Luzerne County’s decision to sell its railroad tracks has sparked a legal battle, with a federal judge set to evaluate the case later this month. At the heart of the dispute is whether the county should accept a lower upfront cash offer from Reading & Northern Railroad over a higher bid from R.J. Corman Railroad Co.
R.J. Corman Railroad Co. initiated legal proceedings against Luzerne County and related entities, including its redevelopment authority and the Luzerne County Rail Corp. The lawsuit aims to prevent the sale to Reading & Northern Railroad, citing a violation of the state Open Meetings Law and a preference for Reading & Northern as the “pre-chosen” bidder, despite offering a lesser cash amount.
The county’s redevelopment authority oversees approximately 60 miles of railroad tracks, with 27 miles currently active. The tracks, initially purchased from a company owned by businessman Louis DeNaples in 1996, have been a point of contention regarding ownership and financial responsibility. Although the county covered a defaulted mortgage with a loan to the authority, the repayment remains unresolved, leading to further disputes over the track sale.
The tracks’ history
More than three decades ago, the Luzerne County Rail Corp. was established to manage operations on these tracks. Since December 2020, R.J. Corman has leased the tracks, facilitating freight transport in the region. The company also owns separate tracks linked to the Grimes Industrial Park in Pittston, acquired around the same time.
Reading & Northern Railroad proposed a $10 million purchase offer for the tracks, prompting R.J. Corman to argue this as evidence of the county’s intent to force a sale. The county and its redevelopment authority agreed to seek buyers as part of a lawsuit settlement, resulting in three bids. R.J. Corman’s proposal included $8.2 million in cash, while Reading & Northern offered $7 million in cash plus $3 million in system improvements post-sale.
The selection process raised questions when the blue-ribbon panel recommended Reading & Northern, despite R.J. Corman’s higher cash offer. The panel’s decision was later vetoed by the county council, but ultimately, the sale to Reading & Northern was approved for $7 million.
Settlement leads to sale
R.J. Corman’s lawsuit suggests that the county’s veto power over the sale process influenced the outcome. The company contends that the county council’s rejection of the highest offer, which could have settled outstanding loans, was not in the public interest. The redevelopment authority and county council eventually approved Reading & Northern’s bid.
Suit says feds’ OK a must
The lawsuit argues that federal approval from the Surface Transportation Board is necessary before proceeding with the sale. R.J. Corman asserts that an unauthorized sale could disrupt shipping services and compromise the title to its Grimes Industrial track, potentially causing “irreparable harm.”
Jack Dean, the attorney representing Luzerne County, expressed confidence in the county’s defense against the claims. “I’m confident that at the end of the day we’re going to be OK on everything,” Dean said.
