the challenge is to reconcile § 1341, which bars jurisdiction, with §§ 581(c)(5) and 546b, which would appear to confer it.
Defendant do not dispute, nor could they, that Congress can create a statutory exception to § 1341. See, e.g., Burlington N.R. R.v. Oklahoma Tax Co mm'n, 481 U.S. 461 (1987) (holding that district court could review railroad's claim under the federal Railroad Revitalization and Regulatory Reform Act of discriminatory state taxation, where that Act expressly declared exception from § 1341). Here, § 546b explicitly allows Amtrak and its subsidiaries to enforce their tax exemption in federal court "notwithstanding the provision of section 1341 of Title 28," and § 581(c)(5) exempts SEPTA from taxation "to the same extent" as Amtrak. Even though it is impossible to make sense of § 581(c)(5) without reference to § 546(b)-- because the former is designed to replicate the latter-- defendants would separate the two provisions, at least for jurisdictional purposes. On defendants' view, because 581(c)(5) does not remove § 1341's jurisdictional bar in the same direct terms as does the Amtrak exception, this court has no jurisdiction to entertain this case on the merits.
It is true that where Congress has withheld federal court jurisdiction over a general class of cases, as in § 1341, the district courts should not exercise jurisdiction over a case falling within that provision, absent clear congressional authorization. See, e.g., Blangers v. Burlington N.,Inc. , 872 F.2d 327, 328 (9th Cir. 1989) (per curiam). Nonetheless, in searching for clear indications of congressional intent, it is possible to construe statutes too narrowly. To demand that Congress write out the magic words "notwithstanding the limitations on district court jurisdiction embodied in 28 U.S.C. § 1341" whenever it desires to create a federally-enforceable tax immunity-- thereby precluding the shorthand method of incorporation as well as the obvious, but implicit, repeal-- would be to expect an unrealistic linguistic precision in the legislative process. Cf. Pennsylvania v. Union Gas Co., 491 U.S. 1, 56 n. 7 (1989) (White, J., concurring) (refusing to require any "magic words" in a statute to achieve abrogation of the Eleventh Amendment).
Perhaps for this reason, courts have never required Congress literally to declare, using any particular words, that § 1341 does not apply when the statutory scheme otherwise makes clear Congress's desire to confer a federally-enforced tax immunity. Indeed, courts have based exceptions to § 1341 on statutes that did not so much as mention the Tax Injunction Act. See, e.g., Moe v. Confederated Salish & Kootenai Tribes, 425 U.S. 463 (1976) (upholding a federal district court injunction against Montana's collection of certain sales taxes from Indian merchants based on 28 U.S.C. § 1362,
which gives the district courts original jurisdiction over certain civil actions brought by Indian tribes but nowhere mentions § 1341); City Vending of Muskogee v. Oklahoma Tax Co mm'n, 898 F.2d 122, 123 (10th Cir 1990) (per curiam), cert. denied, U.S. , 111 S. Ct. 75 (1990) (§ 1341 "will not preclude the determination of state tax liability where federal courts have jurisdiction under the Bankruptcy Code, 11 U.S.C. § 505,"
even though the Code makes no reference to § 1341); Firestone Tire & Rubber Co v. Bodle, 645 F. Supp. 305, 310 (N.D. Ohio. 1986) (concluding that Congress created an exception to § 1341 in 29 U.S.C. § 1132,
which permits a civil action in federal court for enforcement of rights under ERISA, but which nowhere mentions § 1341). Therefore, the mere absence of explicit reference to § 1341 in § 581(c)(5) does not itself preclude this court from exercising jurisdiction in this case.
Claiming that jurisdictional statutes are narrowly construed, defendants would read § 581(c)(5)'s "to the same extent as" language as conferring on SEPTA the "same" substantive tax immunity as Amtrak but not the same federal court access to enforce that immunity.
However, the general canon of statutory construction that federal courts "scrupulously confine their own jurisdiction to the precise limits which the statute has defined," Healy v. Ratta, 292 U.S. 263, 270 (1934), in no way relieves this court of the obligation to make a sensible interpretation of the statute consistent with the legislative purpose in enacting it.
It makes no sense to conclude that Congress designed § 581(c)(5) to be enforced exclusively in the state courts. That provision does not merely confer federal tax immunity upon commuter authorities; it confers upon any commuter authority that could have contracted with Amtrak for local rail service the same favored tax position as Amtrak so that such an entity is not penalized by its decision to operate commuter rail service directly. It would be manifestly inconsistent with that design to limit SEPTA's legal remedies to state courts, which might, as has proven true here, more narrowly construe the federal tax immunity.
Moreover, reading § 581(c)(5) as an exception to the Tax Injunction Act does not frustrate the underlying purposes of that Act. § 1341 is designed to preserve from judicial interference "the imperative need of a State to administer its own fiscal operations," Tully v. Griffin, 429 U.S. 68, 73 (1976), but here Congress itself has denied fiscal autonomy insofar as the state seeks to impose certain taxes on commuter authorities. The existence of a federally-created tax immunity distinguishes the case at bar from situations where the courts have refused to imply exceptions to § 1341 based on the mere existence of a general federal right of action or a general jurisdictional statute that does not specifically pertain to state taxation. See, e.g., Fair Assessment in Real Estate Ass'n v. McNary, 454 U.S. 100 (1981) (declining to treat the broad language of § 1983 as an exception to § 1341); Ashton v. Cory, 780 F.2d 816, 821 (9th Cir. 1986) (refusing to read ERISA as an exception to § 1341 because "nothing in the legislative history of ERISA suggests that in enacting federal law to protect individual pension rights and providing for exclusive federal jurisdiction over certain civil enforcement proceedings under ERISA, Congress sought to override the historic concern for state fiscal autonomy that underlies the Tax Injunction Act"). Where congressional interference with state fiscal autonomy is so clear and unequivocal, particular concern about federal judicial interference with state revenue collection is less justified.
Additionally, whereas state revenue collection would be seriously interrupted if any taxpayer with a plausible § 1983 claim or any pensioner with a tax grievance could sue in federal court, § 581(c)(5)'s protection, by contrast, is sharply delimited to commuter authorities that could have contracted with Amtrak for operation of local rail service. Defendants have failed to provide any reason to conclude that Congress believed that for SEPTA to enforce its tax immunity in federal court would be more disruptive of state tax systems and applicable principles of comity than for Amtrak to do the same. Similarly, this is not an instance where the validity of state tax assessment turns on questions of state tax law, "'which, like issues of state regulatory law, are more properly heard in the state courts.'" California v. Grace Bretheren Church, 457 U.S. 393, 410 (1982) (citation omitted). Rather, Congress has created an exemption whose contours turn exclusively on interpretation of congressional purpose.
For all of these reasons, I conclude that § 581(c)(5), read--as it must be-- in conjunction with § 546b, was enacted as an exception to the Tax Injunction Act.
Even though the Commonwealth is not actually named as a defendant in this litigation, the PUC argues that the Eleventh Amendment bars any action against the PUC unless it has consented to that suit. The PUC contends that it deserves Eleventh Amendment immunity because, under state law, it is "an arm of the Commonwealth of Pennsylvania" with powers to regulate railroads that are clearly derived from the legislature of the Commonwealth. PUC's Mem. in Sup. of Mot. 8 (filed in Civn. No. 92-3793).
It is true that normally a suit may not brought in federal court against a state or one of its departments or agencies, regardless of the nature of the relief sought. Pennhurst State School & Hospital v. Halderman, 465 U.S. 89, 100 (1984). However, even assuming, arguendo, that the PUC is otherwise entitled to Eleventh Amendment immunity as an "arm-of-the-state,"
Congress may abrogate that immunity by making its intention to do so "unmistakably clear in the language of the statute."
Atascadero State Hosp.v Scanlon, 473 U.S. 234, 242 (1985). Having already found that Congress plainly intended for SEPTA to have a right to enforce its tax immunity in federal court,
and since SEPTA is, like Amtrak, "exempt from any taxes or other fees imposed by any State, political subdivision of a State, or local taxing authority . . . ," § 546b (emphasis added), it follows that Congress clearly evinced an intent to subject states to suit in federal court when they impose "taxes or other fees" in violation of §§ 546b and 581(c)(5).
Therefore, the Eleventh Amendment does not prevent this court from entertaining jurisdiction over SEPTA's consolidated actions against the PUC.
Because SEPTA states a colorable claim that § 581(c)(5) precludes the allocation of bridge maintenance costs to SEPTA, and neither § 1341 nor the Eleventh Amendment prevents this court from exercising jurisdiction over the instant cases, defendants' motions to dismiss for lack of subject matter jurisdiction and failure to state a claim will be denied.
An appropriate order follows.
EDITOR'S NOTE: The following court-provided text does not appear at this cite in 802 F. Supp. 1273.
For the reasons given in the accompanying memorandum, it is hereby ORDERED and DIRECTED that:
1. Defendant Pennsylvania Public Utility Commission's motions to dismiss for lack of subject matter jurisdiction are DENIED;
2. Defendant Township of Upper Gwynedd's motion to dismiss for lack of subject matter jurisdiction is DENIED;
3. Defendant Township of Lower Merion's motion to dismiss for lack of subject matter jurisdiction or, alternatively, for failure to state a claim is DENIED.
September 29, 1992
Louis H. Pollak, J.