SPS Limited Partnership LLLP et al v. Environmental Liability Transfer, Inc. et al

Filing 131

MEMORANDUM OPINION. Signed by Judge J. Frederick Motz on 9/6/2017. (kw2s, Deputy Clerk)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND

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SPS LIMITED PARTNERSHIP LLLP,
and SPS 35, LLC
v.

SPARROWS POINT, LLC and
TRADE POINT ATLANTIC, LLC., e/ al.,
v.
BWI SPARROWS POINT, LLC

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Civil No. JFM-14-589

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MEMORANDUM
Plaintiffs SPS Limited Partnership LLLP, and SPS 35, LLC (collectively the "Shipyard
Plaintiffs"), bring this lawsuit against defendants Sparrow Point, LLC, and Tradepoint Atlantic,
LLC (flkJa Sparrow Point Terminal, LLC) (collectively the "Steel Mill Defendants"), seeking
recovery under the Comprehensive Environmental Response, Compensation, and Liability Act
("CERCLA"), 42 U.S.c.

S 9601

e/ seq, and four Maryland common law claims-negligence,

trespass, nuisance, and strict liability. The Shipyard Plaintiffs allege that the Steel Mill
Defendants have caused an "ongoing and continuous discharge of pollutants" from their Steel
Mill Property onto Plaintiffs'

"Shipyard Site" in Sparrows Point, Maryland. The Steel Mill

Defendants also filed counterclaims pursuant to CERCLA and Maryland law against the
Shipyard Plaintiffs. Now pending is the Steel Mill Defendants' Motion for Summary Judgment
[ECF No. 103], and the Shipyard Plaintiffs' Counter-Motion for Summary Judgment. [ECF No.
III].

Also pending is Tradepoint Atlantic's Motion for Summary Judgment on the sole issue of

its status as a bona fide prospective purchaser [ECF No. 107], and the Steel Mill Defendants'

Motion to Strike the affidavit of Dr. Peter Shanahan. [ECF No. 128]. All motions are fully
briefed, and no oral argument is necessary. See Local Rule 105.6. For the reasons set forth
below, the Steel Mill Defendants' Motion for Summary Judgment [ECF No. 103] is granted, and
the Shipyard Plaintiffs' Counter-Motion for Summary Judgment [ECF No. 111] is denied.
Tradepoint Atlantic's Motion for Summary Judgment on the sole issue of its status as a bona fide
prospective purchaser [ECF NO.1 07] is grantcd, and the Steel Mill Defendants' Motion to Strike
the belatedly-introduced

affidavit of Dr. Peter Shanahan is denied. [ECF No. 128].

BACKGROUND
The uncontested facts are as follows. This dispute involves the alleged continuous flow
of hazardous chemicals from the Steel Mill Property onto the adjacent parcel of land referred to
as the Shipyard site. [ECF No. 69, p. I]. PlaintilTs SPS LLLP and SPS 35 ("SPS") are the
current owners of the fonner Bethlehem Steel Corporation Shipyard facility (the "Shipyard"),
once part of the fonner Bethlehem Steel Mill ("Steel Mill Property") in Baltimore, Maryland.
[ECF No. 105, p. 2; ECFNo. 112, pAl. PlaintiffSPS LLLP acquired the Shipyard in March
2004 from an entity called Baltimore Marine Industries, Inc. ("BMI"), and then sold a 35%
ownership share to plaintiffSPS

35 in June 2006. [ECF No. 105, p. 2; ECF No. 112, pAl.

Operation of the Shipyard has been conducted by Third Party Defendant, BWI Sparrows Point,
LLC ("BWI"), which is a related entity that has common ownership with SPS LLLP and SPS 35.
[ECF No. 105, p. 2; ECF No. 112, pAl. Collectively, plaintiffs will be referred to as "Plaintiffs,"
or the "Shipyard Plaintiffs."
A series of different corporations owned the Steel Mill Property between March 2004,
when PlaintilTSPS purchased the Shipyard, and September 2012, when Defendant Sparrows
Point, LLC ("Sparrows Point") purchased the Steel Mill Property. Sparrows Point acquired the

2

Steel Mill Property via an order under

S 363 of the

Bankruptcy Code that authorized Sparrows

Point to acquire the property without assuming liability for any environmental contamination that
may have migrated from the Steel Mill Property prior to that date. [ECF No. 105, p. 5-6]. In
September 2014, Defendant Sparrows Point sold the Steel Mill Property to co-defendant
Tradepoint Atlantic ("TPA"). Collectively, defendants will be referred to as "Defendants," or
the "Steel Mill Defendants."
In February 1997, the Environmental Protection Agency ("EPA") and the Maryland
Department of the Environment ("MOE") sued Bethlehem Steel Corporation-the
of both the Steel Mill and the Shipyard-for

former owner

violating federal and state environmental law by

causing "a release of hazardous wastes ... substances and/or ... constituents into the
environment at and/or from the Steel Mill Site" including benzene, naphthalene, toluene, arsenic
and lead. [ECF No. 69, p. 2]. This contamination was primarily the result of "coke oven
operations" and "byproduct recovery operations" that had ceased in the 1980's. [ECF No. 105, p.
14-15 & Ex. 8]. Bethlehem Steel Corporation entered into a Consent Decree with the EPA and
MOE on October 8, 1997, under which it "agreed to investigate and address certain
environmental conditions at the Steel Mill Property and the Shipyard Site." [ld.] The EPA
removed the Shipyard site from the consent decree in June 2006, but the Steel Mill Property
remains bound by it. [ld.]
The Plaintiffs' Shipyard contains a "graving dock," which is used for the "repair or
scrapping of ships under dry conditions." [ECF No. 112, p. 3]. Ships enter the graving dock
when it is inundated with water, via the Patapsco River, and then the gate is closed and water is
pumped out. [ECF No. 112, p. 3]. The central feature of the graving dock at issue in this case is
the "underdrain pumping system." [ECF No. 105, p. 3]. This "underdrain pumping system"

3

collects groundwater and then pumps the water via pipes into the Patapsco River. [ECF No.1 OS,
p.3].

The Shipyard's pumping system "causes groundwater from the coke oven area [at the

Steel Mill Property] to now towards the dock and thereby to cause contaminated groundwater
from the coke oven arc a to now to the graving dock." [Shanahan Dep., ECF No. 103-39, Ex. 37,
p. 139--40]. The discharge of the water from the underdrain pumps to the Patapsco River is
regulated by the Clean Water Act; specifically, it is regulated by a National Pollutant Discharge
Elimination System ("NPDES") discharge permit issued by the Maryland Department of the
Environment ("MDE"). [ECF No. 105, p. 4]. When SPS LLLP first acquired the Shipyard in
2004, there was a pre-existing NPDES permit in effect; this permit was renewed and transferred
to BWI in 2006. [ECF No.1 OS, p. 4].
Because of sampling performed by MDE in 2005, which detected high levels of benzene
in the discharge, the 2006 renewal included a new discharge limit of 0.51 mg/l on benzene in
certain graving dock discharges. [ECF No. 105, p. 4]. This 0.51 mg/Ilimit applied, however,
only to "dewatering/trim pumps," and not to the "underdrain pumping system." [ECF No. 105, p.
4; ECF No. 112, p. 3]. MDE eventually realized that benzene discharge data was not being
collected from the underdrain pumps, and had discussions in 2007 with the Shipyard about the
issue. [ECF No. 105, p. 4]. Eventually, in January 2009, MOE revised its permit to impose the
same 0.51 mg/Ilimit to the underdrain pump discharge, and this revision was to go in effect in
February 2010. [ECF No. 105, p. 4-5]. A fact sheet that accompanied the modification noted
that: "Groundwater at the site is contaminated with benzene from coke making operations that
took place at the adjacent steel mill. Because the steel mill is not taking steps to contain the
contamination plume, this groundwater enters the underdrain system associated with the graving

4

dock.,,1 [ECF No. 112, p. 3]. To comply with this new benzene limitation, the Shipyard
Plaintiffs installed a benzene treatment system that removes benzene from the groundwater.
[ECF No. 112, p. 4]. Since 2012, Plaintiffs allege to have incurred over $1 million in costs to
BWI for its operations and maintenance of the benzene treatment system. [ECF No. 112, p. 5].
The Shipyard Plaintiffs instituted this action by filing a Complaint on February 28,2014.
[ECF No.1].

They filed an Amended Complaint on May 21, 2014 [ECF No.7], and a Second

Amended Complaint ("SAC") on January 15,2015. [ECF No. 35]. The Shipyard Plaintiffs'
SAC alleges: (I) recovery of costs under CERCLA; (2) a declaratory judgment pursuant to
CERCLA holding defendants liable for their share of all response costs; (3) negligence; (4)
trespass; (5) nuisance; and (6) strict liability. [ECF No. 35]. The Steel Mill Defendants later
filed counterclaims pursuant to CERCLA and Maryland law against the Shipyard Plaintiffs.
[ECF No. 52 & 61]. The Steel Mill Defendants filed a Motion to Dismiss for Failure to State a
Claim [ECF No. 42], which this court denied on August 7, 2015. [ECF No. 69]. The Steel Mill
Defendants filed the instant Motion for Summary Judgment on April 7, 2017. [ECF No. 103]. In
response, the Shipyard Plaintiffs filed a Counter-Motion for Summary Judgment on May 9,
2017. [ECF No. Ill].

TPA also tiled a separate Motion for Summary Judgment on the sole issue

of its status as a Bona Fide Prospective Purchaser on April 7,2017. [ECF No. 107]. The Steel
Mill Defendants filed a Motion to Strike the affidavit of Dr. Peter Shanahan on July 13,2017.
[ECF No. 128]. All motions are fully briefed.
STANDARD
Rule 56(a) of the Federal Rules of Civil Procedure provides the "court shall grant
summary judgment if the movant shows that there is no genuine dispute as to any material fact

I

This was before Sparrows Point's 2012 purchase of the property.
5

and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). The Supreme
Court has clarified this does not mean that any factual dispute will defeat the motion. "By its
very terms, this standard provides that the mere existence of some alleged factual dispute
between the parties will not defeat an otherwise properly supported motion for summary
judgment; the requirement is that there be no genuine issue of material fact." Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986) (emphasis in original). A genuine issue of
material fact exists where, "the evidence is such that a reasonable jury could return a verdict for
the nonmoving party." Id. at 247. The party seeking summary judgment bears the initial burden
of demonstrating the absence of a genuine dispute of material fact. See Celotex Corp. v. Catrell,
477 U.S. 317, 323 (1986).
"A party opposing a properly supported motion for summary judgment 'may not rest
upon the mere allegations or denials of[his] pleadings,' but rather must 'set forth specific facts
showing that there is a genuine issue for trial. '" Bouchat v. Baltimore Ravens Football Club,
Inc., 346 F.3d 514, 522 (4th Cir. 2003) (alteration in original) (quoting Fed. R. Civ. P. 56(e)).
Indeed, the party opposing summary judgment must "do more than simply show that there is
some metaphysical doubt as to the material facts." Matsushita E/ec. Indus. Co. v. Zenith Radio
Corp., 475 U.S. 574, 586 (1986); see also In re Apex Express Corp., 190 F.3d 624, 633 (4th
Cir.1999). The court must "view the evidence in the light most favorable to ... the nonmovant,
and draw all reasonable inferences in her favor without weighing the evidence or assessing the
witnesses' credibility," Dennis v. Columbia Colleton Med. Or., Inc., 290 F.3d 639, 645 (4th Cir.
2002), but the court also must abide by the "affirmative obligation of the trial judge to prevent
factually unsupported claims and defenses from proceeding to trial." Bouchat, 346 F.3d at 526

6

(internal quotations omitted) (quoting Drewill v. Prall, 999 F.2d 774, 778-79 (4th Cir. 1993), and
citing Celolex Corp. v. Calrel/, 477 U.S. 317, 323-24 (1986)).
ANALYSIS
The Shipyard Plaintiffs' SAC alleges: (I) recovery of costs pursuant to CERCLA; (2) a
declaratory judgment holding defendants liable for their share of all response costs pursuant to
CERCLA; (3) negligence; (4) trespass; (5) nuisance; and (6) strict liability. [ECF No. 35]. After
addressing two preliminary issues, I assess these claims in tum. I then assess TPA's argument
that it should be accorded protection as a bonafide prospective purchaser, and the Steel Mill
Defendants' counterclaims.
\.

Preliminary

issues

A. SIan ding

As a threshold matter, the Steel Mill Defendants argue that the Shipyard plaintiffs cannot
bring their claims due to lack of standing. To establish standing, the Shipyard Plaintiffs "must
show (I) an injury in fact, (2) a sufficient causal connection between the injury and the conduct
complained of, and (3) a likelihood that the injury will be redressed by a favorable decision."
Malherly v. Andrews, 859 F.3d 264, 277 (4th Cir. 2017). A plaintiff may only recover damages
that are "reasonably certain" and not "based on speculative, remote or uncertain figures."
Dierker v. Eagle Nal 'I Bank, 888 F. Supp. 2d 645, 658 (D. Md. 2012).
The Steel Mill Defendants argue that the Shipyard Plaintiffs are precluded from recovery
because "they have failed to demonstrate that they actually incurred any damages." [ECF No.
105, p. II]. Specifically, they argue that because BWI "operates both the graving dock and the
wastewater treatment system at the Shipyard," and "BWI is a separate and independent entity
from Plaintiffs," the Shipyard Plaintiffs are barred from bringing these claims. Id They further

7

argue that because BWI has, inter alia, "incurred any and all alleged costs," the Shipyard
Plaintiffs cannot establish an "injury in fact." Jd. at 10. As they contend, the alleged damages
amount to "nothing more than vague and ambiguous statements concerning cash flow," and that
the Shipyard Plaintiffs "have not produced any documents in this litigation reflecting the date,
amount, or purpose for [the] alleged transfers between" the Plaintiffs and BWI. Jd. at I I.
The Shipyard Plaintiffs, however, argue that although BWI is responsible for managing
the benzene treatment system, they "reimburse" BWI at the end of eaeh year. [ECF No. I 12, p.
36]. Specifically, the Shipyard Plaintiffs cite to a "General Ledger" in their counter-motion that
seems to depict the following payments to BWI for operations and maintenance ("O&M") costs
related to the benzene system: $254,435.01 (2016), $222,597.81 (2015), $380,198.16 (2014),
$292,906.45 (2013) and $291,002.37 (2012). Jd. As a result, the Shipyard Plaintiffs believe they
have alleged a "perfectly concrete, non-speculative injury for which Plaintiffs are entitled to
recover." Jd.
First, the court finds that Shipyard Plaintiffs have not sufficiently explained or clarified
the costs associated with benzene treatment. For example, in their cross-motion, they allege
costs associated with benzene treatment in 2014 as $380,198.16. Jd. However, while the General
Ledger reveals a debit of $380, I98.16 associated with "benzene," there is also a credit in 2014 of
$283,382.10 associated with "benzene." [ECF 112-1, p. 4]. Similarly, in 2013, while there is a
debit 01'$292,906.45 associated with "benzene," there is also a credit 01'$234,984.56 associated
with "benzene."

While the Shipyard Plaintiffs mention these debits in their cross-motion, they

never even mention the credits. Thus, the court is uncertain whether the "$ 1.2 million [in
payments to BWI alleged] between the years 2012 to 2016," is an accurate figure or not; the
Shipyard Plaintiffs have not provided sufficient information.

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While the Steel Mill Defendants'

arguments have merit, the Shipyard Plaintiffs have likely incurred some costs. Ultimately, the
court opts to deny granting summary judgment in defendants' favor on this basis; instead, they
are entitled to summary judgment on the merits as discussed, infra.

B. Illegality
Maryland courts generally refuse to extend aid to parties that engage in immoral or illegal
transactions.

See. e.g., United £lec. Supply Co. v. Greencastle Gardens Section III Ltd.

Partnership, 373 A.2d 42, 48 (Md. 1977) (precluding recovery for non-delivery where the sale
itself was illegal); see also Parker v. Moore, lIS F. 799, 805 (4th Cir. 1902) (holding that the
court will not lend aid to one who founds his cause of action upon an immoral or illegal act).
The Steel Mill Defendants argue that the Shipyard Plaintiffs' claims are barred due to illegality
because "a permit is required to appropriate surface or groundwater, when using more than
10,000 gallons per day," and "neither BWI nor Plaintiffs has a water appropriation permit."l
[ECF No. 105, p. 2]. The Shipyard Plaintiffs counter that they are not "using or appropriating
groundwater, but are merely pumping it from the graving dock to the Patapsco River, its natural
end point." [ECF No. 112, p. 34]. Moreover, the Shipyard Plaintiffs are operating under a
NPDES discharge permit issued by MDE, and MDE has not "required a water appropriations
permit," despite being "aware of the discharge at the graving dock." Id. at 34-25.
Not only is in unclear whether the Shipyard Plaintiffs would actually need a groundwater
appropriation permit, the court finds this is not the type of "illegal or immoral transaction"
contemplated by the cases cited by the Steel Mill Defendants. Accordingly, the court rejects the
Steel Mill Defendants' illegality argument.
II.

1

CERCLA

The underdrain system pumps "roughly 1.08 million gallons per day." [ECF No. 105, p. 2].
9

Counts One and Two of the SAC assert claims for cost recovery and declaratory
judgment pursuant to CERCLA (the "Comprehensive Environmental Responsibility,
Compensation and Liability Act"). Congress enacted CERCLA "in response to the serious
environmental and health risks posed by industrial pollution ... [and the] Act was designed to
promote the timely cleanup of hazardous waste sites and to ensure that the costs of such cleanup
efforts were borne by those responsible for the contamination." SPS Ltd. P'ship, LLLP v.
Severstal Sparrows Point, LLC, 808 F. Supp. 2d 794, 800 (D. Md. 2011) abrogated bySPS Ltd.
P'ship, LLLP v. Sparrows Point, LLC, 122 F. Supp. 3d 239 (D. Md. 2015) (quoting Burlington
N. & Santa Fe Ry. v. United States, 556 U.S. 599, (2009)). "By permitting private individuals to
recover specified costs of cleanup from those parties responsible for environmental hazards,
CERCLA encourages private individuals to remediate those hazards." Jd. (quoting Westfarm
Assocs. Ltd. P'shp. v. Washington Suburban Sanitmy COllI/II'n, 66 F.3d 669, 677 (4th Cir.
1995)).
The Steel Mill Defendants and the Shipyard Plaintiffs make various arguments as to why
they are each entitled to summary judgment on these two counts. For the reasons discussed
below, 1agree with the Steel Mill Defendants.
A. Sectioll 363(j) alld the Asset Purchase Agreemellt ("APA"J
Section 363(1) grants a Bankruptcy Court authority to approve the transfer of assets "free
and clear" ofliabilities,
U.S.c.

S 363(1).

including the elimination ofliability for off-site contamination.3

11

A purchaser of assets via a Section 363 sale can take those assets free and clear

of successor liability, including liability relating to environmental claims of the seller. See
Severstal Sparrows Point, LLC v.

3

u.s. E.P.A.,

794 F. Supp. 2d 624, 631 (D. Md. 2011) ("This

The "off-site contamination" at issue here is the contamination at the Shipyard.
10

order was authorized by a Section 363 sale under the Bankruptcy Code, II U.S.C.

S 363,

and

eliminates Severstal's liability for toxic discharge that occurred prior to the date of the order's
issuance."); SPS, 808 F. Supp. 2d at 803 ("[T]he Bankruptcy Sale Order entered by the United
States Bankruptcy Court for the Southern District of New York on April 23, 2003 relieves
defendants ofliability for the release or migration of hazardous waste and hazardous constituents
occurring before April 23, 2003.").
Here, defendant Sparrows Point purchased the Steel Mill Property out of the bankruptcy
proceeding of the former owner, RG Steel. The purchase was pursuant to an Asset Purchase
Agreement ("APA") that was approved by the U.S. Bankruptcy Court. [ECF No. 119, Ex. 17].
The APA explicitly limited the scope of Sparrows Point's liability for existing contamination;
while Sparrows Point assumed environmental liabilities at the Steel Mill Property, it did not
assume liabilities for contamination that was not on the Steel Mill Property. Indeed, Section
IA( d) of the AI' A excludes "all Liabilities related to or associated with offsite issues, third party
bodily or property claims or Natural Resource Damages of Seller (and its predecessors-ininterest or title)." [ECF No. 119, Ex. 17 at

S

IA(d)]. Furthermore, the Bankruptcy Court made a

finding that:
O. Purchaser would not have entered into the Agreement and would not
consummate the transactions contemplated thereby, thus adversely affecting the
Debtors, their estates, and their creditors. if the sale of the Purchased Assets to
Purchase was not free and clear of aI/Interests of any kind or nature whatsoever,
or if Purchaser would, or in the future could, be liable for any of the Excluded
Liabilities (as defined in the Agreement).
[ECF No. 119, Ex. 17 at ~ 0 (emphasis added)]. The Bankruptcy Court Sale Order also prohibits
and enjoins anyone from pursuing claims against the purchaser arising out of the purchased
assets or the prior operations of RG Steel. Id. at ~ 10.

II

The Shipyard Plaintiffs largely ignore the effect of the APA approved by the Bankruptcy
Court in their briefing. They also ignore Paragraph 10 of the Sale Order, which prohibits and
enjoins them from pursuing claims against the Steel Mill Defendants. Accordingly, the court
finds that the Steel Mill Defendants are not liable for any benzene that migrated off the Steel
Mill Property prior to its September 2012 purchase of the property.
B. 42 U.S.c.
42 U.S.c.

S 9607(a)

S 9607(a)

defines who can be held liable under CERCLA. These entities are

commonly referred to as potentially responsible parties ("PRPs"). The statute states that, inter
alia, the "the owner and operator of a vessel or a facility" or "any person who at the time of
disposal of any hazardous substance owned or operated any facility at which such hazardous
substances were disposed of' can be held liable. Id. at

S 9607(a)(l-2)

(emphasis added). PRPs

within these categories are potentially liable for "necessary costs of response" incurred by a nongovernmental party such as the Shipyard Plaintiffs, but only to the extent such costs are
"consistent with the National Contingency Plan." Id. at

S 9607(a)(4)(B).

Defendant Sparrows Point argues that it is not the current "owner and operator" of the
Steel Mill Property, and therefore it can only be held liable if there was a "disposal" of any
hazardous substance while it was the owner of the Steel Mill Property. The Shipyard Plaintiffs
argue that Sparrows Point was the current owner when the complaint was filed, and only became
a former owner when Sparrows Point sold the property to TPA. The Shipyard Plaintiffs argue
that this sale was the basis for the second amendment to the complaint, and this sale cannot
permit Sparrows Point to avoid liability as a current owner. Accordingly, they argue that
Sparrows Point is strictly liable as a "current owner" "without regard to causation."

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I find that while the Shipyard Plaintiffs' argument that Sparrows Point should be
considered a "current owner" within the context of

S 9607(a)(I)

has some merit, their

conclusions are incorrect. First, it is undisputed that the benzene contamination is the result of
the coke oven operations that were discontinued prior to Sparrows Point's acquisition of the
Steel Mill Property pursuant to the APA in 20 I2. Second, I have already decided that the Steel
Mill Defendants are not liable for benzene that migrated off the Steel Mill Property prior to the
September 2012 purchase. See supra, Section I1(A). Accordingly, while Sparrows Point might
have been considered a "current owner" had it not acquired the property through a Section 363
sale, the Shipyard Plaintiffs are incorrect to argue that Sparrows Point is strictly liable for any
benzene migration "without regard to causation." [ECF No. I 12, p. 8]. Rather, Sparrows Point
can be held strictly liable to the extent there was some "disposal of [benzene]" while they
"owned or operated" the Steel Mill Property. 42 U.S.C.

S 9607(a)(2);

see also Nurad, Inc. v.

William E. Hooper & Sons Co., 966 F.2d 837, 846 (4th Cir. 1992) ("The trigger to liability under

S 9607(a)(2)

is ownership or operation of a facility at the time of disposal, not culpability or

responsibility for the contamination.").
Accordingly, the question is whether there was a "disposal" of benzene during the
relevant time period. CERCLA defines "disposal" for purposes of
42 U.S.C.

S 960 I(29),

S 9607(a)(2)

with reference to

which in tum defines "disposal" as follows:

The terrn "disposal" means the discharge, deposil. 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,
including ground waters.
42 U.S.C.

S 6903(3)

(emphasis added). The Fourth Circuit has examined the terrn "disposal,"

finding that it includes not just "active" conduct, but also "passive" conduct. See West/arm

13

Assocs. Ltd. P'ship v. Washington Suburban Sanitary Comm 'n, 66 F.3d 669, 680 (4th Cir. 1995)
("The plain meaning of the statute supports the Nuradreading; 'leaking,' 'leaching,' and
'escaping' are all words which imply passive conduct."); see also Nurad, Inc. v. Willimn E.
Hooper & Sons Co., 966 F.2d 837 (4th Cir. 1992) (finding that 2 U.S.C.
liability for passive, in addition to active, involvement).

S 9607(a)(2)

imposes

Here, there was no "active" conduct

regarding the benzene contamination attributable to the defendants. Rather, the benzene-a
byproduct of coke oven operations that ceased many years ago-was
and merely migrating via the "passive" flow of groundwater.

already in the environment

It should be noted that the

"passive" flow of groundwater to the graving dock was enhanced by the Shipyard Plaintiffs' own
pumping operations; indeed, according to the Shipyard Plaintiffs' own expert, Dr. Peter
Shanahan, it is "unsurprising" that the Shipyard Plaintiffs' pumping activities "cause
contaminated groundwater from the coke oven area to flow to the graving dock." [ECF NO.1 0339, Ex. 37, p. 139-40]. The question, therefore, becomes whether this type of "passive"
movement of benzene constitutes a "disposal."
In Nurad, the Fourth Circuit examined claims against the prcvious owners of a property,
evaluating whether a "disposal" had occurred. Id. There, the previous company abandoned
underground storagc tanks that were leaking hazardous waste at a site, later selling the property,
including the tanks, to a purchaser who had no use for the tanks. Id. The Fourth Circuit first
determined that

S 9607(a)(2)

imposes liability not just for "active involvement in the 'dumping'

or 'placing' of hazardous waste at the facility," but also for more "passive" involvement such as
owning a facility during the time hazardous waste was "spilling" or "leaking." Id. at 846. Next,
the Fourth Circuit concluded there had been a "disposal," finding that "[a] defendant who has

14

abandoned hazardous materials at a site cannot escape CERCLA liability by simply labelling a
subsequent transfer of the property as a 'sale' of the hazardous waste." ld. at 847.
In a subsequent case, the Fourth Circuit extended similar logic to a dispute where the
plaintiff was seeking recovery costs for hazardous substances leaking from a sewer system,
which subsequently migrated to plaintiffs property. West/arm Assocs. Ltd. P'ship v. Washington
Suburban SanitOlY Comm 'n, 66 F.3d 669 (4th Cir. 1995). There, defendant WSSC did not cause
the original leak of contaminants, but instead managed a sewer system and allowed contaminants
to leak into the plaintiffs property by failing to properly maintain its sewage pipes. Jd. at 674-75.
Ultimately, the court concluded that the movement of contaminants through cracks in sewage
piping was a "disposal," in part because the defendant's "failure to maintain its pipes in good
condition earned it some responsibility for the contamination." Jd. at 681 (emphasis added).
Although the type of contamination at issue is a "passive" one, this case is not like
Nurad, where the defendant was itself responsible for the hazardous materials that leaked into
the environment.

It is also not like West/arm, where the defendant had some responsibility for

the contamination bccause it failed to properly maintain its sewage piping. Here, it is undisputcd
that the benzene was released prior to Sparrows Point's 2012 purchasc. Indeed, the evidence
reveals the coke ovens and the byproduct recovery operations responsible for the benzene
contamination "stopped operating in the [1980's)" [ECF No. lOS, p. 14-15 & Ex. 8], and that the
ovens had been demolished prior to Sparrows Point's 2012 purchase. Jd. at p. 14.
Instead, this case is more akin tq cases that address the passive flow of contaminants
through groundwater.

In such cases, courts have generally found that previous owners are not

liable under CERCLA if they were not responsible, in some manner, for the contamination. See
Carson Harbor Viii., Ltd. v. Unoca/ Corp., 270 F.3d 863, 879, 887 (9th Cir. 2001) (finding that

IS

the "gradual passive migration of contamination through the soil that allegedly took place"
during defendants' period of ownership was "not a 'disposal' under ~ 9607(a)(2)"); see also ABB
Indus. Sys., Inc. v. Prime Tech., Inc., 120 F.3d 351, 358-59 (2d Cir. 1997) (finding that "prior
owners and operators of a site [were] not liable under CERCLA" for hazardous chemicals that
"continued to gradually spread underground (passive migration)").
Ultimately, as the Fourth Circuit quoted in West/arm, CERCLA "imposes the costs of
cleanup on those responsible for the contamination." West/arm, 66 F.3d at 681 (quoting
Penmylvania v. Union Gas Co., 491 U.S. 1,7 (1989) overruled by Seminole Tribe of Florida v.
Florida, 517 U.S. 44 (1996) (emphasis added). While responsibility is not purely limited to the
party responsible for the original contamination, it is undisputed that the original benzene
contamination at issue occurred prior to Sparrows Point's purchase, and that Sparrows Point had
no hand in that contamination.

It is also undisputed that the contamination at issue is merely the

passive flow of benzene through groundwater, which is undoubtedly assisted by the Shipyard
Plaintiffs' own activites. [ECF No. 112, p. 2]. Consistent with Fourth Circuit decisions in Nurad
and West/arm, as well as case law from other circuits, I find there has been no "disposal" here in
the context of 42 U.S.C. ~ 9607(a).
C. ''Necessary cost of response" lindeI' 42 U.S,C. 89607(0)(4)

"If PRP status is established, a party faces liability under CERCLA for. , . 'any other
necessary costs of response incurred by any other person consistent with the national
contingency plan.''' Consolidation Coal Co. v. Georgia Power Co., 781 F.3d 129, 143 (4th Cir.
2015) (quoting 42 U.S.C. ~ 9607(a)(4)(b))(emphasis

added). In this context, CERCLA

"provides that 'response' or 'respond' 'means remove, removal, remedy, and remedial action'
and that 'all such terrns (including the terms 'removal' and 'remedial action') include

16

enforcement activities related thereto.'" Key Tronic Corp. v. United States, 511 U.S. 809, 813
(1994) (quoting 42 U.S.C. 9 9601 (25». The Steel Mill Defendants argue that there is no
"necessary cost of response" because the Shipyard Plaintiffs' activities were not undertaken to
clean up the environment, but were instead "incurred solely as a component of Plaintiffs'
business activities." [ECF No. 119, p. 15; ECF NO.1 05, p. 19-21]. The Shipyard Plaintiffs
counter that their costs were "necessary" because they were incurred in order to comply with a
State-imposed limit on benzene, which would cause "a threat to human health and the
environment" if not removed from the groundwater. [ECF No. 112, p. 12].
"As the language of the statute implies, whether the costs were 'necessary'

is a threshold

issue for recovery[.]" Reg'l Airport Auth. of Louisville v. LFG, LLC, 460 F.3d 697, 703 (6th Cir.
2006) (citing 42 U.S.C. 99607(a)(4)(B».

The "CERCLA recovery provision is not a wholesale

cost-shifting mechanism." See 500 Assocs., Inc. v. Vermont Am. Corp., 768 F. Supp. 2d 914, 920
(W.O. Ky. 2011) (citing Reg 'I Airport Auth. of Louisville v. LFG, LLC, 460 F.3d 697, 703 (6th
Cir. 2006». Costs are "'necessary'

if incurred in response to a threat to human health or the

environment." Reg 'I Airport, 460 F.3d at 703. Indeed, as the Fourth Circuit has noted, "Congress
in enacting CERCLA clearly manifested intent not to provide compensation for economic
losses." Braswell Shipyards, Inc. v. Beazer E., Inc., 2 F.3d 1331, 1337, n. 5 (4th Cir. 1993)
(quoting Artesian Water Co. v. Government of New Castle County, 659 F.Supp. 1269, 1285-86
(D. Del. 1987». The "legislative history makes clear that 'Congress ... intended to provide a
vehicle for cleaning up and preserving the environment from the evils of improperly disposed of
hazardous substances rather than a new font of law on which private parties could base claims
for personal and property injuries," Id. (quoting Artesian Water Co. v. Gov't of New Castle Cty.,
605 F. Supp. 1348, 1356 (D. Del. 1985» (emphasis added).

17

In contrast, costs incurred "for other business reasons," costs that do not increase "the
probability that a cleanup would be effective," or costs that are incurred "at a time when the
plaintiff was unaware of any threat to human health or the environment," are generally
unrecoverable because they are not "necessary." See. e.g., Key Tronic Corp. v. United States, 51l
U.S. 809, 820 (1994) (finding that certain legal expenses that were not "closely tied to the actual
cleanup," and that did not increase "the probability that a cleanup would be efTective," did not
constitute "necessary costs of response"); see also Reg'l Airport Auth. oj Louisville v. LFG, LLC,
460 F.3d 697, 705 (6th Cir. 2006) (finding that an alleged response cost was not "necessary"
because ;;the response costs and the runway construction costs were one and the same," and
therefore ;;allowing the [Plaintiff] to recoup its ;response costs' would be tantamount to a
reimbursement of its runway construction costs."); 500 Assocs., 768 F. Supp. 2d at 921 (finding
that plaintift';;cannot recover its costs under

S 9607

because the costs cannot be shown to have

furthered the cleanup of the property," and were instead "incurred for [plaintiffs'] own business
purposes").
Here, it is undisputed that the Shipyard Plaintiffs' costs associated with treating the
graving dock discharge were incurred for business purposes, and not for purposes of cleaning up
the environment.

In other words, although the Shipyard Plaintiffs operated the water treatment

system to remain within the 0.51 mg/I benzene limit imposed by MDE, the need for this
treatment was caused by its operation of the graving dock. Indeed, the Shipyard Plaintiffs seek
contribution for their underdrain pump systems that pumped an "average rate of 750 gallons per
minute (i.e. roughly 1.08 million gallons per day)." [ECF No. 105, p. 11]. The Shipyard
Plaintiffs' corporate designee even conlirrned that their ;;purpose was not to treat or contain the
benzene plume for the adjacent property," but rather ;;to be able to discharge under [their]

18

NPDES penn it." [ECF no. 105, EX 8, p. 146-47]. Moreover, the facts show that there is no
environmental contamination issue at the Shipyard Site that necessitates a "remedial action";
rather it is the operation of the graving dock that forces the Shipyard Plaintiffs to operate their
treatment system. [ECF NO.1 05, p. 23; ECF No. 112, n. 2; ECF no. 119, p. 15].
The Shipyard Plaintiffs counter that their motives for cleaning up the benzene-whether
environmental or business in nature-are

irrelevant to their right to recover under CERCLA.

[ECF No. 112, p. 12]. For this assertion, the Shipyard Plaintiffs cite to Channel Master Satellite
Sys .. Inc. v. JFD Elecs. Corp., and HCW Assocs. , Ltd. v. Occidental Chem. Corp., where the
respective courts stated that the motive for cleaning up a site is not of import. See Channel
Master,748 F. Supp. 373, 379 (E.D.N.C. 1990) (stating that the plaintiffs "motives for cleaning
up the Oxford site have no bearing on its right to recover response costs under CERCLA"); HCW
Assocs .. 1988 WL 102641, at

* 17 (E.D.

Pa. 1988) ("Whether [plaintiff] was initially motivated

by business or by environmental concerns in responding to this threatened release is not relevant
to the causation inquiry.").

However, the Shipyard Plaintiffs' argument is incorrect. As the

Steel Mill Defendants point out, both of these cases involved "an actual cleanup, in situations
where cleaning up the environment was necessary, and where the actions taken were necessary
toward achieving that goal." [ECF No. 119, p. 16]. Instead, the facts of this case are more akin
to

u.s. v. Reuland

Elec. Co., where the U.S. District Court for the Central District of California

found that a Water Company's need to install facilities to treat contaminated water was not a
"response cost." 793 F. Supp. 2d 1131 (C.D. Cal. 2011). Although the Water Company there
"installed [treatment] systems so it could continue to provide safe drinking water to its
customers," the court found this was not a "removal within the meaning of CERCLA because it
is not [a] cleanup or removal ... Fom the environment," nor a "remedial action because it does

19

not prevent or minimize the release of hazardous substances so that they do not migrate." Id. at
1372 (emphasis in original). Accordingly, because the Water Company's actions were not a
"removal" or "remedial" action, they were not a "response cost" under CERCLA.4 Id. The same
is true in the present case. For the foregoing reasons, [ find that the Shipyard Plaintiffs' alleged
costs were not "necessary costs of response" under 42 U.S.C.

S 9607(a)(4).

Ultimately, for the reasons discussed in Section Il(A-C),

the Steel Mill Defendants are

entitled to summary judgment on Counts I and II.
Ill.

State Law Claims
The Shipyard Plaintiffs also allege various theories for recovery under Maryland law in

their SAC, including: (a) ncgligence; (b) trespass; (c) nuisance; and (d) strict liability. [ECF No.
35]. As an initial matter, as discussed supra, the Shipyard Plaintiffs largely disregard the effect
of the Asset Purchase Agreement ("APA") that was approved by the U.S. Bankruptcy Court,
including Paragraph I0 of the Sale Order, as it relates to any liabilities prior to 2012. In addition
to this, the Steel Mill Defendants are entitled to summary judgment on these counts for the
reasons discussed, infra.
A. Negligence
Count III of the Shipyard Plaintiffs' SAC alleges a claim for negligence. [ECF no. 35, p.
13]. "To establish a negligence claim, a plaintiff must allege facts showing that: (I) the
defendant owes the plaintiff a duty of care; (2) the defendant breached that duty; (3) the plaintiff
sustained an injury or loss; and (4) the defendant's breach of the duty was the proximate cause of

4 I note here that the Plaintiffs "respectfully disagree" with the Reuland court's conclusions, and
they point out that "no other case has cited Reuland Electric," and therefore the "case should not
be considered persuasive authority in this proceeding." [ECF No. 125, p. 11-12]. Plaintiffs'
arguments were taken in consideration. Accordingly, while Reuland does not factor heavily in
my analysis or conclusions, I still choose to cite to it because I find it similar to the present case
and well-reasoned.

20

the plaintiffs injury." Balfour Beally Infrastructure, Inc. v. Rummel Klepper & Kahl, LLP, 155
A.3d 445, 451 (Md. 2017). The Steel Mill Defendants are entitled to summary judgment on this
count.
First, it is somewhat unclear what exact duty is owed by the Steel Mill Defendants to the
Shipyard Plaintiffs, and what the alleged breach of that duty is. The Shipyard Plaintiffs cite to
Exxon Corp. v. Yarema, for the proposition that "Defendants had a duty to contain hazardous
substances located beneath the surface of the Steel Mill Site and to prevent the ongoing
migration of pollutants to Plaintiffs' property." 516 A.2d 990, 1005 (Md. Ct. Spec. App. 1986).
However, in that case, the original defendant Exxon Corporation was itself responsible for the
contamination at issue.ld. at 132. There, Exxon's failure to respond to several leaks of unleaded
gasoline into Baltimore County was found to be a breach of its duty to residents. Id. Here, it is
undisputed that the Steel Mill Defendants were not the responsible for the benzene
contamination; rather, they purchased the property-subject
Bankruptcy Court-after

to the APA approved by the

the coke oven operations had ceased. Accordingly, this case is not like

Exxon Corp. v. Yarema cited by the Shipyard Plaintiffs. I further note that accepting the
Shipyard Plaintiffs' argument would essentially impose a res ipsa loquitur-like liability on any
subsequent owner, provided some benzene remaind in the groundwater.
Next, the parties disagree over whether the Shipyard Plaintiffs must provide expert
testimony to support the clements of its negligence claim; the Steel Mill Defendants argue that
expert testimony is needed, while the Shipyard Plaintiffs counter that it is not. "Expert testimony
is required when the subject matter is so particularly related to some science or profession that it
is beyond the ken of the average layman." Adams v. NVR Homes, Inc., 142 F. Supp. 2d 649, 654
(D. Md. 200 I) (summary judgment granted after expert testimony was excluded, on basis that

21

expert testimony was critical because the complaint was "so particularly related to professional
engineering that it [was] beyond the ken of the average juror"). For example, in an
environmental clean-up case alleging gross negligence, the Fourth Circuit affirmed the grant of
summary judgment for defendant, because the plaintiff failed to provide "evidence of normal
industry standards or any expert testimony relevant to Exxon's actual clean-up efforts." 15 F.3d
327at 333 (4th Cir. 1994). The Shipyard Plaintiffs argue that whether the Steel Mill Defendants
breached a duty to them is not one that necessitates expert testimony, because it is a
"straightforward legal determination." [ECF No. 112, p. 24]. I disagree. Specifically, the
Plaintiffs should have provided some testimony regarding the alleged negligence of the Steel
Mill Defendants. This should have included, inter alia, whether sufficient quantities of benzene
migrated from the Steel Mill Property to the graving dock during ownership of the Steel Mill
Defendants.s Although the Shipyard Plaintiffs' allegations were sufficient at the motion to
dismiss stage, they are insufficient here.
Third, I find that the plaintiffs assumed the risk of benzene contamination through their
pumping activities. "[I]t is well settled that in order to establish the defense of assumption of
risk, the defendant must show that the plaintiff: (I) had knowledge of the risk of the danger; (2)
appreciated that risk; and (3) voluntarily confronted the risk of danger." Poole v. Coakley &
Williams Canst .. Inc., 31 A. 3d 212, 224 (Md. 2011). The Shipyard Plaintiffs contend that they
"did not have full knowledge or appreciation of the benzene contamination" and that "nobody
understood that the operation of the graving dock was resulting in the discharge of benzene."
[ECF No. 112, p. 28]. However, such a contention ignores the undisputed facts; indeed, I

The Shipyard Plaintiffs belatedly introduced some such evidence in their surreply. [ECF No.
105]. This evidence is the subject of a motion to strike, which as discussed infra, is denied.
Although I considered the belatedly-introduced evidence of Dr. Shanahan, it does not overcome
the other deficiencies discussed in this section.
S

22

previously found that the Shipyard plaintiffs had, at minimum, inquiry notice of the benzene
contamination as of February 22, 2004, if not actual notice. SPS Ltd. P'ship, LLLP v. Severstal
Sparrows Point. LLC, 808 F. Supp. 2d 794, 814 (D. Md. 2011) ("Plaintiffs may well have had
actual notice of contamination when they submitted the application to Maryland's VCP on
February 22, 2004, but I find they certainly had inquiry notice."). Moreover, the Shipyard
Plaintiffs' activities-namely

pumping water to operate the graving dock-eaused

contaminated

groundwater from the coke oven area to flow toward the graving dock. Ultimately, while
plaintiffs are within their rights to continue their graving dock operations, they do so voluntarily
and with full knowledge of the danger of benzene contamination.
For the aforementioned reasons, the Steel Mill Defendants are entitled to summary
judgment on the negligence count.
B. Trespass
Under Maryland law, "[w]hen a defendant interferes with a plaintiffs interest in the
exclusive possession of the land by entering or causing something to enter the land, a trespass
occurs." Rosenblal/ v. Exxon Co., U.S.A., 642 A.2d 180, 189 (Md. 1994) (citing Rockland, Inc. v.
H. J. Williams, 219 A.2d 48 (Md. Ct. App. 1965». The Steel Mill Defendants cite to
JBG/Twinbrook Aletro Ltd. Partnership v. Wheeler for the proposition that "the defendant must
have some connection with or some control over [the] object," here benzene. 697 A.2d 898, 909
(Md. 1997). Plaintiffs counter, however, that "benzene is continuously migrating off the Steel
Mill Site," "discharges are part of an ongoing trespass and single harm that cannot be readily
apportioned, and thus [defendants] can be held jointly and severally liable." [ECF No. 112, p.
21]. For this assertion, the Shipyard Plaintiffs cite to a CERCLA case, United States v.
lv/onsanto, which only addresses CERCLA and does not address Mmyland causes of action,

23

such as trespass, nuisance, and negligence. 858 F.2d 160 (4th Cir. 1988). Here, [find Shipyard
Plaintiffs have not met their burden at the summary judgment stage to establish the Steel Mill
Defendants controlled the benzene so as to impose liability for trespass. Accordingly, the Steel
Mill Defendants are entitled to summary judgment on this count.
C. Private nuisance
The Shipyard Plaintiffs allege a claim of private nuisance in Count Y against the
Shipyard Defendants. A private nuisance is "a nontrespassory invasion of another's interest in
the private use and enjoyment ofland." Mitchell v. WSG Bay Hills IV, LLC, No. CIY.A, RDB12-2036,2013

WL 6502875, at *5 (D. Md. Dec. 11,2013) (quoting Exxon Mobil Corp. v.

Albright. 71 A.3d 30, 94 (Md. 2013». "To succeed on a nuisance claim, a plaintiff must
establish an unreasonable and substantial interference with his or her use and enjoyment of his or
her property, such that the injury is 'of such character as to diminish materially the value of the
property as a dwelling ... and seriously interfere with the ordinary comfort and enjoyment of
it.'" Id. (quoting Exxon, 71 A.3d at 94). "Not every interference with a plaintiffs

enjoyment and

use of land, however, will support a cause of action for nuisance." Id. (quoting Exxon, 71 A.3d at
94.
As an initial matter, the Steel Mill Defendants ask the court to apply an assumption of the
risk defense to the Shipyard Plaintiffs' nuisance claim, arguing that Maryland courts have not
held that the defense cannot apply to a nuisance claim. [ECF No. 105, p. 47]. However, I decline
to apply this defense here; while no Maryland court has stated the defense does not apply, neither
party has been able to identify a case stating it does. Furthermore, in at least one Maryland case,
a court elected not to submit the "assumption of risk defense" to the jury on a nuisance count.
JBG/Twinbrook Metro Ltd. P'ship v. Wheeler, 697 A,2d 898, 903 (Md. 1997).

24

Instead, [ again note the issues discussed supra. The Shipyard Plaintiffs' voluntary
activities contributed to the benzene contamination by drawing benzene to their property. The
Shipyard Plaintiffs should not be pennitted to hold the Steel Mill Defendants liable for private
nuisance when they themselves contribute to any alleged "substantial interference with [their]
use and enjoyment."

Moreover, the interference must be an "unreasonable" one. Any argument

suggesting that the passive flow of benzene through groundwater is now "unreasonable," ignores
the fact that the Shipyard Plaintiffs were on, at minimum, inquiry notice of the benzene
contamination in 2004-nearly

eight years before the Steel Mill Defendants' purchase of the

Stecl Mill Property. Lastly, as discussed in the trespass section, supra, the Shipyard defendants
do not have control over the benzene. For these reasons, the Steel Mill Defendants are entitled to
summary judgment on this count.
D. Strict Liability
Maryland courts have recognized that strict liability may be extended to defendants
engaged in "abnormally dangerous activities." Gallagher v. H V. Pierhomes, LLC, 957 A. 2d
628,634 (Md. Ct. Spec. App. 2008) (quoting Restatement (Second) ofTorts

S 519,

at 34

(1977)). The Shipyard Plaintiffs argue that the Steel Mill Defendants should be strictly liable
because they "knowingly purchased a property contaminated with benzene which continues to
leach into the groundwater and flow offsite." [ECF No. 112, p. 32]. Specifically, the Shipyard
Plaintiffs argue that the Steel Mill Defendants are strictly liable because bcnzene is a known
carcinogen, that the ongoing risk associated with benzene cannot be eliminated through
reasonable care, and that there is no "value" to benzene. Id This argument is without merit.
The Steel Mill Defendants are not "engaged" in "abnormally dangerous activities."
Gallagher, 957 A. 2d at. 634. Rather, they are engaged in remediating and redeveloping a

25

property. Plaintiffs cite to no case suggesting this type of activity is an "abnormally dangerous
activity." As the Steel Mill Defendants point out, the "practical application of Plaintiffs'
argument would subject all purchasers of contaminated property to strict liability and would
discourage any and all purchases made for the purpose of environmental cleanup and
redevelopment." [ECF No. 119, p. 31]. Accordingly, the Steel Mill Defendants are entitled to
summary judgment on this count.
IV.

TPA's status as a bona fide purchaser
In addition to the arguments discussed supra, Defendant TI'A-which

Steel Mill Property from Sparrows Point in 2014-argues

purchased the

that it should be shielded from

CERCLA liability due to its status as a bona fide prospective purchaser ("BFPP").

"BFPP status

exempts from CERCLA liability a party otherwise liable simply because it is 'considered to be
an owner or operator ofa facility' under 42 U.S.C. ~ 9607(a)(l)." PCS Nitrogen Inc. v. Ashley II
o/Charleston

LLC, 714 F.3d 161, 179 (4th Cir. 2013) (quoting 42 U.S.c. ~ 9607(r)(l)).

"To

qualify for the exemption, a current owner or operator of a facility must have acquired the
facility after January 11,2002, must not impede the performance of a response action or natural
resource restoration at the facility, and must establish eight criteria by a preponderance of the
evidence." Id. at 179-80 (citing 42 U.S.c. ~~ 960 I(40)(A)-(H) & 9607(r)( I)) (internal quotations
omitted).
The Shipyard Plaintiffs argue that Defendant TP A fails two of the eight requirements
enumerated in 42 U.S.c. ~ 9601(40)(A) and 42 U.S.c.

S 9601 (40)(H):

(A) Disposal prior to acquisition: All disposal of hazardous substances at the facility
occurred before the person acquired the facility.
(H) No affiliation: The person is not(i) potentially liable, or affiliated with any other person that is potentially
liable, for response costs at a facility through-

26

(I) any direct or indirect familial relationship; or
(II) any contractual, corporate, or financial relationship (other than
a contractual, corporate, or financial relationship that is created by
the instruments by which title to the facility is conveyed or
financed or by a contract for the sale of goods or services); or
(ii) the result of a reorganization of a business entity that was potentially
liable.
1 first find the Shipyard Plaintiffs' argument that TPA fails 42 U.S.C.

S 9601 (40)(A)

is

without merit. They again argue that the passive migration of benzene through groundwaterthat they themselves contributed to-constitutes
U.S.c.

S 9601 (40)(A).

not a "disposal."

a current "disposal," and therefore TPA fails 42

For the same reasons discussed in further detail, supra, I conclude this is

Accordingly, I find that TPA satisfies this requirement.

Next, the Shipyard Plaintiffs argue that TPA fails 42 U.S.C.

S 9601 (40)(H)

by being

allegedly "affiliated through a web of corporate relationships" with previous owners of the Steel
Mill Property, including Sparrows Point. [ECF No. 114-1, p. 2, 9]. The Shipyard Plaintiffs argue
that TI'A and previous owners of the Steel Mill Property "forrned a plan pursuant to which they
would scrub the environmental liabilities from the Steel Milll'roperty."

[ECF No. 114-1, p. 1-2].

Both parties cite to Ashely II from the U.S. District Court for the District of South Carolina,
where the court stated: "in deciding which 'affiliations'

are prohibited by CERCLA, courts

should be guided by 'Congress's intent of preventing transactions structured to avoid liability.'''
Ashley II a/Charleston.

LLC v. PCS Nitrogen, Inc., 791 F. Supp. 2d 431, 502 (D.S.C. 2011),

ajJ'd, 714 F.3d 161 (4th Cir. 2013). There, the court found that Ashely was not responsible
because, in part, there was "no allegation ... that Ashely is the result of a reorganization of a
business entity that was potentially liable." Id.
Here, given the undisputed facts, I find the Steel Mill Defendants are entitled to summary
judgment on this issue. As an initial matter, the Shipyard Plaintiffs' arguments that TPA was

27

motivated by an intent to avoid liability ignores the undisputed fact that TPA entered into an
"Administrative Consent Order with the Maryland Department of the Environment, and a
Settlement Agreement with the United States Environmental Protection Agency" upon
purchasing the property, and that it has fully complied with those obligations. [ECF No. 122, p.
6, ECF No. 107, Exs. 5 & 6]. Next, the Shipyard Plaintiffs' arguments based on TPA's
"affiliation" with Sparrows Points fails, because they argue that "[Sparrows Point] is a PRP for
purposes of Plaintiffs' CERCLA claims." [ECF NO. 114-1, p. 10]. However, as discussed supra
in Section II, Sparrows Point is entitled to summary judgment on this issue. Third, the Shipyard
Plaintiffs argue that TPA and Hilco are "affiliated" for the purpose of avoiding liability because
"Hilco in part owns TP A." [ECF No. 10]. However, while a Hilco subsidiary does have an
interest in TP A, it only owns a 15% stake. [ECF No. 107-1, p. 17]. Furthermore, Hilco's
primary potential interest in the property pertains to certain "select above-grade assets" that
another of its subsidiaries purchased from RG Steel. ld. Fourth, the Shipyard Plaintiffs'
arguments regarding the Weaver Consulting Group CWeaver") do not establish a genuine issue
of material fact for trial. Plaintiffs argue that Weaver was hired to "limit the liability of the
prospective [ultimate] purchaser" of the Steel Mill Property, which is contrary to CERCLA
guidance. Plaintiffs specifically allege that Weaver assisted with developing an environmental
site assessment C'ESA"), providing assistance with the Administrative Consent Order, and
providing consulting to allow the buyer to take advantage of the 8FPP defense. None of these
activities, however, are improper or inappropriate; indeed, conducting an ESA is a recognized
way of establishing "all appropriate inquiry" under 42 U.S.c.

S 9601(40)(8),

and there is nothing

inherently wrong with seeking protection as a I3FPP, and hiring an expert to assist with that
process.

28

In sum, there is no genuine dispute as to the material facts, and I find that TPA is entitled
to summary judgment on its status as a BFPP for the aforementioned reasons
V.

Counterclaims
The Steel Mill Defendants also filed counterclaims against the Shipyard Plaintiffs

pursuant to CERCLA and Maryland law. [ECF No. 52 & 61]. In granting summary judgment in
favor of the Steel Mill Defendants on the Shipyard Plaintiffs' CERCLA claims, [ have rendered
the CERCLA counts in the counterclaims moot. 6 I also find the remaining negligence
counterclaim, pled in the alternative, is moot. Accordingly, these counterclaims are denied as
moot.
CONCLUSION
For the aforementioned reasons, the Steel Mill Defendants' Motion for Summary
Judgment [ECF No. 103] is granted, and the Shipyard Plaintiffs' Counter-Motion for Summary
Judgment [ECF No. III] is denied. TPA's Motion for Summary Judgment on the sole issue of
its status as a bona fide prospective purchaser [ECF No. 107] is also granted, and the Steel Mill
Defendants' Motion to Strike the affidavit of Dr. Peter Shanahan is denied as moot. [ECF No.
128]. 7 A separate order follows.

The amended counterclaims state: [Steel Mill Defendant] denies any liability under CERCLA.
In the event that [Steel Mill Defendant] ;;found liable under CERCLA, Plaintiffs are liable for
contribution to [Steel Mill Defendant] pursuant to CERCLA 42 V.S.C. S 9613[.]" [ECF No. 52,
p. 3; ECF No. 61, p. 3 (emphasis added)]. Because I granted summary judgment in favor of the
Steel Mill Defendants, these counts are moot. Accordingly, I also choose note to address the
question of whether the Shipyard Plaintiffs are "innocent parties" pursuant to 42 V.S.c. S
9607(b )(3).
7 [ have reviewed the Motion to Strike the affidavit of Dr. Peter Shanahan [ECF No. 128], and
the memoranda submitted in connection therewith. As an initial matter, [ note the belated nature
of the introduction of this affidavit. It was filed 18 months after the Steel Mill Defendants
olTered expert reports on this very issue, after the close of discovery, and after extensive
summary judgment motion practice. Plaintiffs argue that the prejudice can be cured by allowing
defendants to depose Dr. Shanahan, and that they were not on notice that benzene travel time
6

29

Date:

9.t J fIZ

was a part of the Steel Mill Defendants' argument. [ECF No. 129]. Ultimately, I find that Dr.
Shanahan's testimony has no material impact on my conclusions. Accordingly, I deny the
motion to strike [ECF No. 128], after having considered his 9-page affidavit.
30