ELR Citation: ELR 20011
No(s). s. 90-1676 et al (3d Cir. Sep 19, 1991)

The court holds that petitioners may bring Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) response cost claims against a railroad company that filed for bankruptcy, because the claims did not exist at the time of the bankruptcy court's consummation letter and a legal entity still exists against which claims may be asserted. This case arose from a series of lawsuits filed in 1986 alleging that Conrail, the Southeastern Pennsylvania Transportation Authority, and Amtrak had been responsible for releases of polychlorinated biphenyls (PCBs) at the Paoli Yard in Pennsylvania. The court first holds that petitioners' asserted claims seeking to recover response costs under CERCLA did not constitute dischargeable claims under the Bankruptcy Code and thus survive the discharge of the debtor. Because CERCLA was not enacted before the bankruptcy court's consummation letter, petitioners lacked the cause of action against the reorganized railroad prior to the consummation date. Thus, petitioners' claims could not have been discharged. Moreover, the court holds that petitioners may bring their post-consummation claims because the railroad was reorganized, not liquidated. Although the company name was changed in the bankruptcy, the evidence supports an interpretation that a reorganization bankruptcy occurred. The reorganized company continued to acknowledge links to the railroad companies, retained all assets except its railroad assets, and retained substantial income tax loss carry-forwards relating to the railroads.

Counsel for Appellant
Joseph A. Dworetzky
Drinker, Biddle & Reath
1100 PNB Bldg., Broad & Chestnut Sts., Philadelphia PA 19107
(215) 988-2700

Michael M. Baylson, U.S. Attorney; Catherine Votaw, Ass't U.S. Attorney
601 Market St., 3310 U.S. Courthouse, Philadelphia PA 19106
(215) 597-1716
Vicki Plaut, Joel M. Gross, Dirk Snel
Environment and Natural Resources Division
U.S. Department of Justice, Washington DC 20530
(202) 514-2000

Counsel for Appellee
Kenneth N. Hart, James J. Capra, Alan B. Howard
Donovan, Leisure, Newton & Irvine
30 Rockefeller Plaza, New York NY 10112
(212) 632-3000

Mansmann, J. (before Nygaard and Roney^*, JJ.)