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National Railroad Passenger Corp. v. Pennsylvania Public Utility Commission

August 27, 2003

NATIONAL RAILROAD PASSENGER CORPORATION
v.
PENNSYLVANIA PUBLIC UTILITY COMMISSION; GLEN THOMAS, CHAIRMAN, PENNSYLVANIA PUBLIC UTILITY COMMISSION; ROBERT K. BLOOM, VICE CHAIRMAN, PENNSYLVANIA PUBLIC UTILITY COMMISSION; AARON WILSON, JR., COMMISSIONER, PENNSYLVANIA PUBLIC UTILITY COMMISSION; TERRENCE J. FITZPATRICK, COMMISSIONER, PENNSYLVANIA PUBLIC UTILITY COMMISSION, APPELLANTS
SOUTHEASTERN PENNSYLVANIA TRANSPORTATION AUTHORITY
v.
PENNSYLVANIA PUBLIC UTILITY COMMISSION, APPELLANT



On Appeal from the United States District Court for the Eastern District of Pennsylvania (D.C. Nos. 01-cv-05570, 95-cv-04500) District Judge: Hon. Jan E. DuBois

Before: Sloviter, Ambro, and Becker, Circuit Judges

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

PRECEDENTIAL

Argued June 23, 2003

OPINION OF THE COURT

This case is one in a long line of disputes between on one side the Pennsylvania Public Utility Commission ("PUC") and on the other side the National Railroad Passenger Corporation ("Amtrak"), and/or in a separate but related dispute the Southeastern Pennsylvania Transportation Authority ("SEPTA"), concerning the PUC's assignment of costs and responsibilities for maintaining and repairing rail-highway crossings in Pennsylvania. The PUC appeals*fn1 from the District Court's order which: (1) denied the motions of the PUC and PUC Commissioner Aaron Wilson, Jr., to dismiss Amtrak's complaint; (2) granted SEPTA's motion to enforce the Consent Decree it previously entered into with the PUC in federal court; and (3) granted in part and denied in part Amtrak's motion for preliminary and other injunctive relief and its renewed motion for declaratory judgment and preliminary injunctive relief. SEPTA v. Pa. PUC, 210 F. Supp. 2d 689, 729-30 (E.D. Pa. 2002) ("SEPTA"). We will affirm.

I. FACTS AND PROCEDURAL BACKGROUND

The PUC is a state commission with a mandate to determine "the manner and conditions in or under which [railroad crossings] shall be maintained, operated, and protected to effectuate the prevention of accidents and the promotion of the safety of the public." 66 Pa. Cons. Stat. Ann. § 2702(b). As part of its duties, the PUC has responsibility for allocating the maintenance costs for railroad crossings in Pennsylvania among the parties having an interest in the particular crossing. 66 Pa. Cons. Stat. Ann. § 2704. This dispute centers on the PUC's assignment of the costs for maintenance and repair of the Lloyd Street Bridge, in Chester, PA, although the ramifications are wider.

A. History of Litigation Between the PUC, Amtrak, and SEPTA

Both Amtrak and SEPTA have been involved in a recurring legal battle with the PUC concerning its attempt to assess them a portion of the maintenance costs for railroad crossings. The dispute arises from their differing interpretations of Amtrak's exemption from state and local taxes and fees contained in the Rail Passenger Service Act ("RPSA"), which provides:

( l ) Exemption from taxes levied after September 30, 1981.– (1) In general.– Amtrak, a rail carrier subsidiary of Amtrak, and any passenger or other customer of Amtrak or such subsidiary, are exempt from a tax, fee, head charge, or other charge, imposed or levied by a State, political subdivision, or local taxing authority on Amtrak... after September 30, 1981. In the case of a tax or fee that Amtrak was required to pay as of September 10, 1982, Amtrak is not exempt from such tax or fee if it was assessed before April 1, 1997. 49 U.S.C. § 24301( l )(1) (2003).

The statutory history and legislative purpose behind enactment of the RPSA were discussed in some detail by the Supreme Court in Nat'l R.R. Passenger Corp. v. Atchison, Topeka & Santa Fe Railway Co., 470 U.S. 451, 453-55 (1985). In that opinion, the Court noted that Congress passed the RPSA in 1970 as a response to the significant decline in the number of operating rail passenger trains and the "tremendous operating losses" suffered by those passenger services still in operation. Id. at 454. The RPSA was Congress' effort to revive the passenger train industry by reorganizing and restructuring the rail passenger system. Id. As part of the RPSA, Congress created Amtrak and provided private railroads the opportunity to transfer their passenger-service obligations to Amtrak, which Congress had established for that purpose. Id. at 454-55. All but five private railroads offering intercity passenger service contracted with Amtrak to transfer their obligations. Id. at 456.

We explained in Nat'l R.R. Passenger Corp. v. Pa. PUC, 848 F.2d 436, 438 (3d Cir.), cert. denied, 488 U.S. 893 (1988) ("Amtrak II"), that despite federal subsidies, Congress recognized that Amtrak suffered losses in its first decade, and its financial situation was bleak. In a 1980 report, the Department of Transportation estimated that state and local taxes would cost Amtrak more than $14 million in 1981. S. Rep. No. 253, 97th Cong., 1st Sess. 103 (1981). The Senate Appropriations Committee noted that "[i]t is generally recognized that State and local taxes on a primarily Federal investment are inappropriate," and that "such taxation serves to erode the revenue-to-cost ratios which impact on whether States and localities continue to receive the benefits of Amtrak service." Id. Based on this reasoning, Congress deferred for one year Amtrak's payment of any state or local taxes. Pub. L. No. 97-102, 95 Stat. 1442, 1451 (1981).

The following year, Congress revisited the matter and "converted Amtrak's temporary exemption into a continuing one." Amtrak II, 848 F.2d at 438. A Senate Committee Report concluded that "[a]t a time when local jurisdictions are demanding that nationwide rail passenger service be maintained, it seems reasonable to provide for a 'user contribution' whereby those areas receiving the service in turn contribute to Amtrak's continued existence through tax relief." S. Rep. No. 516, 97th Cong., 2d Sess. 170 (1982). The statutory exemption from state and local taxes and fees was codified at 45 U.S.C. § 546b, which has since been recodified at 49 U.S.C. § 24301( l )(1).*fn2

Based on this statutory exemption, Amtrak and SEPTA have repeatedly contested the PUC's attempts to assess them for maintenance costs for crossings. E.g., Nat'l R.R. Passenger Corp. v. Pa. PUC, 665 F. Supp. 402 (E.D. Pa. 1987) ("Amtrak I"), aff'd., Amtrak II, 848 F.2d 436 (3d Cir.), cert. denied, 488 U.S. 893 (1988); Nat'l R.R. Passenger Corp. v. Pa. PUC, No. Civ. A. 86-5357, 1991 WL 998 (E.D. Pa. Jan. 2, 1991) ("Amtrak III"); Nat'l R.R. Passenger Corp. v. Pa. PUC, No. Civ. A. 86-5357, 1997 WL 587278 (E.D. Pa. Sept. 10, 1997) ("Amtrak IV"); Nat'l R.R. Passenger Corp. v. Pa. PUC, No. Civ. A. 86-5357, 1997 WL 597963 (E.D. Pa. Sept. 15, 1997) ("Amtrak V"); Nat'l R.R. Passenger Corp. v. Pa. PUC, No. Civ. A. 86-5357, 1998 WL 103377 (E.D. Pa. Feb. 23, 1998) ("Amtrak VI"); SEPTA v. Pa. PUC, 592 A.2d 797 (Pa. Commw. Ct. 1991), alloc. denied, 611 A.2d 714 (Pa. 1992) ("SEPTA I"); SEPTA v. Pa. PUC, 592 A.2d 808 (Pa. Commw. Ct. 1991), alloc. denied, 611 A.2d 714 (Pa. 1992) ("SEPTA II"); SEPTA v. Pa. PUC, 802 F. Supp. 1273 (E.D. Pa. 1992) ("SEPTA III"); SEPTA v. Pa. PUC, 826 F. Supp. 1506 (E.D. Pa. 1993) ("SEPTA IV"); SEPTA v. Pa. PUC, No. Civ. A. 95-4500, 1999 WL 639946 (E.D. Pa. Aug. 23, 1999) ("SEPTA V").

Two of the opinions listed above have particular relevance for the issues before us. In Nat'l R.R. Passenger Corp. v. Pa. PUC, 665 F. Supp. 402 (E.D. Pa. 1987) ("Amtrak I"), Amtrak challenged a PUC order that assessed against Amtrak costs required for the replacement and maintenance of the Cassatt Avenue Bridge, also in Chester, PA. The district court granted Amtrak's motion for summary judgment against the PUC, finding that Amtrak was exempt from the PUC's assessments under the RPSA.*fn3 Id. at 412. The district court held that "[t]he extensive federal involvement [in] Amtrak's management, finances and operations make it apparent that the legislative exemptions should be liberally construed to effectuate its goals." Id. at 411. In addition, the court reasoned that application of the exemption was necessary to prevent the diversion of federal funds from use for Amtrak operations and to guarantee Amtrak's fiscal integrity. Id. at 410-11.

Consequently, the district court enjoined the PUC from assessing against Amtrak costs regarding the Cassatt Avenue Bridge. Id. at 412.

The PUC appealed to this court. In Amtrak II, we affirmed the district court's order, holding that "Amtrak's immunity from local 'taxes or other fees'... extends to assessments for local improvements of the kind at issue [for the Cassatt Avenue Bridge]." 848 F.2d at 440. It should be noted that the PUC's attempt to interest the Supreme Court in the issue was unsuccessful. See 488 U.S. 893 (1988).

Thereafter, litigation between the PUC and SEPTA pending in federal court was resolved by a Consent Decree entered into by the two parties on January 23, 1996. See SEPTA v. Pa. PUC, Civ. A. No. 95-CV-4500 (E.D. Pa. Jan. 23, 1996); SEPTA App. at 161. The Consent Decree, which bars the PUC from assessing costs against SEPTA, was based on the outcome and language of related cases. In SEPTA v. Pa. PUC, 826 F. Supp. 1506 (E.D. Pa. 1993) ("SEPTA IV"), the district court held that SEPTA was exempt from the PUC's assessment of maintenance costs for four bridge crossings pursuant to the RPSA section, 45 U.S.C. § 581(c)(5),*fn4 which confers tax immunity on commuter authorities "to the same extent as" Amtrak. Id. at 1526 n.24. Thereafter, the Commonwealth Court acknowledged that "[t]he PUC and this Court have duly recognized the federal preemption of the subject matter of state and local assessment of charges against Amtrak for repair or replacement of railroad crossings." Consolidated Rail Corp. v. Pa. PUC, 671 A.2d 248, 252 (Pa. Commw. Ct. 1995). With this background, the PUC agreed to the Consent Decree with SEPTA.

The PUC accurately describes the Consent Decree as requiring it to "refrain from assessing costs or responsibilities in future cases involving highway bridges against SEPTA." PUC's Br. at 9 (emphasis added). Specifically, the Consent Decree provides that the PUC "is barred hereafter from assessing or continuing to assess upon SEPTA the cost or responsibility of or for design, construction, reconstruction, inspection, maintenance, removal of snow, ice, debris or graffiti, or repair... of any Highway Bridge ...." SEPTA App. at 163. Moreover, the Consent Decree states:

Unless permitted by subsequent amendment to, or repeal of, [49 U.S.C. §§ 24301( l ) and 24501(g)], henceforth in all PUC above-grade crossing proceedings involving SEPTA railroad operations or SEPTA railroad rights-of-way, whether such proceedings are initiated by the [PUC], SEPTA or by any other party, the [PUC] shall not assign to SEPTA, either on a temporary or on a permanent basis, any Assessed Cost or Responsibility in violation of SEPTA's statutory exemption with respect to Highway Bridges....

SEPTA App. at 164-65. The Consent Decree also provides that the District Court "shall retain jurisdiction over this action to enforce the provisions of this Consent Decree, including any claims of SEPTA arising out of the [PUC's] failure to comply with SEPTA's federal statutory exemption." SEPTA App. at 172.

B. Lloyd Street Bridge Dispute

In accordance with its statutory mandate, the PUC initiated an investigation of the Lloyd Street Bridge in 1997 to determine the condition of the bridge and to assign responsibility for its maintenance. The Lloyd Street Bridge, located in Chester, Pennsylvania, provides a street crossing over railroad tracks used by Amtrak and SEPTA. At a Field Conference held on July 14, 1997, the PUC discovered that "no concerned party agreed to accept responsibility for maintaining the structure." Amtrak App. at 104.

A PUC Administrative Law Judge ("ALJ") held an evidentiary hearing and issued a Recommended Decision on March 14, 2000, assigning costs to parties with an interest in the bridge. The City of Chester ("Chester"), Amtrak, Consolidated Rail Corporation ("Conrail"), the Pennsylvania Department of Transportation ("PennDOT"), and Delaware County each filed exceptions to the decision with the PUC. On September 1, 2000, the PUC entered an order ("2000 Order") denying all exceptions and adopting the ALJ's Recommended Decision. The PUC order assigned 75% of the maintenance costs to Chester, with the remaining 25% divided between Conrail (15%), PennDOT ...


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