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NEW YORK v. SOLVENT CHEM. CO.

May 6, 1998

THE STATE OF NEW YORK, Plaintiff, -vs- SOLVENT CHEMICAL COMPANY, INC., Defendants. AND RELATED ACTIONS

JOHN T. CURTIN, United States District Judge.


The opinion of the court was delivered by: CURTIN

DECISION and ORDER

CURTIN, District Judge

 BACKGROUND

 Currently before the court are (1) third-party defendant Consolidated Rail Corporation's ("Conrail") motion for summary judgment against third-party plaintiffs Solvent Chemical Co., Inc. ("Solvent"), Mader Capital, Inc. ("Mader"), and ICC Industries, Inc. ("ICC") (Item 268), and (2) Solvent's cross-motion for partial summary judgment against Conrail (Item 277). Oral argument on these motions was first held on December 16, 1994 (Item 335). After that, both Conrail and Solvent submitted numerous briefs and letters in support of their positions. The parties appeared for a final oral argument on these motions on Friday, April 24, 1998.

 On December 3, 1983, the State of New York filed suit against Solvent, Mader, ICC, and three other defendants under the Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA"), 42 U.S.C. § 9601 et. seq., and related state law for the costs of investigation and cleanup of a site at 3163 Buffalo Avenue, Niagara Falls, New York. In April 1994, Solvent, Mader, and ICC filed amended third-party complaints alleging that Niagara Junction Railway ("NJR") owned and operated on a portion of the site from 1950 until 1974, and that it allowed railway tank cars to contaminate the site by leaking hazardous waste. The amended third-party complaints further alleged that Conrail is liable as the successor-in-interest to NJR, and that Conrail, therefore, is liable for cost-recovery under CERCLA section 107 and contribution under CERCLA section 113 and New York statutory and common law.

 On April 3, 1998, Solvent filed its fifth amended third-party complaint, adding many third-party defendants and in which Solvent added a claim that Conrail was an owner and/or operator on the site after April 1976 (Item 746, PP 125-126). Solvent alleges that during this period, Conrail caused or contributed to the contamination at the site by allowing railway tank cars to leak hazardous substances while moving or standing on or near the site (Id., P 126).

 On April 8, 1998, the court granted Mader's motion to discontinue its action against Conrail, and other third-party defendants, without prejudice (Item 747). Consequently, Conrail's motion for summary judgment against Mader is now moot. As such, the court will not discuss any of Mader's arguments in response to Conrail's motion.

 FACTUAL BACKGROUND

 In the early 1970s, eight of the major railroads in the Northeast and Midwest became insolvent and filed for bankruptcy. In response to what it perceived as a rail transportation crisis, Congress enacted the Regional Rail Reorganization Act of 1973 ("Rail Act") and created the United States Railway Association ("USRA"), which it charged with the preparation of a plan to restructure rail service in the region. Consolidated Rail Corp. v. United States, 883 F. Supp. 1565, 1569 (Sp.Ct.R.R.R.A. 1995). *fn1" The primary purpose of the Rail Act was the reorganization of railroads in the region into an "economically viable system capable of providing adequate and efficient rail service." 45 U.S.C. § 701(b)(2). The Rail Act called for the creation of Conrail, a private corporation which would operate "a rail system . . . adequate to meet the needs and service requirements of this region and of the national rail transportation system." 45 U.S.C. § 701(b)(1). The USRA's final system plan ("FSP") designated that certain properties would be transferred to and operated by the newly created Conrail in order to create a financially self-sustaining rail service system. The USRA submitted the FSP to Congress for approval pursuant to section 208(a) of the Rail Act. 45 U.S.C. § 718(a).

 Conrail was created by Congress specifically to take title to and operate certain rail properties and assets. It did not choose the properties and assets that it received. The USRA selected the properties and assets, and the transfers were made pursuant to court orders and documents drafted pursuant to such orders. As Judge Wisdom explained in Penn Central Corp. v. United States, 862 F. Supp. 437, 446 (Sp.Ct.R.R.R.A. 1994) (Penn Central II):

 
These transactions were consummated with an eye toward the future. Congress believed that the future profitability of the rail lines depended upon the degree to which they could be made more efficient. Accordingly, Conrail, as the recipient of the properties, was charged with rehabilitating, improving, and modernizing the rail properties. In exchange, Congress sought to give Conrail and the other post-conveyance railroads a clean slate, free from the financial burdens of their predecessor. This financial tabula rasa reflected the "fresh start policy" embodied in the Rail Act.

 The Rail Act also created a special court ("Rail Act Court") comprised of three federal judges to administer "all judicial proceedings with respect to the final system plan." 45 U.S.C. § 719(b). This court was "authorized to exercise the powers of a district judge in any judicial district with respect to such proceedings . . . ." Id. Under the Rail Act, the Rail Act Court has original and exclusive jurisdiction over certain issues. 45 U.S.C. § 719(e). Subsection (e)(1) provides in relevant part that the Rail Act Court has original and exclusive jurisdiction, "notwithstanding any other provision of law," over any civil action:

 
(A) for injunctive or other relief against the [USRA] from the enforcement, operation, or execution of this chapter or any provision thereof, or from any action taken by the [USRA] pursuant to authority conferred or purportedly conferred under this chapter;
 
(B) challenging the constitutionality of this chapter or any provision thereof;
 
(C) challenging the legality of any action of the [USRA], or any failure of the [USRA] to take any action, pursuant to authority conferred or purportedly conferred under this chapter;
 
(D) to obtain, inspect, copy, or review any document in the possession or control of the [USRA] that would be discoverable in litigation pursuant to section 743(c) of this title;
 
(E) brought after a conveyance, pursuant to section 743(b) of this title, to set aside or annul such conveyance or to secure in any way the reconveyance of any rail properties so conveyed; or
 
(F) with respect to continuing reorganization and supplemental transactions, in accordance with ...

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