appellant's contribution claim fails as a matter of law. The claim depends on the appellant and the debtor both being liable to the United States, and the U.S. claim was discharged by the debtor's bankruptcy. All four CERCLA elements making up the U.S. claim existed at the time of the debtor's reorganization. The court refuses to remand the case so that the derivative nature of the contribution claim and its potential failure can be resolved by the district court. As a matter of judicial efficiency, remand would be wasteful. Also, when there is no question that joint liability is lacking, a necessary element to establish contribution cannot be proven.

[The district court's opinion is published at 26 ELR 20512.]

Counsel for Appellee
Robert P. Frank, Andrew J. Soven
Reed, Smith, Shaw & McClay
2500 One Liberty Place
1650 Market St., Philadelphia PA 19103
(215) 851-8308

Counsel for Appellant
John A. Bryson
Environment and Natural Resources Division
U.S. Department of Justice, Washington DC 20530
(202) 514-2000

Before Sloviter, Cowen, and Roth, JJ.