City of Philadelphia v. Pennsylvania Public Utility Com'n

• Decision Date: 24 May 1996
• Parties: CITY OF PHILADELPHIA, Petitioner, v. PENNSYLVANIA PUBLIC UTILITY COMMISSION, Respondent. CONSOLIDATED RAIL CORPORATION, Petitioner, v. PENNSYLVANIA PUBLIC UTILITY COMMISSION, Respondent.
• Court: Pennsylvania Commonwealth Court

Page 1298

676 A.2d 1298

CITY OF PHILADELPHIA, Petitioner, v. PENNSYLVANIA PUBLIC UTILITY COMMISSION, Respondent.

CONSOLIDATED RAIL CORPORATION, Petitioner, v. PENNSYLVANIA PUBLIC UTILITY COMMISSION, Respondent.

Commonwealth Court of Pennsylvania.

Argued April 16, 1996.

Decided May 24, 1996.

Gerald T. Clark, for Petitioner, City of Philadelphia.

David C. Eaton, for Petitioner, Consolidated Rail Corporation.

Susan T. Povilaitis, Assistant Counsel, for Respondent.

Lee C. Silverman, Assistant Counsel, for Intervenor, Department of Transportation.

Before SMITH and PELLEGRINI, JJ., and NARICK, Senior Judge.

PELLEGRINI, Judge.

The City of Philadelphia (City) and Consolidated Rail Corporation (Conrail) present cross-appeals of a decision of the Pennsylvania Public Utility Commission (PUC) directing the City to incur the costs of performing an inspection, preparing construction plans and reconstructing a bridge and directing Conrail, upon completion, to reimburse the City for 20 percent of the actual cost of the inspection, planning and repairs to the bridge. The bridge carries 41st Street, a City street in West Philadelphia, over railroad tracks used principally for passenger rail service.

In November of 1993, the City informed the PUC that it found the 41st Street Bridge to be in a deteriorating structural condition and had reduced its load limit from 20 tons to three tons. The 41st Street Bridge crosses six railroad lines, four are currently owned by the National Railroad Passenger Corporation (Amtrak) and the remaining two are owned by Conrail. Conrail's railroad tracks have not been used in recent years. Amtrak's tracks are used both by Amtrak and, on lease, by the Southeastern Pennsylvania Transportation Authority (SEPTA). ¹

All parties agreed that further investigation was needed, but none agreed to perform any of the work. The PUC initially ordered that plans be made to restore the bridge to its original load limit by Amtrak but at the cost of the City. Amtrak petitioned for reconsideration, asserting, among other things, that it is exempt from paying such costs, and hearings were scheduled before an administrative law judge (ALJ). While the case was pending before the PUC, the City closed the bridge to all motor vehicle traffic due to continuing deterioration.

The ALJ found that the bridge was built by the Pennsylvania Railroad in 1928. Pennsylvania Railroad signed an agreement with the City in 1927 requiring the railroad to maintain the bridge. Pennsylvania Railroad was succeeded by Penn Central Transportation Company which acknowledged responsibility for maintenance of the bridge under the 1927 agreement with the City. In 1976, Penn Central transferred the property and right-of-way for the tracks to Conrail. Conrail immediately transferred the property and right-of-way for some of the tracks to Amtrak. Corresponding to its ownership, Amtrak solely performed maintenance on the bridge while the City solely performed maintenance on the approach roadways to the bridge.

The ALJ found that the City should perform an in-depth inspection, prepare plans and perform repairs to the bridge. The ALJ recommended that, after the work was completed, Conrail reimburse the City for 20 percent of all actual costs of the reconstruction and thereafter maintain the bridge. The City, the ALJ found, should be responsible for maintaining the approaches to the bridge. Although Amtrak was not present at the hearing and presented no acceptable evidence, the ALJ held that the PUC has no authority to order Amtrak to repair and maintain the bridge, citing National Railroad Passenger Corporation v. Pennsylvania Public Utility Commission, 665 F.Supp. 402 (E.D.Pa.1987), affirmed, 848 F.2d 436 (3rd Cir.1988), cert. denied, 488 U.S. 893, 109 S.Ct. 231, 102 L.Ed.2d 220 (1988) (Amtrak I ), wherein the Third Circuit held that the PUC could not impose costs of reconstructing a bridge crossing on Amtrak because Amtrak was statutorily exempt from all state taxes and fees. The PUC adopted the findings and recommended decision of the ALJ. The City then filed this appeal and Conrail filed a cross-appeal. ² After its initial petition to the PUC, Amtrak has chosen not to participate before the PUC or this court.

I.

Pursuant to Sections 2702(b) and 2704(a) of the Public Utility Code (Code), 66 Pa.C.S. §§ 2702(b) and 2704(a), ³ the Commission is vested with the authority to determine who shall bear the costs associated with the repair or maintenance of a railroad crossing and the facilities at or adjacent to such a crossing in order to protect the safety of the public. ⁴ In exercising this authority, the PUC is not limited to any fixed rate with respect to the allocation of costs, but instead, may take all relevant factors into consideration. Department of Transportation v. Pennsylvania Public Utility Commission, 79 Pa.Cmwlth. 266, 469 A.2d 1149 (1983). The allocation of costs between the parties is within the discretion of the PUC, but such allocation must be just and reasonable. Borough of South Greensburg v. Pennsylvania Public Utility Commission, 117 Pa.Cmwlth. 361, 544 A.2d 82 (1988). The decision must be based upon some sound legal or factual basis. Port Authority of Allegheny County v. Pennsylvania Public Utility Commission, 207 Pa. Superior Ct. 299, 217 A.2d 810 (1966). ⁵

The City contends that the PUC erred in holding that it could not require Amtrak to be responsible for maintenance costs and in not enforcing the 1927 agreement against Amtrak and Conrail as successors of the railroad which assumed all maintenance costs in that agreement. The City also contends the PUC erred in holding that it had any responsibility for maintenance based on the 1927 agreement and based on the fact that Amtrak and Conrail received the benefit of the bridge crossing over their tracks. The City contends that the allocation to Conrail, to pay 20 percent of the repair and none of the costs of the detour or approach roadways, is too low. Conrail contends that there should be no assessment against it because it receives no benefit from the bridge, since the tracks it owns under the bridge are inactive. It also contends the PUC cannot enforce the 1927 agreement against it, because its enabling statute prohibits successor liability.

II.

The overriding question before us is whether the PUC erred in holding that it cannot order Amtrak to pay costs for construction or repair of a bridge over Amtrak facilities. The PUC's holding was based on the federal court decision in Amtrak I, that such an allocation of costs was a tax on Amtrak in violation of 45 U.S.C. § 546b, ⁶ which grants Amtrak an exemption from "a tax or fee imposed by a State". The City argues that this court's decision in Southeastern Pennsylvania Transportation Authority v. Pennsylvania Public Utility Commission, 140 Pa.Cmwlth. 270, 592 A.2d 797 (1991), petition for allowance of appeal denied, 531 Pa. 642, 611 A.2d 714 (1992) (SEPTA I ) that the exemption for taxes and fees, in the same federal statute, is inapplicable to the PUC's cost allocation to SEPTA, allows the PUC to impose such costs on Amtrak. In resolving this question, we first address the prior cases addressing Amtrak's liability and the historical basis for the PUC's jurisdiction over the matter.

A. Prior Case Law

In Amtrak I, the first case addressing the issue, the PUC ordered Amtrak to pay 20 percent of the replacement cost of a bridge located in Tredyffrin Township, with the remaining 80 percent paid by the township, subject to reimbursement from the state. Amtrak sought declaratory and injunctive relief in federal court. In determining whether the allocation of reconstruction and maintenance costs to Amtrak is prohibited by the exemption for "a tax or fee", the Third Circuit stated that the costs were similar to "special assessments". Holding that such "special assessments" amounted to taxes on Amtrak, as we noted in SEPTA I, the Third Circuit court gave special consideration to the statute's legislative history and purpose:

The Senate Appropriations Committee reasoned 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." S.Rep. No. 253, 97th Cong., 1st Sess. 103 (1981).

A Senate Committee Report commented that "there are many parts of the country which would gladly pay an amount equal to local or State taxes owed by Amtrak in order to have the benefit of Amtrak service." S.Rep. No. 516, 97th Cong., 2d Sess. 170 (1982).

Amtrak was created to maintain and improve rail passenger service with federal financial support and the payment of taxes would impinge on the ability to carry out that service.

Amtrak I, 848 F.2d at 437-440. Affirming the District Court, the Third Circuit held the allocation of costs were taxes from which Amtrak was exempt because it would be inappropriate to undermine the goals of Amtrak through "the too stingy construction of the exemption". Id. at 437.

Thereafter, the PUC issued an order requiring the bridge to be maintained rather than replaced and ordered Amtrak to contribute to the cost of maintenance. Amtrak requested the federal courts to enforce their previous injunction against the PUC to prevent the new cost allocation. In a memorandum opinion, Judge Newcomer, for the District Court, held that the imposition of maintenance costs was enjoined by the order in Amtrak I and that the PUC's action violated that order. The District Court's order reiterated a permanent injunction against the PUC's imposition of any costs of maintenance for the bridge against Amtrak. National Railroad Passenger Corporation v. Commonwealth of Pennsylvania and Township of Tredyffrin, No. 86-5357, 1991 WL 998, filed January 2, 1991. Judge Newcomer also awarded Amtrak its costs and attorney's fees incurred not only in enforcing the injunction but also in contesting before the PUC the imposition of the...