Opinion
No. 2157 C.D. 2010
12-01-2011
Norfolk Southern Railway Company, Petitioner v. Public Utility Commission, Respondent
BEFORE: HONORABLE ROBERT SIMPSON, Judge HONORABLE JOHNNY J. BUTLER, Judge HONORABLE KEITH B. QUIGLEY, Senior Judge
OPINION NOT REPORTED
MEMORANDUM OPINION BY JUDGE SIMPSON
Norfolk Southern Railway Company (Norfolk) petitions for review of an order of the Pennsylvania Public Utility Commission (PUC) that allocated to Norfolk 15% of the final cost of a bridge removal project at a rail-highway crossing. Norfolk contends the PUC's cost allocation is contrary to this Court's decision in City of Chester v. Pennsylvania Public Utility Commission, 798 A.2d 288 (Pa. Cmwlth. 2002) (no cost allocation to a railroad that does not own property or facilities at the crossing). In addition, Norfolk contends the PUC erred in determining that Norfolk's freight operating agreement with the National Railroad Passenger Corporation (Amtrak) failed to qualify as a "cost allocation agreement" as contemplated by Section 2704(a) of the Public Utility Code (Code), 66 Pa. C.S. §2704(a). Alternatively, Norfolk contends the 15% allocation was neither just nor reasonable under the circumstances where: Norfolk does not own or lease any property or facilities at the crossing; Norfolk pays Amtrak an amount for all costs to operate on the line; and, Norfolk was not responsible for the deterioration of the bridge's structure. In light of our decision in City of Chester, we reverse the PUC's cost allocation to Norfolk.
The Pennsylvania Department of Transportation and East Hempfield Township, also allocated a percentage of the project costs by the PUC, participate in this appeal as Intervenors.
I. Background
A. Generally
This matter involves the PUC's final allocation of costs for the demolition and removal of the Colebrook Road Bridge (Bridge) in East Hempfield Township (Township), Lancaster County (County). The Bridge, a grade-separated crossing, carried a Township road above railroad tracks owned by Amtrak. In 1977, the PUC closed the Bridge to vehicular traffic for structural reasons. After repairing it, the Township re-opened the Bridge with a posted maximum weight limit of seven tons. However, the Bridge continued to deteriorate. In 1987, following an inspection by the Pennsylvania Department of Transportation (DOT), the Township closed the Bridge to vehicular traffic.
In June 2003, the PUC ordered the Township to remove the Bridge within 12 months and bear the initial cost of removal. As a result of delays arising from Amtrak's lack of cooperation, the Township obtained three extensions for completion of the project. The last extension expired at the end of June 2008. Several weeks prior to the deadline, DOT notified the Township that Pier 1 of the Bridge was in imminent danger of failure. In response, the Township barricaded pedestrian traffic from the Bridge.
In light of safety concerns, the Township immediately hired a contractor, J.D. Eckman, Inc., to perform the demolition and removal. The contractor completed the project in July 2008. A separate contractor, SYSTRA Consulting, Inc., removed Amtrak's electrified catenary wires from the Bridge.
In September 2008, the PUC's Bureau of Transportation and Safety (PUC Safety Bureau) confirmed the Bridge's removal and notified the parties of their right to a hearing on final cost allocation. The Township requested a hearing. The Township, Amtrak, the County, Norfolk and DOT participated in the cost allocation proceeding. The PUC Safety Bureau submitted a position statement.
B. 2010 Recommended Decision
In June 2010, Administrative Law Judge Kandace F. Melillo (ALJ) issued a recommended decision. See Reproduced Record (R.R.) at 470a-555a. The ALJ assigned Amtrak financial responsibility for $59,130.02 in costs associated with the protection of its own operations and facilities during the project. Of this amount, the ALJ directed Amtrak to reimburse the Township $15,088.28 in costs improperly charged to it. The ALJ determined Amtrak is exempt by federal statute from being assessed costs for maintenance and repair of local rail-highway crossings. See Nat'l R.R. Passenger Corp. v. Pa. Pub. Util. Comm'n, 848 F.2d 436 (3d Cir. 1988), cert. denied, 488 U.S. 893 (1988) (Amtrak exempt from any taxes or other fees imposed by the PUC for improvements at rail-highway crossing). However, the ALJ also determined Amtrak's federal exemption does not preclude assessment of costs against Amtrak for protection of its own operations.
With respect to the remaining $525, 441.48 in allocable costs, the ALJ allocated $367,809.83 (70%) to the Township, which owned and maintained the Bridge. The ALJ found the Township primarily responsible for the Bridge's deterioration. Although the Township performed safety measures throughout the years, it did not significantly invest in improvements.
The ALJ also found the Township to be the primary beneficiary of the Bridge. While operational, the Bridge permitted an unimpeded flow of traffic over Colebrook Road. The Township further benefited by enhanced rail passenger and freight transportation provided by the crossing.
Next, the ALJ allocated $78,816.22 (15%) of the allocable costs to Norfolk. The ALJ reasoned that out of the three remaining cost-allocation eligible parties, Norfolk realized the greatest benefit from the existence and eventual removal of the Bridge. The Bridge permitted unimpeded movement of freight over the rail line and a reduced risk of accidents associated with at-grade crossings. Norfolk also benefited from the removal of the deteriorating structure, which presented a threat to safety and a possible disruption of operations.
The ALJ also allocated $52,544.15 (10%) of the allocable costs to the County. Of the remaining two parties, the County benefited more than DOT. Among other benefits, Amtrak's commuter service brought tourism revenue into the County. In addition, the County received property tax revenue from businesses served by the railroad.
Finally, the ALJ allocated $26,272.08 (5%) of the allocable costs to DOT. Amtrak passengers' use of the crossing reduced congestion and wear and tear on nearby state-owned roads. In particular, commuters use Amtrak's rail line as an alternative to State Route 283 and other state highways.
C. Exceptions
Norfolk, the County and DOT filed exceptions to the ALJ's recommended decision, which the PUC denied. For purposes of this appeal, we need only review Norfolk's three exceptions.
Only Norfolk seeks review of the PUC's final cost allocation order.
1. Exception No. 1
In Exception No.1, Norfolk objected to the ALJ's Conclusion of Law No. 20, which provides:
20. The [PUC] is not precluded from allocating costs to [Norfolk] by the Commonwealth Court decision in City of [City of Chester].R.R. at 551a. Norfolk argued City of Chester precludes any cost allocation to it because railroads are exempt from cost allocation where, as here, the railroad does not own any property or facilities at the crossing at issue.
The PUC rejected Norfolk's argument. It noted City of Chester is at odds with other appellate court cases applying the "relevant factors" analysis. See, e.g., AT&T v. Pa. Pub. Util. Comm'n, 558 Pa. 290, 737 A.2d 201 (1999) (Section 2704(a) of the Code vests the PUC with exclusive discretion to determine who shall bear the costs of relocation at rail-highway crossings; in exercising this authority, the PUC is not limited to any fixed rate or formula with respect to the allocation of costs; it may take all relevant factors into consideration); Millcreek Twp. v. Pa. Pub. Util. Comm'n, 753 A.2d 324 (Pa. Cmwlth. 2000) (both the ownership and use of a rail-highway crossing are valid considerations when allocating costs and maintenance responsibilities for the crossing); Greene Twp. Bd. of Supervisors v. Pa. Pub. Util. Comm'n, 668 A.2d 615 (Pa. Cmwlth. 1995) ("relevant factors" analysis used in determining who shall bear the costs of abolition of a bridge at rail-highway crossing); Se. Pa. Transp. Auth. (SEPTA) v. Pa. Pub. Util. Comm'n, 592 A.2d 797 (Pa. Cmwlth. 1991) (SEPTA 1991) (SEPTA's ownership of bridge is not dispositive of the issue of responsibility for maintaining that property; "relevant factors" analysis used in apportioning costs for construction, relocation and alteration of rail-highway crossings, the only requirement being that the order is just and reasonable and supported by substantial evidence). In light of this line of cases, the PUC reasoned City of Chester should not be read as controlling or precedential with respect to cost allocation and work assignments in rail-highway projects ordered by the PUC. PUC Op., 09/17/10, at 9.
2. Exception No. 2
In Exception No. 2, Norfolk objected to the ALJ's Conclusion of Law No. 21, which provides:
21. The Amended and Restated Northeast Corridor Freight Operating Agreement ... under which [Norfolk] makes payments to Amtrak for its use of the rail line at the Crossing area, does not qualify as a cost allocation agreement for purposes of 66 Pa. C.S. §2704.R.R. at 551a.
Norfolk operates on Amtrak's rail line pursuant to the Amended and Restated Northeast Corridor Freight Operating Agreement (Freight Operating Agreement). See Norfolk Ex. No. 3; R.R. at 194a-248a. Section 2704(a) of the Code provides for paid, private cost agreements in place of PUC-mandated cost allocations. Although Norfolk concedes the Freight Operating Agreement is not a cost allocation agreement, it argued the PUC should interpret it as encompassing all of Norfolk's costs for operating on the line, including the costs of demolishing and removing the Bridge.
The PUC rejected Norfolk's contention. Pursuant to Section 2704(a) of the Code, the PUC has jurisdiction to proportion the costs for construction, relocation or abolition of rail crossings "unless such proportions are mutually agreed upon and paid by the interested parties." 66 Pa. C.S. §2704(a) (emphasis added). Norfolk's Freight Operating Agreement does not address cost allocation for demolition and removal of the Bridge. In addition, there is no record evidence indicating either Norfolk or Amtrak paid any costs under the Freight Operating Agreement specifically attributable to the Bridge removal project. Therefore, the ALJ properly determined the private cost agreement provision in Section 2704(a) is inapplicable here. See City of Phila. v. Phila. Elec. Co., 504 Pa. 312, 473 A.2d 997 (1984) (PUC jurisdiction over cost allocation for rail-highway projects automatically attaches unless the parties executed a mutual agreement on the subject).
3. Exception No. 3
In Exception No. 3, Norfolk objected to the ALJ's Conclusion of Law No. 29, which provides:
29. A just and reasonable allocation of the remaining final costs, based upon consideration of the factors set forth in [Greene Township] and Application of the City of Wilkes-Barre, Docket No. A-00101606, Order entered April 9, 1981, is a 70% allocation to the Township, a 15% allocation to [Norfolk], a 10% allocation to the County, and a 5% allocation to [DOT].R.R. at 552a. As discussed above, when apportioning costs in rail-highway crossing cases, the general standard is that the PUC is not bound by a fixed rule; it takes all relevant factors into consideration. AT&T; Greene Twp. The only requirement is that the order be just and reasonable, and supported by the evidence. Id.
Norfolk argued that the ALJ, in allocating costs, did not consider the relevant factors listed in Greene Township. They include (1) the party that built the crossing; (2) the party that owned and maintained the crossing; (3) the relative benefit initially conferred on each party with the construction of the crossing; (4) which party is responsible for the deterioration of the crossing; and, (5) the relative benefit that each party will receive from the repair, replacement or removal of the crossing. Id.
Primarily, Norfolk asserted the ALJ failed to adequately consider which party is most responsible for the deterioration of the Bridge and thus the need for its removal. Norfolk asserted the Township is predominantly, if not solely, responsible for the deterioration of the Bridge. Therefore, Norfolk argued the 15% allocation to it should be reallocated to the Township.
The PUC again rejected Norfolk's argument. It determined the ALJ, in assigning 70% of the project costs to the Township, properly determined the extent of the Township's responsibility for the deterioration of the Bridge.
For the above reasons, the PUC denied Norfolk's exceptions and adopted the ALJ's recommended decision. Norfolk petitions for review.
Appellate review of a PUC order is limited to determining whether the necessary findings are supported by substantial evidence or whether the PUC committed an error of law or constitutional violation. N. Lebanon Twp. v. Pa. Pub. Util. Comm'n, 962 A.2d 1237 (Pa. Cmwlth. 2008).
II. Issues
Norfolk raises three issues. It contends the PUC's cost allocation is contrary to this Court's decision in City of Chester, and cases cited therein, which preclude any cost allocation for the repair, removal, reconstruction or maintenance of a crossing to a railroad that does not own property or facilities at the crossing. In addition, Norfolk contends the PUC erred in determining that its Freight Operating Agreement with Amtrak failed to qualify as a paid, private cost agreement under 66 Pa. C.S. §2704(a). Alternatively, Norfolk contends the PUC's cost allocation was neither just nor reasonable under the facts of this case.
III. Discussion
A. PUC Jurisdiction
Sections 2702 and 2704 of the Code, 66 Pa. C.S. §§2702 and 2704, grant the PUC exclusive jurisdiction to regulate rail-highway crossings. SEPTA 1991. Section 2702 of the Code (construction, relocation, suspension and abolition of crossings) relevantly provides (with emphasis added):
(a) General Rule.—No public utility, engaged in the transportation of passengers or property, shall, without prior order of the commission, construct its facilities across the facilities of any other such public utility or across any highway at grade or above or below grade, or at the same or different levels; and no highway, without like order, shall be so constructed across the facilities of any such public utility, and, without like order, no such crossing shall be altered, relocated, suspended or abolished.66 Pa. C.S. §§2702(a) and (c).
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(c) Mandatory relocation, alteration, suspension or abolition.— Upon its own motion or upon complaint, the commission shall have exclusive power after hearing, upon notice to all parties in interest, including the owners of adjacent property, to order any such crossing heretofore or hereafter constructed to be relocated or altered, or to be suspended or abolished upon such reasonable terms and conditions as shall be prescribed by the commission. ... The commission may order the work of construction, relocation, alteration, protection, suspension or abolition of any crossing aforesaid to be performed in whole or in part by any public utility or municipal corporation concerned or by the Commonwealth or an established nonprofit organization with a recreational or conservation purpose.
Section 2704(a) of the Code (compensation for damages occasioned by construction, relocation or abolition of crossings), provides (with emphasis added):
(a) General rule.--The compensation for damages which the owners of adjacent property taken, injured, or destroyed may sustain in the construction, relocation, alteration, protection, or abolition of any crossing under the provisions of this part, shall, after due notice and hearing, be ascertained and determined by the commission. Such compensation, as well as the cost of construction, relocation, alteration, protection, or abolition of such crossing, and of facilities at or adjacent to such crossing which are used in any kind of public utility service, shall be borne and paid, as provided in this section, by the public utilities, municipal corporations, municipal authority or nonprofit organization authorized under section 2702(h) (relating to construction, relocation, suspension and abolition of crossings) concerned, or by the Commonwealth, in such proper proportions as the commission may, after due notice and hearing, determine, unless such proportions are mutually agreed upon and paid by the interested parties.66 Pa. C.S. §2704(a).
B. City of Chester
1. Norfolk's Argument
Norfolk contends this Court's decision in City of Chester prohibits any cost allocation under Section 2704(a) to Norfolk for the demolition and removal of the Bridge. It asserts the relevant facts in City of Chester are nearly identical to those here. As in City of Chester, Norfolk does not own or maintain any property or facilities at the crossing; it operates on Amtrak's line pursuant to a similar operating agreement. Under the rule of stare decisis, Norfolk asserts, this Court is bound to follow its own decision unless overruled by the Supreme Court or where other compelling reasons exist. Pries v. Workers' Comp. Appeal Bd. (Verizon Pa.), 903 A.2d 136 (Pa. Cmwlth. 2006).
Further, Norfolk contends there is no inconsistency between City of Chester and Greene Township or the other cases cited by the PUC for the proposition that all relevant factors, regardless of ownership, must be considered in allocating costs for repair, replacement or removal projects at rail-highway crossings. None of these cases involved a cost allocation under Section 2704(a) of the Code to a railroad without any ownership interest at the crossing.
More specifically, Norfolk asserts our decisions in Greene Township and Millcreek Township involved cost allocations to municipalities, which typically maintain roads and bridges at or near a rail-highway crossing. In SEPTA 1991, where the PUC allocated maintenance costs between SEPTA and the City of Philadelphia, SEPTA owned the bridge carrying a city street across its commuter rail lines.
Norfolk further asserts this Court in City of Chester recognized that going back at least to Lehigh Valley R.R. Co. v. Pub. Serv. Comm'n, 161 A. 422 (Pa. Super. 1932), a railroad must own property at a crossing in order to be allocated costs associated with the crossing. It is the ownership interest at the crossing, not mere usage that gives the PUC the authority to allocate costs to a railroad for the maintenance repairs, removal or reconstruction of rail-highway crossings. City of Chester.
Also, Norfolk asserts, although it benefited from the removal project in the present case, it similarly benefited from the repair and maintenance of the bridge in City of Chester. In that case, we recognized Norfolk, Amtrak and SEPTA all benefited from the bridge by being afforded an uninterrupted and unimpeded rail crossing and thus avoiding possible accident and liability claims that could occur at an at-grade crossing. See id., 798 A.2d at 291. However, such benefits did not justify allocation of maintenance costs to Norfolk where it owned no property at the crossing.
Further, Norfolk acknowledges the Township and DOT do not own property at the crossing. Nonetheless, Norfolk cites several cases where this Court upheld cost allocations against DOT and counties that own and maintain roads at or nearby a rail-highway crossing. See, e.g., Dep't of Transp. v. Pa. Pub. Util. Comm'n, 452 A.2d 619 (Pa. Cmwlth. 1982) (PUC properly allocated 5% of project costs to DOT where the crossing benefited nearby state roads); Pittsburgh & Lake Erie R.R. Co. v. Pa. Pub. Util. Comm'n, 445 A.2d 851 (Pa. Cmwlth. 1982) (PUC properly allocated 10% of project costs to county even though it did not own the bridge at the crossing).
In addition, Norfolk contends the ALJ's attempt at distinguishing City of Chester on the basis that it involved ongoing bridge maintenance costs rather than bridge removal costs lacks merit. See R.R. at 511a. It again asserts this Court clearly stated "it is the ownership of the rail line involved that places liability on the railroad for costs associated with a crossing, including repairs, removal, reconstruction or maintenance." City of Chester, 798 A.2d at 294 (emphasis added).
Finally, Norfolk asserts the PUC allocated costs against it simply because it cannot allocate costs against Amtrak. Norfolk contends this does not justify abrogation of the longstanding rule that prevents the PUC from allocating costs against Norfolk because it does not own property or facilities at the crossing. City of Chester.
2. PUC's Response
In response, the PUC asserts, ownership is only one of many factors the PUC may consider for purposes of cost allocation under Section 2704(a) of the Code for the construction, relocation, repair, alteration, protection or abolition of rail-highway crossings. Although ownership can be probative, no one factor in a "relevant factors" analysis is determinative of cost allocation.
The PUC's argument is as follows. Section 2702(a) of the Code grants the PUC jurisdiction over rail-highway crossings. 66 Pa. C.S. §2702(a). Pursuant to Section 2702(b), the PUC determines the manner in which rail-highway crossings are constructed, altered, relocated, suspended or abolished. 66 Pa. C.S. §2702(b). Pursuant to Section 2702(c), the PUC orders the relocation, alteration, suspension or abolition of crossings on such reasonable terms and conditions as it prescribes. 66 Pa. C.S. §2702(c).
Of greater significance here, the PUC contends it is authorized to determine who are "concerned" or "interested" parties for purposes of cost allocation under 66 Pa. C.S. §2704(a). County of Chester v. Pa. Pub. Util. Comm'n, 408 A.2d 552 (Pa. Cmwlth. 1979). Nowhere in the Code does it state that a public utility must own property or facilities at a crossing in order to be a concerned party for purposes of cost allocation. "Concerned" for purposes of this provision is the equivalent of "interested." Phila. Suburban Water Co. v. Pa. Pub. Util. Comm'n, 78 A.2d 46 (Pa. Super. 1951).
Here, the PUC contends, Norfolk is a concerned or interested party because it daily operated its trains under the Bridge; thus, the presence of the Bridge directly benefited Norfolk's operations. In addition, the removal of the Bridge benefited Norfolk by eliminating the risk of the deteriorating structure falling on the tracks and causing damage or disrupting service. In addition, at no point in the cost allocation proceedings did Norfolk seek to be removed as a non-concerned or non-interested party.
Next, in dismissing Norfolk's narrow interpretation of City of Chester, the PUC asserts ownership of property at a rail-highway crossing is only one of many probative factors to be considered in cost allocation. See AT&T (when allocating costs of constructing, removing or altering a rail-highway crossing, the PUC is not confined to any one formula; it must consider all relevant factors); Greene Twp. (same); Millcreek Twp. (both the ownership and use of a rail-highway crossing are valid considerations when allocating costs and maintenance responsibilities for the crossing); SEPTA 1991 (ownership of property is not dispositive of responsibility for maintaining bridge at crossing).
Citing these cases, the PUC urges the proper interpretation of City of Chester cannot be so narrow as to assign ownership of property or facilities at a crossing as a "but-for" test for cost allocation under 66 Pa. C.S. §2704(a). It asserts City of Chester does not absolutely and unconditionally require ownership of property or facilities at a crossing to allocate costs to a railroad. Rather, City of Chester states that mere usage, absent any other factors that support cost allocation to a railroad, is an insufficient basis to allocate bridge maintenance costs under 66 Pa. C.S. §2704(a). Here, however, the PUC contends Norfolk not only used the lines under the Bridge, but benefited by the Bridge's removal.
3. Intervenors' Response
Intervenors DOT and Township also contend Sections 2702 and 2704 of the Code grant the PUC exclusive jurisdiction over the construction, maintenance and removal of rail-highway crossings and allocation of the related costs. The allocation of costs under Section 2704(a) falls within the PUC's discretion. City of Phila. v. Pa. Pub. Util. Comm'n, 676 A.2d 1298 (Pa. Cmwlth. 1996) (Conrail 1996). In allocating costs under Section 2704(a), the PUC is not limited to any fixed rate or formula; it can take all relevant factors into consideration. Id.; Greene Twp.; SEPTA 1991.
Moreover, DOT argues this Court wrongly decided City of Chester by misconstruing the cases cited therein, which resulted in City of Chester being at odds with the clear and unambiguous language in 66 Pa. C.S. §2704(a) that grants the PUC exclusive jurisdiction to allocate costs regardless of ownership. DOT asserts Section 2704(a) clearly states the PUC can allocate costs to any concerned carrier or non-carrier public utility.
DOT further asserts the PUC has long included rail line operators as well as rail line owners as concerned parties in rail-highway crossing cases. Thus, DOT urges, Section 2704(a) does not require that a "concerned party" own property at the crossing to be allocated costs. See, e.g., Norfolk S. Ry. Co. v. Pa. Pub. Util. Comm'n, 870 A.2d 942 (Pa. Cmwlth. 2005) (Norfolk, as a rail line operator, considered a "concerned" party in an initial cost allocation proceeding involving the maintenance and repair of three Pittsburgh bridges that they may or may not own or may or may not be contractually liable to maintain).
DOT also contends the Superior Court's decision in Lehigh Valley, upon which this Court relied in City of Chester, cannot be read as discounting or disregarding the PUC's usage or benefits analyses in this case. Rather, the court in Lehigh Valley recognized "ownership" as a valid basis for a just and reasonable allocation. Other reasons, such as "usage" were not discounted. The reference in Lehigh Valley to "benefits conferred" was in rejection of the railroad's argument that its costs should be limited in proportion to the benefits it received. In sum, DOT urges, Lehigh Valley recognized that both ownership and benefits conferred are factors to be considered in cost allocations.
Further, DOT seeks to distinguish the other two cases cited in City of Chester to support the concept that ownership at rail-highway crossings is required to allocate costs to a railroad. Rather, those cases upheld cost allocations to Conrail and SEPTA, respectively, on the grounds that they acquired ownership of the tracks at the crossings. They do not involve the issue of whether a non-owner railroad may be assessed costs. See Consol. Rail. Corp. v. Pa. Pub. Util. Comm'n, 423 A.2d 1108 (Pa. Cmwlth. 1980) and Pa. Pub. Util. Comm'n v. Se. Pa. Transp. Auth., 343 A.2d 371 (Pa. Cmwlth. 1975).
Next, DOT asserts that if City of Chester is correct in stating that only owners may be allocated costs under 66 Pa. C.S. §2704(a), then DOT could not be allocated costs here because it did not own the Bridge. "[A] bridge carrying a public street is deemed to be part of the street, and, as such, it is owned by the entity that owns the street." City of Phila. v. Consol. Rail Co., 560 Pa. 587, 592, 747 A.2d 352, 354 (2000). Here, the Township owned and maintained the Bridge.
Finally, DOT argues the Lehigh Valley and City of Chester line of cases create an inequitable situation where railroads are judged by one set of criteria (whether or not they own property at the crossing) and the other "concerned parties" under 66 Pa. C.S. §2704(a), including DOT, counties and local municipalities, are judged by different criteria (benefits or usage analysis) regardless of whether they own property at the crossing.
4. Analysis
The facts here are very similar to those in City of Chester. In that case, Amtrak owned the lines under the Lloyd Street Bridge in the City of Chester (City). The City owned and maintained the Lloyd Street Bridge. Norfolk operated on the lines pursuant to an operating agreement with Amtrak. Norfolk paid Amtrak for any maintenance at a cost of $1.00 per freight car mile. Amtrak operated 54 trains per day. Norfolk operated four trains per day. In addition, SEPTA operated 60 trains each week day.
In City of Chester, Norfolk argued the PUC lacked jurisdiction to allocate maintenance costs to it because it did not own any property or facilities at the crossing. Amtrak owned the rail line. The City owned and maintained Lloyd Street, including the Lloyd Street Bridge.
The PUC argued that it is not simply ownership that subjects an entity to allocations. We summarized the PUC's argument as follows:
In opposition, the [PUC] argues that it is not only the owner of the railroad who may be allocated costs because each crossing case must be considered separately under the circumstances presented. The [PUC] explains that it is possible for an entity to own but not operate over the tracks in which case the operator would be the public utility subject to the [PUC's] jurisdiction. Conversely, the owner may not be a public utility and could not be allocated any costs or responsibilities. Therefore, it is not simply the ownership of facilities or property at a rail-highway crossing which subjects an entity to allocations. Rather, a review of all relevant factors, including the usage of the crossing, is necessary.City of Chester, 798 A.2d at 293. This Court, speaking through Judge Pellegrini, rejected the PUC's argument. We noted that Pennsylvania courts, dating back at least to the Superior Court's 1932 decision in Lehigh Valley, hold that it is the ownership of the rail line involved that places liability on the railroad for costs associated with repair, replacement or removal of a crossing.
In Lehigh Valley, the railroad contested the allocation of costs to it for the construction of a new bridge at a rail-highway crossing over its tracks and those of another railroad. The railroad argued it should only have to pay an amount in proportion to the benefit it received. In rejecting this argument, the Superior Court stated (with emphasis added):
This proposition finds no support in the statute nor in any decision of either of the appellate courts of this commonwealth. By the terms of the statute, the costs of construction may be imposed on the companies or municipal corporations "concerned." "It is well settled that railroad corporations may be required, at their own expense, not only to abolish existing grade crossings, but also to build and maintain suitable bridges or viaducts to carry highways, newly laid out, over their tracks or to carry their tracks over such highways." [Chi. Mil. & St. Paul Ry. v. Minneapolis, 232 U.S. 430, 438 (1914); Erie R.R. Co. v. Pub. Serv. Comm'n, 271 Pa. 409, 114 A. 357 (1921)]. It is the presence and ownership of the track involved, not any benefit conferred, which places liability on the railroad.Lehigh Valley, 161 A. at 423-24.
Citing Conrail 1996, we explained in City of Chester that the common law historically imposed a duty on private railroads, when necessary, to construct and maintain bridges at crossings. Near the turn of the century, municipalities gained control over the roads within their borders and entered into agreements with the railroads for the maintenance of rail-highway crossings. Conrail 1996. "If either party failed to fulfill its part of the agreement, the other party could seek to compel performance of maintenance responsibilities." Id., 676 A.2d at 1306. In 1913, the legislature created the Public Service Commission, the PUC's predecessor, and granted it jurisdiction over the repair, relocation or abolishment of rail-highway crossings. Id. This legislation conformed with the common law duty on railroad companies to ensure the public safety. Id. It also permitted a cost allocation to the municipalities that benefited from the rail-highway crossings. Id.
See Public Service Company Law, Act of July 26, 1913, P.L. 1374, formerly, 66 P.S. §§551-77, repealed by the Act of May 28, 1937, P.L. 1053.
In deciding the PUC abused its discretion in allocating costs to Norfolk in City of Chester, we reasoned (with emphasis added):
Because it is the ownership interest at the crossing, not mere usage that gives the [PUC] the authority to allocate costs, Pennsylvania courts have historically held that it is the ownership of the rail line involved that places liability on the railroad for costs associated with a crossing, including repairs, removal, reconstruction or maintenance. ...
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If we were to adopt the [PUC's] argument, any utility that merely utilized the right-of-way could be allocated costs associated with the crossing, or, for that matter, for the reconstruction of the [b]ridge because it has use of one of the right-of-ways involved in the crossing. ... However, because usage of property alone is not a justification for imposing cost allocations at crossings and because an owner of a railroad with a crossing over its line is the party responsible for costs
associated with that rail line, and there is no dispute that Amtrak, not Norfolk Southern is the owner of the rail-line and crossing at issue, the [PUC] abused its discretion in allocating 5% of the maintenance costs of the [b]ridge to Norfolk Southern.
Id.
Here, the PUC, DOT and the Township contend City of Chester was incorrectly decided because it is contrary to this Court's decisions in Greene Township, Millcreek Township, SEPTA 1991 and other cases applying the "relevant factors" analysis, which do not require an ownership interest at a crossing for purposes of cost allocation. We disagree. The cases on which the PUC, DOT and the Township rely are factually distinguishable; they do not involve the allocation of costs to a railroad which does not own property or facilities at the crossing. Therefore, City of Chester is in accord with prior case law cited therein, and it is not inconsistent with the Greene Township line of cases allocating costs to railroads with an ownership interest at the crossing or municipalities that benefit from the crossing.
Further, although DOT did not own or maintain Colebrook Road or the Bridge, this Court previously upheld cost allocations against DOT where the crossing is not part of the state highway system. See Dep't of Transp. v. Pa. Pub. Util. Comm'n (all public roads and their related structures in Pennsylvania are the property of the Commonwealth; the PUC properly allocated 5% of costs for repair of a bridge at rail-highway crossing even though the road was not a state highway). Similarly, the PUC may allocate costs to a county for rail-highway crossings where the county does not own or maintain the crossing. County of Chester.
In short, City of Chester places a narrow limitation on the "relevant factors" analysis used by the PUC in rail-highway crossing cases. Where, as here, a railroad pays to operate on a rail line but has no ownership interest in or maintenance responsibility for the rail line or facilities at a crossing, it is not a "concerned party" subject to cost allocation under Section 2704(a) of the Code for repairs, removal, reconstruction or maintenance of the crossing. City of Chester.
Because the facts here are substantially similar to those in City of Chester, we hold that City of Chester is controlling and that the PUC abused its discretion by allocating costs to Norfolk under 66 Pa. C.S. §2704(a). Accordingly, we reverse the PUC's order to the extent it directs Norfolk to pay the Township $78,816.22 or 15% of project costs. It is our understanding that the Township, as the primary beneficiary of the Bridge and the party responsible for its maintenance, will bear these costs.
In accord with City of Chester, we believe a proper allocation of the majority of the costs would primarily be between the Township as owner of the Bridge and Amtrak as owner of the rail line. In City of Chester, we re-allocated the 5% initially allocated to Norfolk to Amtrak. Id. However, a federal district court ultimately enjoined all parties in the PUC proceeding "from pursuing, enforcing or seeking to enforce any judicial or administrative order that would result in assessment of costs to Amtrak with respect to the Lloyd Street bridge." Se. Pa. Transp. Auth. v. Pa. Pub. Util. Comm'n, 210 F.Supp.2d 689, 730 (E.D. Pa. 2002), aff'd sub nom., Nat'l R.R. Passenger Corp. v. Pa. Pub. Util. Comm'n, 342 F.3d 242 (3d Cir. 2003). Moreover, on appeal in the present case, the parties did not raise the issue of whether Amtrak is liable under 66 Pa. C.S. §2704(a) for a percentage of the costs for the removal of the Bridge. --------
Having determined, in accord with City of Chester, that the PUC abused its discretion in allocating costs to Norfolk for removal of the Bridge, we need not address the remaining two issues raised by Norfolk.
/s/_________
ROBERT SIMPSON, Judge ORDER
AND NOW, this 1st day of December, 2011, for the reasons stated in the foregoing opinion, the order of the Pennsylvania Public Utility Commission is REVERSED to the extent it required Petitioner Norfolk Southern Railway to pay East Hempfield Township $78,816.22 or 15% of project costs. The Township shall bear the costs allocated to Norfolk. In all other respects, the Commission's order is AFFIRMED.
/s/_________
ROBERT SIMPSON, Judge