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Boston and Maine Corp. v. Massachusetts Bay Transportation Authority

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Before Lynch, Chief Judge, Torruella and Howard, Circuit Judges.

On June 30, 1983, the Boston and Maine Corporation (“B&M”), a railroad operator, was discharged from bankruptcy by a Consummation Order stating that it was “free and clear of all claims.” The Order was pursuant to § 77 of the Bankruptcy Act of 1898, 11 U.S.C. § 205 (repealed 1978). B&M was the operator of what is now known as the MBTA Commuter Rail Maintenance Facility (“the Terminal”), a thirty-four-acre railroad terminal in the greater Boston area used for refueling diesel trains. In 1983, the Terminal was owned by the Massachusetts Bay Transportation Authority (“the MBTA”), having been purchased by the MBTA from B&M in 1976; B&M had operated the Terminal under bankruptcy protection from 1970 to June 1983 and had owned the Terminal since the late 1920s. B&M continued to operate the Terminal under an agreement with and for the benefit of the MBTA until December 31, 1986.

The MBTA asserted no claims against B&M regarding environmental matters before B&M’s June 1983 discharge from bankruptcy, pursuant to the Consummation Order. The MBTA did, however, assert a claim on May 4, 2004, almost 21 years later, against B&M. The claim was for 95 percent of $15,340,810 for past costs and 95 percent of all future costs, as contribution, under state environmental law, the Massachusetts Oil and Hazardous Material Release Prevention and Response Act, Mass. Gen. Laws ch. 21E (“Chapter 21E”), for certain cleanup activities the MBTA had undertaken at the Terminal. The state’s Department of Environmental Quality Engineering (“DEQE”), now known as the Department of Environmental Protection (“DEP”), had ordered the MBTA in 1989 to clean up oil contamination at the site under Chapter 21E. The MBTA sought contribution for that portion of cleanup it said was attributable to B&M for releases of oil and hazardous substances during B&M’s operation and earlier ownership of the Terminal. The vast majority of these releases occurred prior to the 1983 Consummation Order.

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