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Metropolitan Transportation Authority v. United States

June 4, 1986

METROPOLITAN TRANSPORTATION AUTHORITY AND METRO-NORTH COMMUTER RAILROAD CO., PETITIONERS
v.
INTERSTATE COMMERCE COMMISSION AND UNITED STATES OF AMERICA, RESPONDENTS, NATIONAL RAILROAD PASSENGER CORP., INTERVENOR



Petition for review of three decisions of the Interstate Commerce Commission determining compensation for trackage rights pursuant to section 402(a) of the Rail Passenger Service Act. Constitutional and statutory challenges to ICC decision rejected. Petition denied.

Author: Oakes

Before: OAKES, KEARSE, and PIERCE, Circuit Judges.

OAKES, Circuit Judge:

This case concerns questions of the applicability and constitutionality of acts Congress pertaining to certain rail passenger services as well as questions whether the Interstate Commerce Commission (ICC or Commission), respondent here, has jurisdiction to determine the compensation owed by the National Railroad Passenger corporation (Amtrak), intervenor here, to the New York Metropolitan Transportation Authority (MTA) and its wholly-owned subsidiary Metro-North Cummuter Railroad Company (Metro-North) (jointly referred to as Metro), petitioners, here, for Amtrak's use of certain facilities and services of the petitioners and whether the determinations that the ICC made were proper. Resolution of these questions involves examination of the tortuous collation of statutes pertaining to Amtrak, including the relevant sections of the Rail Passenger Service Act of 1970 (RPSA), 45 U.S.C. §§ 501-658 (as amended),*fn1 and to Metro-North, which by virtue, inter alia, of the Northeast Rail Service Act of 1981 (NRSA), Pub. L. No. 97-35, 95 Stat. 643 (codified as amended in scattered sections of 45 U.S.C.), now operates a commuter rail service formerly operated by the Penn Central Transportation Company (Penn Central), and from 1976 through 1982, by Penn Central's federally-funded successor in interest, Consolidated Rail Corporation (Conrail), which was statutorily constituted pursuant to the Regional Rail Reorganization Act of 1973 (3R Act), Pub. L. No. 93-236, 87 985 (codified as amended in scattered section of 45 U.S.C.).

The case also requires our consideration of, among other things, the tortured history by which the seventy-four miles of liens in question between Poughkeepsie, New York, and Grand Central Terminal (GCT) in New York City (the Harlem-Hudson Line), as well as the GCT facility itself, came to be leased originally to MTA by Penn Central 1972, the latter reserving certain rights, however, to Amtrak and to itself. Penn Central's rights were in turn later assigned in part to Conrail. In our trek through these statutes and this history we are aided no end by the previous opinion of the Special Court, Regional Rail Reorganization Act (the Special Court), 45 U.S.C. § 719(b), which (a) declined to stay the instant Commission proceedings, Consolidated Rail Corp. v. Metro-North Commuter Railroad co., C.A. No. 83-14 (Regional Rail Reorg. Ct., July 23, 1984) (Conrail I) holding (1) section 402(a) of RPSA, 45 U.S.C. § 562(a), facially applicable to Amtrak's trackage rights over the lines in question, (2) a Fifth Amendment constitutional argument insubstantial, (3) section 504(f) of RPSA, added by section 1137 of NRSA, 45 U.S.C. § 584(f), inapplicable, and (4) declining to exercise any power under the All Writs Act, 28 U.S.C. § 1651, in order to preserve its jurisdiction); and (b) in a proceeding related to this one held that the free trackage rights and rights to GCT (collectively "trackage rights") retained by Penn Central in its 1972 leases to MTA devolved upon Conrail and, to a limited extent, upon Amtrak and remain in full force and effect despite Conrail's ceasing as of January 1, 1983, to furnish commuter service on the liens in question and despite the enactment of section 504(f) of RPSA, see Consolidated Rail corp. v. Metro-North Commuter Railroad Co., 598 F. Supp. 1571 (Regional Rail Reorg. Ct. 1984) Conrail II). With that aid, as well as with a careful independent examination of the historical facts, statutes, and claims involved, we deny the petition to review.

STATEMENT OF FACTS

Because rail passenger service was deteriorating throughout the nation, Congress enacted the RPSA in 1970. The RPSA created Amtrak and provided for its assumption of nearly all "basic system" intercity passenger service obligations. See Congress of Railway Unions v. Hodgson, 326 F. Supp. 68, 70 (D.D.C. 1971). Under section 401 of RPSA, 45 U.S.C. § 561, railroads were permitted to terminate their responsibility to provide intercity rail passenger service without filing an application for discontinuance with the ICC; they could, instead contract with Amtrak, at least until Amtrak's authority to enter such contracts expired in 1975.

Amtrak continues to have authority under section 402 of RPSA, 45 U.S.C. § 562, to "contract with railroads or with regional transportation agencies for the use of tracks and other facilities." If the parties cannot agree, section 402(a), the critical statutory provision involved in this case, gives the Commission the authority, if necessary to accomplish the purposes of RPSA, to prescribe compensation to be paid by Amtrak for the use of such tracks and facilities. That subsection provides that such compensation is in general to be limited to "incremental costs"; the "quality of service" is the principal factor that can lead to an award of compensation in excess of those costs. "Incremental costs," all parties to this case agree, are the same as so-called "avoidable costs," i.e., the costs of the carrier whose facilities are being used that would be avoidable except for Amtrak's use. These are as opposed to "fully-allocated" or "fully-distributed" costs, which are equal to the total costs of maintenance, operation and repair of a line or facilities, and to a return on investment, in basically the same proportion as the respective carriers use the facilities. It is self-evident that Metro wishes to get out form under the application of section 402(a) so that it can receive fully-allocated costs.*fn2

The relationship that led to the controversy before us can be traced back to 1972, when MTA, which, like its subsidiary Metro-North, is a New York state public benefit corporation, see N.Y. Pub. Auth. Law §§ 1263(1), 1266(5), (McKinney 1982), entered into an arrangement with Penn Central concerning the latter's Harlem-Hudson service. This arrangement enabled MTA to obtain full control over a substantial part of Penn Central's tracks, terminals, stations, shops, and yard by a single lease, the so-called Harlem-Hudson Lease. The lease covered both GCT and the whole of the Harlem and Hudson Lines. It was for a term of sixty years with various rights of renewal permitting it to run up to an additional thirty years. The rent that MTA agreed to pay Penn Central was nominal, but the agreement made MTA eligible for substantial federal aid and rehabilitation. See 49 U.S.C. App. § 1602(a). Although Penn Central was then in the process of transferring responsibility for its long-haul passenger services to the newly-created Amtrak, it reserved certain rights under the lease, including the right to continue to operate its freight and long-haul passenger services over the leased properties and all rights necessary to enable Penn Central to perform its obligations and Amtrak to exercise its rights under an April 16, 1971, agreement between Amtrak and Penn Central. Penn Central was was required to pay MTA if its traffic exceeded a certain level and to pay various other costs. In a separate but simultaneous agreement, MTA contracted with Penn Central to underwrite the latter's losses on its Harlem-Hudson commuter service.

In accordance with the Final System Plan (FSP), drafted by the United States Railway Association (USRA) pursuant to section 206 of the 3R Act, 45 U.S.C. § 716, and approved by Congress in section 601(e) of the Railroad Revitalization and Regulatory Reform Act of 1976 (4R Act), 45 U.S.C. § 718(d)(1) (adding § 208(d) to 3R Act), see Penn Central Corp. v. Consolidated Rail Corp., 611 F. Supp. 285, 291 n.5 (Regional Rail Reorg. Ct. 1985), Penn Central's trackage rights and its commitment to provide commuter services were assigned to Conrail on April 1, 1976. The FSP required a scaled-down Penn Central system and compelled Penn Central for value to convey that system to Conrail. The FSP left Penn Central as fee owner of the properties subject to MTA's long-term lease and USRA simply designated Penn Central's Harlem-Hudson trackage rights for transfer to Conrail. On the same day that Conrail received these rights from Penn Central-April 1, 1976-Conrail transferred to Amtrak other long-haul passenger train rights, but not the Harlem-Hudson commuter train rights. Conrail and Amtrak continued to exercise the trackage rights reserved in the Harlem-Hudson Lease for freight and long distance passenger service. See Conrail II, 598 F. Supp. at 1576-77.

In 1981 Congress adopted the NRSA. Section 1133(2) of that Act, 45 U.S.C. § 1102(2), provided for the transfer of Conrail's commuter service responsibilities to other entities. Sections 1137 and 1145 of NRSA also added a new title to RPSA, Title V, sections 501-10, 45 U.S.C. §§ 581-91 (as amended), authorizing the creation of a wholly-owned subsidiary of Amtrak know as Amtrak Commuter Services Corporation (Amtrak Commuter) whose primary function was to provide certain commuter services formerly provided by Conrail. New section 506(a) of RPSA, 45 U.S.C. § 586(a), required each local commuter authority to notify Amtrak Commuter and Conrail by April 1, 1982, whether it intended to operate its own commuter service or to contract with Amtrak Commuter for such service. MTA elected not to use Amtrak commuter. It instead organized its subsidiary Metro-North, which began operations January 1, 1983, the day that Conrail's commuter service obligations terminated.

In Conrail II, which involved questions of the nature of Conrail's and Amtrak's rights and obligations under Penn Central's lease of its West End properties (the New Haven line) and of Conrail's rights and obligations under the Harlem-Hudson Lease into which Penn Central had entered, MTA argued to the Special Court that Conrail lost its free trackage rights when it stopped providing lost its free trackage rights when it stopped providing commuter services. MTA maintained that, after January 1, 1983, Conrail and Amtrak had an obligation to contribute their share of the costs of maintenance, operation, and repair of the MTA lines, including GCT. The Special Court held that Penn Central's leases to MTA reserved rights to Penn Central, that, as discussed above, those rights to Penn Central, that, as discussed above, those rights had been assigned to Conrail and Amtrak, and that they were not extinguished by the statutory termination of Conrails' duties to provide commuter services. 598 F. Supp. at 1582-83.

This case concerns a matter not at issue in Conrail II: the compensation that Amtrak owes for its use of Harlem-Hudson Line trackage rights and for the use of facilities and services associated with that line. See id. at 1578 n.3. Conrail II involved free trackage rights that had passed from Penn Central to Amtrak and Conrail pursuant to the 3R Act and the FSP. Since the Hudson portion of the Harlem-Hudson Line was not in the Northeast corridor, the 3R Act and the FSP did not give Amtrak free trackage rights over that time. Amtrak does not dispute that it must pay for use of the line. The question is how much.

After failing to reach agreement with Metro over compensation for its use of the lien and associated services and facilities, Amtrak filed the instant petition before the Commission requesting that compensation be set pursuant to section 402(a) of RPSA, 45 U.S.C. § 562(a). MTA and Metro-North then filed a motion asking the Special Court to enjoin the Commission proceeding. They claimed, as they do here, that section 402(a) does not apply to them, but that if it does that section is unconstitutional, and that the Special Court, not the Commission, ...


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