Wheeling & Lake Erie R. Co. v. Public Utility Com'n of Com. of Pa.

• Court: U.S. Court of Appeals — Third Circuit
• Writing for the Court: NYGAARD; GARTH
• Citation: Wheeling & Lake Erie R. Co. v. Public Utility Com'n of Com. of Pa., 141 F.3d 88 (3rd Cir. 1998)
• Decision Date: 31 March 1998
• Docket Number: 96-3704,Nos. 96-3703,s. 96-3703
• Parties: WHEELING & LAKE ERIE RAILWAY COMPANY v. PUBLIC UTILITY COMMISSION OF THE COMMONWEALTH OF PENNSYLVANIA; David W. Rolka, Chairman of the Pennsylvania Public Utility Commission; Joseph Rhodes, Jr.; John M. Quain; Lisa Crutchfield; John Hanger, In their Official Capacities as Members of the Pennsylvania Public Utility Commission; Scott Township, Pennsylvania; James P. Mulligan, Chairman of the Board of Commissioners of Scott Township, Pennsylvania Scott Township, Pennsylvania and James P. Mulligan, Chairman of the Board of Commissioners of Scott Township, Pennsylvania, Appellants in 96-3703. Public Utility Commission of the Commonwealth of Pennsylvania; David W. Rolka, Joseph Rhodes, Jr.; John M. Quain, Lisa Crutchfield and John Hanger, Appellants in 96-3704.

Page 88

141 F.3d 88

WHEELING & LAKE ERIE RAILWAY COMPANY v. PUBLIC UTILITY COMMISSION OF THE COMMONWEALTH OF PENNSYLVANIA; David W. Rolka, Chairman of the Pennsylvania Public Utility Commission; Joseph Rhodes, Jr.; John M Quain; Lisa Crutchfield; John Hanger, In their Official Capacities as Members of the Pennsylvania Public Utility Commission; Scott Township, Pennsylvania; James P Mulligan, Chairman of the Board of Commissioners of Scott Township, Pennsylvania Scott Township, Pennsylvania and James P. Mulligan, Chairman of the Board of Commissioners of Scott Township Pennsylvania, Appellants in 96-3703 Public Utility Commission of the Commonwealth of Pennsylvania; David W. Rolka, Joseph Rhodes, Jr.; John M. Quain, Lisa Crutchfield and John Hanger, Appellants in 96-3704.

Nos. 96-3703, 96-3704.

United States Court of Appeals, Third Circuit.

Argued Sept. 11, 1997.

Decided March 31, 1998.

David A. Salapa (Argued), Assistant Counsel, John F. Povilaitis, Chief Counsel, Pennsylvania Public Utility Commission, Harrisburg, PA, for Appellants, Pennsylvania Public Utility Commission; David W. Rolka; Joseph Rhodes, Jr.; John M. Quain; Lisa Crutchfield; and John Hanger.

David L. Haber (Argued), Weinheimer, Schadel & Haber, Pittsburgh, PA, for Appellants, Scott Township, Pennsylvania; and James Mulligan.

Gregory G. Fletcher (Argued), Baker, Donelson, Bearman & Caldwell, Memphis, TN, Richard R. Wilson Vuono, Lavelle & Gray, Pittsburgh, PA, for Appellee.

Charles D. Gray, National Association of Regulatory Utility Commissioners, Washington, DC, for Amicus, National Association of Regulatory Utility Commissioners.

Andrew S. Gordon, Chief Counsel, Gina M. D'Alfonso, Assistant Counsel in Charge, Commonwealth of Pennsylvania Department of Transportation, Harrisburg, PA, for Amicus, Commonwealth of Pennsylvania Department of Transportation.

Before: MANSMANN, NYGAARD and GARTH, Circuit Judges.

OPINION OF THE COURT

NYGAARD, Circuit Judge.

In this appeal we must decide whether assessing a railroad for a portion of the construction and maintenance costs of a bridge intersecting its right-of-way constitutes a discriminatory tax under the Railroad Revitalization and Regulatory Reform (4-R) Act of 1976, 49 U.S.C. § 11501. ¹ The district court held that the assessment was a discriminatory tax. We will reverse.

I. Background

The Wheeling & Lake Erie Railway Company subleases a railroad right-of-way passing under "Old Washington Pike" in Scott Township, Allegheny County, Pennsylvania. The bridge supporting that highway became so deteriorated that it was closed in 1982. The Township procured the necessary approvals from the Pennsylvania Public Utility Commission and constructed a new bridge at the Township's initial expense. The Commission then ordered Wheeling to pay 3% of the total construction costs of the bridge replacement project and 15% of the maintenance costs of the new bridge (excluding costs of snow and ice removal). ² The Commission also assessed another railroad, whose tracks pass under the same span, 3% and 15% respectively. That railroad is not a party. The Pennsylvania Department of Transportation was to pay 7% of the construction costs. The Township was to pay the remaining 87% of the construction costs and 70% of the maintenance costs, with an 80% reimbursement for construction costs coming from Pennsylvania's Billion Dollar Bridge Project Fund.

Wheeling filed this action requesting declaratory and injunctive relief from the construction and maintenance costs. It argued that the assessment was a discriminatory tax in violation of the 4-R Act. All parties filed motions for summary judgment. In its order granting Wheeling's motion, the district court declared that the assessment was an unlawfully discriminatory tax under the 4-R Act. The court also enjoined the defendants from assessing or collecting the construction and maintenance costs from Wheeling. The Commission and the Township appealed separately. We consolidated the appeals.

II. Eleventh Amendment Immunity

The Commission did not raise its Eleventh Amendment ³ argument before the district court. Nonetheless, Eleventh Amendment immunity can properly be raised for the first time on appeal. See Edelman v. Jordan, 415 U.S. 651, 658, 94 S.Ct. 1347, 1363, 39 L.Ed.2d 662 (1974) ("the Eleventh Amendment sufficiently partakes of the nature of a jurisdictional bar so that it need not be raised in the trial court"); Bolden v. Southeastern Pa. Trans. Auth., 953 F.2d 807, 812 (3d Cir.1991).

The Eleventh Amendment bars suits against unconsenting states in federal courts. See Seminole Tribe of Fla. v. Florida, 517 U.S. 44, 53-54, 116 S.Ct. 1114, 1122, 134 L.Ed.2d 252 (1996). There are two exceptions: Congress may abrogate a state's immunity, id., and parties may sue state officers for prospective injunctive and declaratory relief. See Idaho v. Coeur d'Alene Tribe of Idaho, --- U.S. ----, ----, 117 S.Ct. 2028, 2034, 138 L.Ed.2d 438 (1997); Seminole, 517 U.S. at 72-74, 116 S.Ct. at 1132; Ex parte Young, 209 U.S. 123, 28 S.Ct. 441, 52 L.Ed. 714 (1908); Balgowan v. New Jersey, 115 F.3d 214, 217 (3d Cir.1997). Here, the parties do not dispute that the Pennsylvania Public Utility Commission is an arm of the Commonwealth of Pennsylvania protected by Eleventh Amendment principles of sovereign immunity. ⁴ Also, Pennsylvania has not given its consent to be sued in federal court. ⁵ The question remaining is whether any exceptions to immunity apply.

A. Congressional Abrogation of Immunity

A valid abrogation of Eleventh Amendment immunity requires Congress to "unequivocally express[ ] its intent to abrogate the immunity" and to act "pursuant to a valid exercise of power." Seminole, 517 U.S. at 55, 116 S.Ct. at 1123 (quoting Green v. Mansour, 474 U.S. 64, 68, 106 S.Ct. 423, 426, 88 L.Ed.2d 371 (1985)). Here, the parties agree that section 11501(c) ⁶ is an unmistakably clear expression of Congress's intent to abrogate states' immunity regarding violations of section 11501(b). However, the parties disagree on whether the statute is a valid exercise of congressional power.

The dispute centers largely around Seminole, which overruled Pennsylvania v. Union Gas Co., 491 U.S. 1, 23, 109 S.Ct. 2273, 2286, 105 L.Ed.2d 1 (1989) (holding that Congress could validly abrogate a state's sovereign immunity pursuant to its Commerce Clause powers). In Seminole, the Court noted that it had previously recognized only one other source of congressional power to abrogate states' sovereign immunity--the Fourteenth Amendment. Seminole, 517 U.S. at 58-60, 116 S.Ct. at 1125 (citing Fitzpatrick v. Bitzer, 427 U.S. 445, 96 S.Ct. 2666, 49 L.Ed.2d 614 (1976)). Thus, after Seminole, the only remaining source of congressional power to abrogate states' Eleventh Amendment immunity is the Fourteenth Amendment.

Congress promulgated the 4-R Act pursuant to its Commerce Clause powers because of the interstate nature of the railroad industry. Section 11501 announces Congress's concern that discriminatory taxation "unreasonably burden[s] and discriminate[s] against interstate commerce." 49 U.S.C. § 11501(b); see also 49 U.S.C. § 10101 (listing the purposes and policies of railroad regulation). However, when determining the sources of Congress's authority to legislate, we may look beyond the expressed constitutional basis in a statute's preamble or legislative history. See Fullilove v. Klutznick, 448 U.S. 448, 478, 100 S.Ct. 2758, 2774-75, 65 L.Ed.2d 902 (1980). The Supreme Court directs us to:

"proceed to the consideration whether [§ 11501] is 'appropriate legislation' to enforce the Equal Protection Clause, that is ... whether [§ 11501] may be regarded as an enactment to enforce the Equal Protection Clause, whether it is 'plainly adapted to that end' and whether it is not prohibited by but is consistent with 'the letter and spirit of the constitution.' "

Katzenbach v. Morgan, 384 U.S. 641, 651, 86 S.Ct. 1717, 1724, 16 L.Ed.2d 828 (1966). In a later examination of Morgan, the Court established that to answer this inquiry:

"[i]t was enough that the Court could perceive a basis upon which Congress could reasonably predicate a judgment that application of literacy qualifications within the compass of § 4(e) would discriminate in terms of access to the ballot and consequently in terms of access to the provision of administration of government programs."

Fullilove, 448 U.S. at 477, 100 S.Ct. at 2774 (citing Morgan, 384 U.S. at 652-53, 86 S.Ct. at 1724-25). ⁷

The legislative history of the statute before us shows "Congress was aware that the railroads 'are easy prey for State and local tax assessors' " in that they are "nonvoting, often nonresident, targets for local taxation," who cannot easily remove themselves from the locality.' " Department of Rev. of Or. v. ACF Indus., 510 U.S. 332, 336, 114 S.Ct. 843, 847, 127 L.Ed.2d 165 (1994) (quoting Western Air Lines, Inc. v. Board of Equalization, 480 U.S. 123, 131, 107 S.Ct. 1038, 1043, 94 L.Ed.2d 112 (1987) (quoting S.Rep. No. 91-630, at 3 (1969))). Moreover, another court of appeals has held that the very purpose of section 11501 was to remedy discrimination against railroads:

"Until this law was passed, as pointed out by the appellants, states could constitutionally classify railroads differently from all other taxpayers for the imposition of state taxes without violating the equal protection clause of the Fourteenth Amendment. It was the obvious purpose of Congress to put an end to this practice, where such treatment of the railroads as a class was discriminatory in effect."

Alabama Great S. R.R. Co. v. Eagerton, 663 F.2d 1036, 1040 (11th Cir.1981) (emphasis added). The Supreme Court has also said that "[c]orrectly viewed, § 5 [of the Fourteenth Amendment] is a positive grant of legislative power authorizing Congress to exercise its discretion in determining whether and what legislation is needed to secure the guarantees of the Fourteenth Amendment." Morga...