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June 29, 1993

Southeastern Pennsylvania Transportation Authority
Pennsylvania Public Utility Commission and Township of Lower Merion Southeastern Pennsylvania Transportation Authority v. Pennsylvania Public Utility Commission and Township of Upper Gwynedd Southeastern Pennsylvania Transportation Authority v. Pennsylvania Public Utility Commission

The opinion of the court was delivered by: LOUIS H. POLLAK

 Pollak, District Judge

 June 29, 1993


 Factual and Procedural Background

 The background of these consolidated cases has been set out in some detail in a previous opinion denying defendants' motions to dismiss for lack of subject-matter jurisdiction and for failure to state a claim. See Southeastern Pa. Transp. Auth. v. Pennsylvania Pub. Util. Comm'n, 802 F. Supp. 1273 (E.D. Pa. 1992). Therefore, I only briefly rehearse those facts here and encourage the interested reader to consult my prior opinion.

 In 1991 and 1992, the PUC issued three separate orders requiring that SEPTA make payments toward the upkeep of four highway-bridge structures passing over railway lines owned and operated by SEPTA. *fn1" In each case, the PUC determined that SEPTA, as the operator of the railway line running under the bridge, benefitted from a separated railway-highway crossing and should therefore share bridge-maintenance costs with the localities that owned the roads and also benefitted from a separated crossing. *fn2" SEPTA argued unsuccessfully to the PUC that this assignment of costs to SEPTA violated a pair of federally-conferred tax exemptions: 45 U.S.C. § 581(c)(5) (1988) and 45 U.S.C § 546b (1988).

 The history of these tax-exemption statutes is fairly straightforward. In 1981, Congress required that the financially-troubled Consolidated Rail Corporation ("Conrail") -- established by federal law to provide national rail transportation -- transfer its commuter rail operations to local commuter authorities. To assist these local authorities with handling the provision of commuter service, Congress created the Amtrak Commuter Services Corporation ("Amtrak Commuter"), as a wholly-owned subsidiary of the National Railroad Passenger Corporation ("Amtrak"), and afforded the local authorities a choice between contracting with Amtrak Commuter for provision of commuter rail service formerly handled by Conrail or operating commuter rail service directly. SEPTA decided to operate its own local commuter rail service and, on January 1, 1983, assumed from Conrail the operation of thirteen commuter rail lines.

 On September 10, 1982, Congress enacted 45 U.S.C. § 546b, exempting Amtrak -- which, like Conrail, was struggling financially -- and its newly-created subsidiary Amtrak Commuter "from any taxes or other fees imposed by any State, political subdivision of a State, or a local taxation authority which are levied . . . from and after October 1, 1981 . . . ." 95 Stat. 852 (1982), codified at 45 U.S.C. § 546b. In exempting Amtrak from state taxation, Congress reasoned that local jurisdictions benefitting from Amtrak's rail service have an obligation to contribute to its continued existence through tax relief. Then, in 1988, Congress enacted 45 U.S.C. § 581(c)(5), providing that:

Notwithstanding any other provision of law, any commuter authority that could have contracted with Amtrak Commuter for the provision of commuter service but which elected to operate directly its own commuter service as of January 1, 1983, shall be exempt from the payment of any taxes or other fees to the same extent as [Amtrak] is exempt.

 45 U.S.C. 581(c)(5) (1988).

  Relying on two Pennsylvania Commonwealth Court opinions, *fn3" the PUC determined, in three separate orders, that § 581(c)(5) did not exempt SEPTA from assessments for bridge maintenance because such assessments were not "taxes or other fees" within the meaning of the federal exemption. Subsequently, SEPTA appealed each PUC decision to the Pennsylvania Commonwealth Court, and then apparently applied for, and was granted, a stay of each state proceeding after filing each of three separate complaints with this court. In these federal complaints, consolidated on August 19, 1992, SEPTA argues that the imposition upon SEPTA of bridge-maintenance costs violates the federal tax- exemption statutes; SEPTA seeks a declaration to that effect and a permanent injunction against assessment of such costs by the PUC with respect to the four bridges. In its complaints, and again in its motions for summary judgment, SEPTA relies heavily on National R.R. Passenger Corp. v. Pennsylvania Pub. Util. Comm'n, 848 F.2d 436 (3d Cir. 1988) (Amtrak I), cert. denied, 488 U.S. 893, 102 L. Ed. 2d 220, 109 S. Ct. 231 (1988), in which the Third Circuit held that the immunity afforded Amtrak in § 546(b) precluded the PUC from assessing Amtrak for costs incurred in the reconstruction and future maintenance of a bridge overhanging Amtrak-owned railway tracks. On SEPTA's view, because the PUC cannot assign bridge-maintenance costs to Amtrak without running afoul of § 546b, and because, pursuant to § 581(c)(5), SEPTA, as a local commuter authority, is entitled to relief from "taxes or other fees to the same extent as" Amtrak, it follows that SEPTA cannot be required by the PUC to contribute to improvements on a highway bridge passing over its railway lines.

 In a September 29, 1992 opinion, I rejected defendants' arguments that the Tax Injunction Act, 28 U.S.C. § 1341 (1988), or the Eleventh Amendment deprived this court of subject-matter jurisdiction over these consolidated cases, or that SEPTA had failed to state a legally sufficient claim. In doing so, and specifically in response to an argument that no "taxes or other fees" had been imposed upon SEPTA within the meaning of § 581(c)(5), I decided that, under Amtrak I, the costs in question in these consolidated cases are, as a matter of law, "taxes" under § 581(c)(5). Buoyed by this portion of my September 29 opinion, SEPTA, on January 8, 1993, moved for summary judgment, arguing that these cases had, in effect, already been resolved because they could not be distinguished from Amtrak I. At about the same time, the three defendants -- the PUC, Lower Merion, and Upper Gwynedd -- also moved for summary judgment, presenting a number of reasons why judgment should be entered against SEPTA. *fn4" Thereafter, all parties responded to the opposing motions for summary judgment. Defendants' arguments for summary judgment in their favor and/or to resist summary judgment in favor of SEPTA fall into three categories: (1) deference to state policies and proceedings; (2) the unconstitutionality of § 581(c)(5); and (3) the inapplicability of § 581(c)(5) to the cases at bar (or, at least, factual uncertainty surrounding that statute's applicability). I will address each of these arguments in turn.

 The standards for granting or denying summary judgment do not change by virtue of cross-motions being presented. United States v. Hall, 730 F. Supp. 646, 648 (M.D. Pa. 1990). Therefore, the question now -- as always at the summary judgment stage -- is whether, provided there is no genuine issue as to any material fact, the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c).


 Deference to State Policy and Proceedings

 The PUC and Lower Merion recommend that this court decline to exercise its jurisdiction pursuant to either Burford v. Sun Oil Co., 319 U.S. 315, 87 L. Ed. 1424, 63 S. Ct. 1098 (1943), or Colorado River Water Conservation Dist. v. United States, 424 U.S. 800, 47 L. Ed. 2d 483, 96 S. Ct. 1236 (1976). In considering the possibility of abstention, it is important to keep in mind that

abstention from the exercise of federal jurisdiction is the exception, not the rule. "The doctrine of abstention, under which a District Court may decline to exercise or postpone the exercise of its jurisdiction, is an extraordinary and narrow exception to the duty of a District Court to adjudicate a controversy properly before it."

 Colorado River, 424 U.S. at 813 (quoting County of Allegheny v. Frank Mashuda Co., 360 U.S. 185, 188, 3 L. Ed. 2d 1163, 79 S. Ct. 1060 (1959)). These cases do not present one of those limited circumstances where a district court should decline to exercise its jurisdiction in deference to state policies (pursuant to Burford) or to pending state proceedings (pursuant to Colorado River).

 A. Burford Abstention

 Under the Burford doctrine, "if the exercise of federal review would be disruptive of state efforts to establish a coherent policy, and the policy concerns complicated local matters, abstention may be justified." United Servs. Auto. Ass'n v. Muir, 792 F.2d 356, 364 (3d Cir. 1986), cert. denied sub nom. Grode v. United Servs. Auto. Ass'n, 479 U.S. 1031, 93 L. Ed. 2d 830, 107 S. Ct. 875 (1987). In Burford itself, the Court held that a federal district court should decline to review the Texas Railroad Commission's grant of a permit to drill oil wells where the question was whether the Commission had properly applied complex state regulations and where the state had set up a thorough system of judicial review of such administrative determinations. Under those circumstances, the Court concluded, "a sound respect for the independence of state action requires the federal equity court to stay its hand." 319 U.S. at 334. Defendants argue that because the PUC has power to allocate maintenance responsibilities for rail-highway crossings and a unique ability to assess the benefits flowing to each interested party from a particular crossing, and because enjoining the PUC orders would disrupt its sensible allocation of maintenance responsibilities, this court should, under Burford, stay clear of reviewing the PUC orders.

 "While Burford is concerned with protecting complex state administrative processes from undue federal interference, it does not require abstention whenever there exists such a process or even in all cases where there is a 'potential for conflict' with state regulatory law or policy." New Orleans Public Serv., Inc. v. Council of City of New Orleans, 491 U.S. 350, 359, 105 L. Ed. 2d 298, 109 S. Ct. 2506 (1989) (NOPSI) (quoting Colorado River, 424 U.S. at 815-16). For one, the Burford doctrine does not pertain if it is clear that federal law has pre-empted state regulatory authority in a particular area. 17A Charles A. Wright & Arthur R. Miller, Federal Practice & Procedure § 4244, at 93-94 (1988). Further, when a defendant urges abstention for fear of disruptive effect on state regulatory policy, the defendant must show that the federal court is presented with claims implicating local concerns that fall within the technical or specialized expertise of the state administrative body. See, e.g., United Servs., 792 F.2d at 365 (finding that district court erred in applying Burford to state regulation of insurance where the party urging abstention "has not suggested any peculiar local conditions or special expertise required to interpret the [state] statute"); Baltimore Bank for Coops. v. Farmers Cheese Coop., 583 F.2d 104, 110 (3d Cir. 1978) (district court erred in abstaining on basis of Burford where "no special expertise or competence" of the agency involved); accord Property & Casualty Ins., Ltd. v. Central Nat'l Ins. Co. of Omaha, 936 F.2d 319, 323 (7th Cir. 1991) (footnote omitted) (where abstention is urged for fear of disruption of coherent state policy, the state forum "must stand in a special relationship of technical oversight or concentrated review to the evaluation of those claims."). SEPTA, far from asking this court to assess the reasonableness of the PUC orders against the backdrop of unclear state law or complicated state policies within the special competence of the PUC, simply asks for a construction of federal law -- §§ 581(c)(5) and 546b -- and a ruling that the several PUC orders are foreclosed by this federal legislation. Where, as here, no issues of peculiar local concern are required to interpret the allegedly pre-empting federal law, there is no reason for abstention on Burford grounds because there is no significant intrusion into state governmental processes. Cf. NOPSI, 491 U.S. at 363 (Burford abstention not appropriate where "no inquiry beyond the four corners of the Council's retail rate order is needed to determine whether it is facially pre-empted by FERC's allocative decree and relevant provisions of the Federal Power Act."). Although federal review may result in an injunction against enforcement of PUC orders, "there is, of course, no doctrine requiring abstention merely because resolution of a federal question may result in the overturning of a state policy." Zablocki v. Redhail, 434 U.S. 374, 380, 54 L. Ed. 2d 618, 98 S. Ct. 673 n. 5 (1978).

 In short, any disruptive effect on state policy in these cases would flow from a federal legislative design rather than from federal judicial oversight of issues of distinctive local concern. For this reason, it would be manifestly inappropriate to abstain in order to avoid what defendants perceive as "needless" conflict with state policy; where Congress has afforded an exemption from state taxation, any conflict with a State's affairs that ...

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