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City of Jersey City, et al v. Consolidated Rail Corporation

February 3, 2012

CITY OF JERSEY CITY, ET AL.,
APPELLANTS
v.
CONSOLIDATED RAIL CORPORATION, ET AL.,
APPELLEES PAULA T. DOW, ATTORNEY GENERAL OF THE STATE OF NEW JERSEY, INTERVENOR



Appeal from the United States District Court for the District of Columbia (No. 1:09-cv-01900)

The opinion of the court was delivered by: Tatel, Circuit Judge:

Argued October 18, 2011

Before: TATEL and GRIFFITH, Circuit Judges, and WILLIAMS, Senior Circuit Judge.

Opinion for the Court filed by Circuit Judge TATEL.

Consolidated Rail Corporation (Conrail) sold its Harsimus Embankment in Jersey City to developers. The City, together with others interested in the historic and environmental value of the Embankment, sued Conrail, alleging that the sale was unlawful because Conrail failed to obtain authority from the Surface Transportation Board to abandon the property. The district court, which has jurisdiction over this case because of the unique nature of the Harsimus Branch--it was transferred to Conrail as part of the Penn Central bankruptcy--dismissed the case for lack of standing. For the reasons set forth in this opinion, we reverse.

I.

The Harsimus Embankment is a six-block, half-mile long stone structure in the heart of Jersey City's historic downtown. Made of maroonish-brown ashlar, the edifice carries seven rail lines as high as twenty-seven feet above street level. Constructed from 1901 to 1905, these lines served the Pennsylvania Railroad for decades, but as the twentieth century wore on, traffic dwindled, and dwindled, and perhaps inevitably, on a probably-unremarkable day in the early 1990s, the last train ever to use the line came and went. Built to be an artery in shipping and commerce, the Embankment-- once a symbol of modernity--is now covered in foliage and stands, somewhat ironically, as a quaint memorial to a bygone era, a verdant holdout against modern urban sprawl.

A place like that is bound to draw attention. The Embankment presents an opportunity for developers who see new and more profitable uses for the land--in this case, the developers (LLCs) to whom Conrail sold the property. At the same time, the Embankment attracts those who see its rustic qualities and historic value as irreplaceable--here the City of Jersey City, the Rails to Trails Conservancy, and the Pennsylvania Railroad Harsimus Stem Embankment Preservation Coalition.

To explain why a dispute over six blocks of property in New Jersey has ended up in the United States Court of Appeals for the District of Columbia Circuit--indeed, for the second time--we begin with some regulatory background. The Interstate Commerce Commission Termination Act requires that rail carriers obtain Surface Transportation Board (STB) approval before "abandon[ing] any part of its railroad lines." 49 U.S.C. § 10903(a). By contrast, carriers need no such approval for "spur, industrial, team, switching, or side tracks." 49 U.SC. § 10906; see also 49 U.S.C. § 11323(a)(2) (listing transactions which "may be carried out only with the approval and authorization of the Board"). Ordinarily, STB decides whether tracks qualify as "railroad line" and thus require abandonment authorization. See 49 U.S.C. § 10903(a).

This, however, is not an ordinary case. In 1968, the Pennsylvania Railroad, of which the Harsimus Branch was a small part, merged with a rival to form the Penn Central Transportation Company. By the early 1970s, the Penn Central, along with eight other major railroads, filed for bankruptcy, precipitating a "rail transportation crisis." See Blanchette v. Conn. Gen. Ins. Corps., 419 U.S. 102, 108 (1974). In response, Congress enacted the Regional Rail Reorganization Act of 1973, which established two new entities: one to reorganize the railroad system, the United States Railway Association (USRA); and the other to own and operate the reorganized system, Conrail, a railroad headquartered in Philadelphia. See Consol. Rail Corp. v. Surface Transp. Bd., 571 F.3d 13, 14-15 (D.C. Cir. 2009) ("Conrail I"). In 1975, USRA published a Final System Plan that, among other things, formally transferred the bankrupt carriers' rail properties to Conrail. The Harsimus Branch was one such property. The Rail Act also created a "special court" with exclusive jurisdiction over disputes relating to the Final System Plan, 45 U.S.C. § 719, including responsibility for determining whether tracks conveyed to Conrail by the Plan qualify as "railroad line," which Conrail could not abandon without STB authorization. See generally id. Congress later abolished that court and transferred its "jurisdiction and other functions" to the United States District Court for the District of Columbia. Id. § 719(b)(2).

With this background in mind, we return to the facts of the case. In the late 1990s, Conrail began discussions with the Jersey City Redevelopment Authority about redeveloping the Harsimus Embankment for residential housing. These redevelopment plans were blocked, however, when a group of citizens successfully petitioned the State of New Jersey to have most of the Embankment designated as a "historic place" in the New Jersey State Register of Historic Places. In early 2003, after Conrail formally put the property out for bid, the City passed an ordinance designating the Embankment as a "historic landmark," meaning that the property could be developed only with the consent of the Jersey City Historic Preservation Commission.

Conrail began negotiating with SLH Holdings Company to sell the Embankment to the LLCs, which SLH had formed for that purpose. Soon thereafter, the City sent Conrail a letter proposing to "open up a dialogue" to have a public entity acquire the property. City of Jersey City v. Consol. Rail Corp., 741 F. Supp. 2d 131, 135 (D.D.C. 2010). In 2004, Jersey City passed an ordinance authorizing the City to purchase or condemn the Embankment. Subsequently, however, the City's lawyers advised it that it could neither purchase nor condemn the Harsimus Embankment because it was "railroad line" that Conrail could lawfully abandon only with STB authorization. Having received no offer from the City, Conrail, believing that the Harsimus Branch qualified as "spur, industrial, team, switching, or side tracks" that it could abandon without STB approval, sold the Harsimus Embankment to the LLCs.

When the LLCs began dismantling the tracks and other rail structures, the City petitioned STB for a declaratory order that Conrail's sale was void because the Embankment was "railroad line" requiring STB abandonment authorization. Although STB agreed with the City, we vacated that decision in Conrail I, holding that because the dispute related to property transferred pursuant to the Final System Plan, it fell within the "original and exclusive jurisdiction" of the special court, now the U.S. District Court for the District of Columbia. Conrail I, 571 F.3d at 19-20.

Accordingly, the City, joined by Rails to Trails Conservancy and the Pennsylvania Railroad Harsimus Stem Embankment Preservation Coalition, filed a complaint in the district court, arguing again that Conrail's sale of the Harsimus Embankment was void because it had failed to obtain STB abandonment authority. The LLCs intervened as defendants. The district court dismissed the complaint for lack of standing because, among other things, "plaintiffs have not established that judicial intervention here would ...


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