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In This Issue:

• CONTRACTS BETWEEN PUBLIC UTILITIES AND MUNICIPAL CORPORATIONS NOT ENFORCEABLE UNLESS APPROVED BY PUC
• MAINTENANCE AND REPAIR COSTS FOR AT-GRADE CROSSINGS CAN BE ALLOCATED TO MUNICIPALITIES
• PENNSYLVANIA'S RAILROAD TRESPASS STATUTE GIVES ADDED TEETH TO POLICING RIGHTS OF WAY
• SCRAP MATERIAL THEFT PREVENTION ACT PROVIDES ADDITIONAL PROTECTION INVOLVING THE THEFT OF RAILROAD PROPERTY FOR PROFIT
• NAUMAN SMITH WELCOMES FORMER ASSISTANT DISTRICT ATTORNEY, JOSHUA BONN, TO THE RAIL AND TRANSPORTATION PRACTICE GROUP

More Issues:

• Summer 2009

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Rail & Transportation Law Newsletter

Summer 2009

CONTRACTS BETWEEN PUBLIC UTILITIES AND MUNICIPAL CORPORATIONS NOT ENFORCEABLE UNLESS APPROVED BY PUC 

Section 507 of the Public Utility Code provides that except for contracts to furnish service at regularly filed and published tariff rates, "no contract or agreement between any public utility and any municipal corporation shall be valid unless filed with the Commission at least 30 days prior to its effective date." 

Since its enactment in 1937, courts over the years have refused to enforce contracts that had not been approved by the PUC pursuant to the statutory requirement.  In one case, the Pennsylvania Supreme Court refused to allow the recovery by a gas company for work performed in replacing part of its line, even though a contract entered into with the county called for such reimbursement, because the contract had not been approved by the PUC before the work was performed.

Railroads generally have many contracts with municipal corporations that are subject to approval by the PUC.  A common type of agreement permits municipal corporations, including municipal water or sewer authorities, to locate their lines under railroad tracks outside of a public rail-highway crossing.  These contracts typically include a provision that requires the municipality or water or sewer authority to relocate its line at its own expense if a change in railroad operations ever so requires.  Without prior approval of the contract, such provisions would not be enforceable.

Some railroads might not be aware of this requirement, as the PUC's Bureau of Transportation and Safety reports that it processed just 21 public utility municipal contracts in 2008.  Twenty-one of those contracts were filed by Norfolk Southern Corporation, eight were filed by CSX Transportation, Inc. and one was filed by the Buffalo & Pittsburgh Railroad.  In 2009 to date, the Bureau reports that just eight such contracts were processed, all of which involved Norfolk Southern Corporation.

The filing process with the PUC is rather simple and involves simply filing the executed agreement with the Secretary's Bureau, where it will be given a PUMC docket number and be assigned to the Bureau of Transportation and Safety for review within 30 days.  The PUC has the power to institute proceedings to determine the reasonableness, legality or other matter affecting the validity of such contracts, but rarely does so.  With contracts for the location of water and sewer lines under railroad tracks, the Bureau checks the engineering as well as the reasonableness of the plan review, licensing and other fees charged by the railroad, pursuant to the fee schedule submitted by the railroad.  Further information on such filings can be obtained from the PUC by calling Dave Hart at (717) 787-5189.

MAINTENANCE AND REPAIR COSTS FOR AT-GRADE CROSSINGS CAN BE ALLOCATED TO MUNICIPALITIES

The general rule is that the maintenance and repair costs for at-grade crossing surfaces and warning devices are assigned by the Public Utility Commission to the railroad operating at the crossing.  However, railroads have leverage to obtain agreements with the involved municipalities to pay for these costs in certain circumstances and a recent decision by the Commonwealth Court confirms that such costs can be allocated to a municipality through litigated proceedings where the facts of the case will support it.

In a recent case involving Norfolk Southern, the costs not only to install gates and lights at a public at-grade crossing, but also the cost to maintain them in the future, were allocated by the PUC to the City of Lebanon and North Lebanon Township.  In that case, Norfolk Southern had applied to abolish the subject crossing, alleging that it was redundant and unnecessary, as supported by a traffic study conducted by the railroad.  While determining that the crossing should remain open, the PUC accepted Norfolk Southern's alternate argument that the municipalities which owned the roadway at the crossing derived the greatest benefit from the crossing remaining open, and therefore should bear not only the costs of installing the safety improvements, but also to pay for the future maintenance of these devices. 

In so deciding, the PUC relied upon testimony by the municipalities that there would be a substantial increase in vehicular traffic due to new developments in the surrounding areas, that the crossing provided emergency responders with the most direct route in responding to emergencies in certain areas, and provided access for local businesses.  Another important factor in this case was that the municipalities permitted the construction of a driveway from the businesses in close proximity to the crossing, thereby creating a dangerous situation.

Railroads also possess considerable leverage to obtain such concessions when a municipality wants to establish a new at-grade crossing.  While railroads generally oppose the establishment of any new at-grade crossing, a fall back position is to require the municipality to pay for future maintenance costs in addition to construction costs.  If obtained by agreement, railroads could require the municipality to pay a set amount each year for the inspection and maintenance of gates and lights or other warning devices installed at the crossing as well as for the maintenance of the crossing surface.  The railroad might separately require the municipality to pay the actual costs of any repairs or replacement of signage or flashing lights and gates due to damages caused by persons other than railroad employees or to pay for the replacement of high-type crossing surfaces.

While the shifting of these maintenance and repair costs to the roadway authority are available, it requires careful preparation of evidence to obtain through litigation as well as through negotiations.

PENNSYLVANIA'S RAILROAD TRESPASS STATUTE GIVES ADDED TEETH TO POLICING RIGHTS OF WAY

Over a three-year period, 2004 to 2007, trespassers comprised the largest number of railroad-related fatalities, according to a Federal Railroad Administration Report.  Particularly at this time of year when warmer weather prevails, trespassing incidents increase whether by hunters and fishermen, ATVs and juveniles. 

In 2004, the Pennsylvania Legislature enacted 18 Pa. C.S.A. §3504, commonly referred to as the "Railroad Trespass Statute."  The purpose of this legislation was to provide railroads with the ability to more easily hold trespassers accountable for acts of trespass with provisions that recognize the unique nature of railroad rights-of-way as opposed to general trespassing statutes involving other types of land within the Commonwealth.

Although Pennsylvania law does recognize a "permissive crossing" if a well-defined path is used openly and routinely by the public to cross the tracks, generally, there is no right of a pedestrian or other trespasser on a railroad right-of-way to a longitudinal pathway along the railroad tracks.  The Railroad Trespass Statute helps underscore this distinction.

The statute provides that a person who without lawful authority or railroad consent causes damage to property he knows or reasonably should have known to be railroad property or causes delay in railroad operations is guilty of trespassing which is classified as a third degree misdemeanor.  This is in contrast to a summary offense penalty provided under general trespass laws.  In addition to providing an extra means of punishing trespassers on railroad property, it also deals with the situation of stowaways or those riding or jumping onto rail cars or causing vandalism which causes delay in railroad operations. 

Because the statute is relatively new, there are still police officers and magisterial district judges who are not as familiar with this particular trespass statute as they are with the general trespass laws.  This is true even though the statute is covered in the general training program required of police officers within the Commonwealth.  Since the statute does involve a third degree misdemeanor, it should also draw greater attention and assistance from local district attorneys offices should the need arise to continue the prosecution beyond the magisterial judge level. 

Several railroads have taken the opportunity to educate the local police forces and magisterial district judges having jurisdiction over the areas where their right-of-way is located.  The ability of Pennsylvania Game Commission officers to enforce the statute should also not be overlooked. 

Finally, consideration should be given to a trespass abatement program within the areas covered by the railroad's right-of-way.  This program involves not only educating local law enforcement, district attorneys and judges, but also can be made part of the Operation Lifesaver Program or in other presentations made to schools, civic groups, or hunting and fishing organizations from where members offenses may occur.  It is also a good idea to post your property clearly with "no trespassing" signs and to photograph those postings in relation to the various locations where they are placed to assist in future prosecutions.

SCRAP MATERIAL THEFT PREVENTION ACT PROVIDES ADDITIONAL PROTECTION INVOLVING THE THEFT OF RAILROAD PROPERTY FOR PROFIT

On December 8, 2008, the Scrap Material Theft Prevention Act went into effect.  The Act may be located at 73 P.S. §1943.1 et seq.  The law is designed to make scrap dealers and recyclers aware of the various types of railroad property which are stolen for profit and to make scrap dealers accountable for knowingly selling such materials. 

The statute applies to "scrap processors" and "recycling facility operators" and covers "commercial metal property" which includes railroad materials or those marked with the railroad's name.  When an individual sells to a scrap processor or recycling facility operator "restricted material" (which includes commercial metal property) over $100, the scrap processor or recycling facility operator must obtain the following information from a non-commercial seller:  (1) a copy of the seller's drivers license, (2) signature of seller, (3) the license plate of the motor vehicle operator at the time of the transaction, (4) written permission of the seller's parent or guardian if they are under 18 years of age, (5) the date and time of the transaction, and (6) a description of the material. 

If cash is paid, the seller's signature must appear on the receipt and the receipt must contain a certification that the seller is indeed the owner of the property.  When the scrap dealer is dealing with a "commercial enterprise," records of the name, tax ID, address, telephone number, date, time, and value of property purchased and a description of the property from that commercial enterprise must be kept permanently.

If a scrap processor or recycling facility operator acquires material that it has been notified is believed to have been illegally obtained, they must notify the police within 24 hours of such material coming into their possession and must hold the suspected material for another 48 hours following notification of the police.  This time may be extended by an order from the magisterial district judge upon a showing of probable cause.  The Act provides that a first violation is a summary offense with a fine up to a maximum of $2,500 and a second offense and beyond is punishable as a third degree felony.  These penalties and provisions should provide additional "teeth" to the Act and help to curb the illegal acquisition and sale of railroad property.

Once again, a pro-active educational program may be beneficial to the railroad.  This would involve contacting the local scrap processors and recycling operators in your area and providing a description and, if possible, photographs of the common types of items which are or may be routinely stolen.  This type of notice will help educate the local scrap processors and recyclers and also alert them to the fact that the railroad is aware of the law and will take the steps necessary to enforce it to protect their property. 

NAUMAN SMITH WELCOMES FORMER ASSISTANT DISTRICT ATTORNEY, JOSHUA BONN, TO THE RAIL AND TRANSPORTATION PRACTICE GROUP

Nauman Smith has added a valuable member to its Rail and Transportation Practice Group.  Litigation is a key component to Nauman Smith's representation of rail and transportation industry clients, so the firm sought an energetic attorney with hands-on courtroom experience.  New associate, Joshua D. Bonn, previously served as an assistant district attorney in York County, Pennsylvania, where he appeared in court daily and handled hundreds of criminal cases.

With close to seventy jury and bench trials behind him, Josh brings his experience to the firm and in assisting fellow practice group members Craig J. Staudenmaier and Benjamin C. Dunlap, Jr. in a variety of railroad related matters.  In regard to defense litigation, attorney Bonn has handled various discovery and pretrial motions, conducted depositions and researched issues including federal preemption of state tort claims.  To assist in the firm's regulatory practice, attorney Bonn conducted extensive research on crossing laws and co-drafted a brief in a successful request to the PUC to deny a township's application to construct a new crossing at grade.

Attorney Bonn is a Pennsylvania native and resides in Lancaster.  He is a graduate of Lock Haven University and the Pennsylvania State University Dickinson School of Law.  He enjoys bicycling, tennis and is an avid supporter of Penn State's football team.  To contact attorney Bonn, call Nauman Smith at (717) 236-3010 or send an e-mail to jbonn@nssh.com.

Nauman Smith's Rail and Transportation Practice Group can assist in all of your railroad and transportation issues by providing quality legal service at a competitive value.