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National Railroad Passenger Corp. v. Southeastern Pennsylvania Transportation Authority

United States District Court, District of Columbia

July 11, 2019



          TREVOR N. McFADDEN, U.S.D.J.

         This is a case about a relationship between two railroad authorities that has veered off track over a property dispute. The Southeastern Pennsylvania Transportation Authority (“SEPTA”) believes it possesses an easement granting it the right to provide commuter passenger services using property owned by the National Railroad Passenger Corporation (“Amtrak”). Amtrak disagrees. It seeks a declaratory judgment that SEPTA does not own the easement. In response, SEPTA has moved for a dismissal of Amtrak's Complaint for lack of subject matter jurisdiction. Because the Court finds that it has jurisdiction to consider the merits of the parties' arguments, it denies SEPTA's Motion.


         In the early 1970s, several major railroads in the Northeast filed for bankruptcy. To ensure continued service in the region, Congress passed the Regional Rail Reorganization Act of 1973, 45 U.S.C. § 701 et seq. (“3R Act”). The 3R Act created the Consolidated Rail Corporation (“Conrail”). Id. § 741. Through a “Final System Plan, ” the Act directed Conrail to acquire and operate the bankrupt railroads' rail lines. See id. § 716; P.L. No. 94-210. The Plan also required Conrail to convey some of these properties to other rail authorities, including Amtrak. Id. For property transferred to Amtrak, the Plan reserved to Conrail “appropriate trackage rights for the operation of commuter services.” ECF No. 8-5 at 3.[1]

         Under the Plan, Conrail conveyed to Amtrak the “Northeast Corridor Properties, ” which include rail lines running from Washington to Boston, and from Philadelphia to Harrisburg. See ECF No. 8-6 at 7-9. To ensure that Conrail retained trackage rights on these properties, Amtrak granted it a “Commuter Service Passenger Easement.” See ECF No. 8-7.

         The parties' easement agreement gave Amtrak a right of first refusal. It stated that if Conrail “elect[s] to abandon or assign the Commuter Passenger Service Easement, in whole or in part, other than to a subsidiary, affiliate or successor entity, [Amtrak] shall have a first option to acquire such easement, or portion thereof, at the purchase price of one dollar ($1.00).” Id. at 7.

         Using this easement, Conrail began providing commuter passenger services on behalf of regional transport authorities like SEPTA. See ECF No. 8-1 at 9. But in 1981, Congress found that the 3R Act and Conrail had “failed to create a self-sustaining railroad system in the Northeast” and had “cost United States taxpayers many billions of dollars over original estimates.” 45 U.S.C. § 1101(1). To remedy this failure, Congress passed the Northeast Rail Service Act (“NERSA”), which, among other things, relieved Conrail of its commuter service obligations. See 45 U.S.C. § 744(a). NERSA gave regional transport authorities two choices: they could either “operate [their] own commuter service” or “contract with Amtrak Commuter for the operation of such service.” See 45 U.S.C. § 586.

         SEPTA chose door number one. See Compl. 6; ECF No. 8-1 at 10. Section 506 of NERSA states that a commuter authority choosing to operate its own service “may initiate negotiations with Conrail for the transfer of commuter service operated by Conrail.” 45 U.S.C. § 586(b)(1). Section 506 requires that “[a]ny transfer agreement between [SEPTA] and Conrail shall specify . . . the rail properties to be conveyed.” Id. § 586(b)(2). It defines “rail properties” as “assets or rights owned, leased, or otherwise controlled by Conrail, other than real property, which are used or useful in rail transportation service.” Id. § 586(h).

         As required by Section 506, Conrail and SEPTA began negotiations for a transfer of certain properties, including the Commuter Service Passenger Easement. See Compl. 7. What happened next is the crux of the parties' dispute. SEPTA argues that Conrail successfully transferred the easement to it through a “Transfer Agreement” signed by both parties in 1982. See ECF No. 8-1 at 11-12; ECF No. 8-8. Amtrak disagrees. It contends that, by the easement's clear terms, “Conrail had no authority to convey the Commuter Easement” without offering Amtrak a first option to purchase the easement. Compl. 7. Amtrak suggests that it exercised this option, bought the easement, and won an arbitration that confirmed the legality of its acquisition. Id. at 7-8. And because Amtrak “possessed the fee that was burdened by the Easement, ” it argues, the purchase terminated the easement. Id. at 8.

         SEPTA contends that the Court lacks jurisdiction to resolve this dispute for two reasons. ECF No. 8-1 at 17. First, it suggests that the 3R Act proscribes judicial review of any rights reserved by the Final System Plan to Conrail. Id. at 18. Second, it argues that NERSA bars judicial review of any transfers made by Conrail under Section 506. Id.


         The Court must dismiss Amtrak's claims if it lacks subject matter jurisdiction to consider them. Fed.R.Civ.P. 12(b)(1). When a defendant moves to dismiss under Rule 12(b)(1), the plaintiff bears the burden of establishing the Court's jurisdiction. See Moms Against Mercury v. FDA, 483 F.3d 824, 828 (D.C. Cir. 2007). In conducting its review, the Court accepts as true all factual allegations in the complaint. Wright v. Foreign Serv. Grievance Bd., 503 F.Supp.2d 163, 170 (D.D.C. 2007). It also gives the plaintiff “the benefit of all favorable inferences that can be drawn from the alleged facts.” Id. Beyond the complaint, it may consider “undisputed facts plus the [C]ourt's resolution of disputed facts.” Herbert v. Nat'l Acad. of Sciences, 974 F.2d 192, 197 (D.C. Cir. 1992).


         At this early junction, Amtrak has met its burden of establishing the Court's jurisdiction. Consider first the 3R Act. True, the Act limits judicial review of the Final System Plan to “matters concerning the value of the rail properties to be conveyed under the plan and the value of the consideration to be received for such properties.” 45 U.S.C. § 719. And it is also true that Amtrak is not ...

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