449 Pa. 402 | Pa. | 1972
Lead Opinion
Opinion by
This appeal involves the question whether the burden of financing the relocation of utility lines and equipment necessitated by the extension of the Broad Street Subway in Philadelphia, must be borne by utility companies (intervening appellants)
The proposed subway extension is intended to expand rapid transit service to the inhabitants of South
The Commission issued a preliminary order on May 5, 1969, temporarily approving the project and directing the utilities to make the necessary relocations at the utilities’ expense pending a hearing and final order.
The Commission hearing adduced the following relevant evidence. Exclusive of the cost of relocating the intervening appellants’ facilities, the subway construction and grade crossings would cost $33,000,000. The project is to be financed by a self-sustaining bond issue by the City, the debt service of which is to be paid from revenue generated by appellee SEPTA in the operation of the subway pursuant to an agreement between SEPTA and the City. SEPTA will operate the subway extension on its completion. The City has agreed to relocate all City-owned water mains, drainage facilities and transit ducts and to defray as much of the cost of relocation of the facilities of the Philadelphia Gas Works as the City assumed by agreement with the Gas Works dated December 29, 1961. All of these expenses will be defrayed from the proceeds of the City bond issue.
The Commission, in its final order dated June 1, 1970, determined that its power to allocate costs in crossing cases was plenary and exclusive, notwithstanding that the permit provisions dictate that relocation expenses should be borne by the utility companies. The Commission directed, in paragraphs 21 and 22 of its order, that the City pay the utility companies 75% of the cost of relocation exclusive of any betterment to their facilities. On appeal by the City and SEPTA, the Commonwealth Court vacated and set aside paragraphs
This Court is asked to decide the questions: (1) whether the Public Utility Commission has statutory authority to allocate the cost of relocating the facilities of Bell and Electric between the City and said utilities in view of the permit agreements imposing the entire cost of relocation on appellants utilities; and (2) whether the Commission exceeded its statutory powers by abrogating the provisions of the permits here involved.
That a valid, binding contractual obligation was created when the utility companies obtained permits for the laying of conduits in the City’s streets was decided by this Court in Philadelphia Electric Company v. Philadelphia, 301 Pa. 291, 152 Atl. 23 (1930). “The contractual conditions imposed by the City, which [appellants] could either accept or reject, were impositions certainly within the scope of its municipal powers.” 301 Pa. at 298, 152 Atl. at 26. Since the permits were granted as part of contractual agreements between the City and the utility companies, there can be no doubt that the covenants of Bell and Electric providing that the cost of facility relocation would be borne by facility owners were part of the quid pro quo which the utility companies proffered in exchange for the City’s permit grants.
Appellants would have this Court disturb vested contractual rights derived from arm’s length bargain
Section 411(a) provides for the compensation of utility owners for the expense necessitated by facility relocation, the amount of such compensation to be borne by the City and the utilities in proportions determined by the Commission unless the amounts to be paid are mutually agreed upon and paid by the parties. The parties affected by rail-highway construction are thus encouraged to agree among themselves respecting the allocation of relocation expenses. The Commission is unauthorized to allocate costs in the presence of an agreement and payment by the parties.
The appellants contend that the allocation of costs in rail-highway construction is an exercise of the Commission’s police power and that the Commission is necessarily injected as a third party to any cost allocation agreement. It is thus argued that any agreement reached with respect to the apportionment of relocation expenses without the approval of the Commission is not mutually agreed upon by the parties within the meaning of Section 411(a).
The view that an agreement of the parties without Commission approval cannot be deemed “mutually agreed upon” for Section 411(a) purposes denies a common sense reading to that provision. We read the provision to mean that the Commission may exercise its jurisdiction to allocate costs only in the absence of an agreement respecting cost apportionment among the parties. There is no agreement lacking here. No public interest is served by permitting the Commission to exercise the authority to allocate costs between the parties when the condition precedent to the exercise of that authority, i.e., the failure of these parties to reach an agreement respecting cost allocation, has not transpired.
Appellants contend that, even if a mutual agreement is here present, “[t]o deprive the commission of jurisdiction in allocating the cost, the proportions must be paid, as well as be agreed upon; that is, the agreement must be actually carried into effect, pursuant to its terms.” Pennsylvania Railroad Co. v. Public Service Commission, 127 Pa. Superior Ct. 544, 552, 193 Atl. 127, 130 (1937). Appellants would define “paid” in the context of Section 411(a) as pertaining only to payments pursuant to final allocation of costs by the Commission. This interpretation renders the proviso “mutually
We hold that the private contractual cost allocation embodied in appellants’ permits is both mutually agreed upon and paid within the contemplation of Section 411(a) and, therefore, that the Commission was without statutory authority to order the City to reimburse 75% of appellants’ cost of facility relocation.
The Commission’s order exceeded its statutory authority. The Commission is authorized to allocate the costs of facility relocation in grade crossing cases where the parties havce not mutually agreed upon and paid the cost of relocation. The Commission, however, is not authorized to impair pre-existing contractual rights and duties except under limited circumstances. The appellants ask this Court to permit the Commission to abrogate the road occupancy contracts as a legitimate exercise of police power. Unless it appears, however, that these contracts adversely affect the public welfare, the legislature may not interfere with the cost allocation provisions. Director General of Railroads v. West Penn Railways Co., 281 Pa. 309, 126 Atl. 767 (1924). This Court has limited the contract abrogation ambit of the Commission to particular circumstances. The Commission’s power to set aside contracts does not apply to a contract which does not affect the common welfare by directly influencing rates or actual operations of the public utility. Pittsburgh and Lake Erie Railroad Co. v. McKees Rocks Borough, 287 Pa. 311, 135 Atl. 227 (1926). Affirming the permit con
We will not abrogate vested contractual rights bargained for in an arm’s length transaction between the utility companies and the City of Philadelphia. The doctrine of stare decisis would here dictate that contractual rights should abide except under circumstances where public welfare compels a contrary result. “This doctrine [stare decisis] ‘is a salutary one and should not be departed from where the decision is of long standing and rights have been acquired under
The order of the Commonwealth Court is affirmed. Paragraphs 21 and 22 of the Commission’s order dated June 1, 1970, are vacated and set aside and the City of Philadelphia is relieved of any duty to reimburse the utility companies for the cost. of facility relocation necessitated by the Broad Street Subway extension.
City and SEPTA appealed to the Superior Court. Bell and Electric were granted leave to intervene as appellees. The Commonwealth’s Department of Transportation was granted leave to intervene as appellant. Both appeals were transferred to the Commonwealth Court on October 15, 1970. Bell and Electric are here intervening appellants and the Department of Transportation is now an intervening appellee.
Electric made two applications for permits in 1916, three in 1926, four in 1941 and one each in 1932, 1940, 1942, 1943 and 1945. Bell made two applications for permits each in 1914 and 1945, and one each in 1925 and 1949.
Bell stipulated at the hearings that its facilities, for which it sought reimbursement for relocation costs, were installed pursuant to agreements containing the following provision: “If, in the laying of water or gas pipes, sewers, or any other municipal work, it shall become necessary to change the location of any of the conduits, manholes or other structures, they shall be shifted or altered at the cost or expense of the owners. . . .”
Electric stipulated that its facilities were installed pursuant to agreements containing similar language: “. . . if, in the construction of water or gas mains, sewers, or any other municipal work, it shall become necessary to change the location of any existing privately owned structures occupying the highways, their location shaU be changed at the sole expense of the owners. . . .”
The question whether the Commission acted arbitrarily and capriciously in abuse of its administrative discretion by allocating expenses is also raised. The Court’s determination that the Commission’s order exceeded its statutory authority makes the question whether the Commission acted in abuse of its administrative discretion unnecessary to reach.
Dissenting Opinion
Dissenting Opinion by
On numerous occasions in the past, this court has recognized that in enacting the Public Utility Code and creating the Public Utility Commission, the legislature sought to eliminate the vagaries and inequities of local utility regulation and to substitute a statewide standardization of all facets of the operation of public utilities, including but not limited to rates, service, installation and safety. Chester County v. Philadelphia Electric, 420 Pa. 422, 218 A. 2d 331 (1966) ; Einhorn v. Philadelphia Electric, 410 Pa. 630, 190 A. 2d 569 (1963); Lansdale Borough v. Philadelphia Electric, 403 Pa. 647, 170 A. 2d 565 (1961); Duquesne Light v. Upper St. Clair, 377 Pa. 323, 105 A. 2d 287 (1954); York Water Co. v. York, 250 Pa. 115, 95 A. 396 (1915). Indeed, by its opinion in Duquesne Light Co. v. Monroeville Borough, 449 Pa. 573, 298 A. 2d 252 (1972), the court again recognizes this purpose. Whether local interference with this policy is expressed in the form of an ordinance or, as in the case at bar, a street occupancy permit, it should not be countenanced. As this Court said in Fogelsville & T. Elec. Co. v. Pennsylvania
The instant dissent is compelled not only out of regard for the above principle, but also because I am unable to agree with the majority’s two main conclusions: (1) that the proportions to be paid in the Broad Street subway project have been both “mutually agreed upon” and “paid” within the meaning of Section 411 (a) of the Public Utility Code, thereby ousting the Commission of jurisdiction to allocate costs; and (2) that even if the Commission has jurisdiction, its order assessing 75 percent of the cost of the project to the City of Philadelphia unconstitutionally abrogates preexisting contract rights. I address these points in turn.
I.
The Jurisdiction of the Public Utility Commission to Allocate Costs
While the jurisdiction of the Public Utility Commission over rail-highway crossings is not unlimited, it is, when it attaches, exclusive. Pittsburgh Railways v.
“(a) No public utility, engaged in the transportation of passengers or property, shall, without prior order of the commission, construct its facilities across the facilities of any other such public utility or across any highway at grade or above or below grade, or at the same or different levels; and no highway, without like order, shall be so constructed across the facilities of any such public utility, and, without like order, no such crossing heretofore or hereafter constructed shall be altered, relocated or abolished.
“(b) The commission is hereby vested with exclusive power to appropriate property for any such crossing, and to determine and prescribe, by regulation or order, the points at which, and the manner in which, such crossing may be constructed, altered, relocated or abolished, and the manner and conditions in or under which such crossings shall be maintained, operated, and protected to effectuate the prevention of accidents and the promotion of the safety of the public.”
The Commonwealth Court concluded, and a majority of this Court agree, that the proportions to be borne by the parties in this case had been both “mu
In the first place, §911 of the Public Utility Law, 66 P.S. §1351, directs that: “No contract or agreement between any public utility and any municipal corporation, shall be valid , unless filed with the Commission at least thirty days prior to its effective date: Provided, That upon notice to the municipal authorities, and the public utility concerned, the commission may, prior to the effective date of such contract or agreement, institute proceedings to determine the reasonableness, legality, or. any other matter affecting the validity thereof. Upon the institution of such proceedings, such contract or agreement shall not be effective until the commis
I recognize that two of the permits involved in Philadelphia Electric, supra, like all of those involved in the present case, were issued subsequent to enactment of The Public Service Company Law and were thus subject to the same filing requirement referred to in the Carnegie case.
The second factor distinguishing Philadelphia Electric from the case at bar is that in Philadelphia Electric, no crossing was involved. The utility was ordered to relocate its facilities by the City Board of Highway Supervisors, which has jurisdiction over City-owned streets.6
Even to hold, however, as the majority does, that the occupancy permits constituted “mutual agreement” within the meaning of §411 is not to end the matter, for “[to] deprive the commission of jurisdiction in allocating the cost, the proportions must be paid, as well as be agreed upon; that is, the agreement must be actually carried into effect, pursuant to its terms.” Penna. R.R. v. Public Service Commission, 127 Pa. Superior Ct. 544, 552, 193 Atl. 127, 130 (1937). The Commonwealth Court held, and the majority of this Court apparently agrees, that the proportions had been “paid by the interested parties” pursuant to the preliminary order of the Commission issued May 5, 1969, and that the final order of June 1, 1970 merely directed a 75 percent reimbursement by the City to the utility appellants. This conclusion is untenable because it results in the anomolous situation that when, without hearing
II.
Power of the Commission to Disregard the Permit Provisions
The court holds that even if the Commission’s jurisdiction to allocate the costs of the present relocations has not been prevented from attaching by the. street occupancy permits, the Commission’s power is circumscribed by the provisions of those permits and our previous decision in the Philadelphia Electric case, mpra, wherein we recognized their contractual nature; specifically, as I read the majority opinion, any allocation different from that contained in the street occupancy permits would constitute an abrogation of preexisting contract rights.
As previously indicated, it is a fair interpretation of the permits that they do not even cover the instant situation; i.e., they were meant to apply to situations where the City is in sole control of changes ordered by it as a public project, and not to situations where the State, acting through the Commission, has preempted the field. Assuming m-guendo, however, the applica: bility of the permits to the crossings which are involved
It cannot be doubted, and tbe appellees concede tbat tbe police power allows tbe Commission to order them to pay a proportion of tbe costs initially so tbat tbe crossing can be constructed safely. Tbe majority bolds, however, tbat once tbe project is completed, it is of no concern to tbe public or tbe Commission bow tbe parties previously have agreed among themselves to divide tbe expense; this remains a strictly private matter and is legally enforceable. In support, tbe court cites our decisions in Pgh. & Lake Erie R.R. v. McKees Rocks Boro., 287 Pa. 311, 135 Atl. 227 (1926) and Director General of Railroads v. West Penn Railways Co., 281 Pa. 309, 126 Atl. 767 (1924). In both of these cases, tbe Public Service Commission bad made an allocation of costs inconsistent with pre-1913 contracts and tbe aggrieved utility was later allowed recovery on tbe contract in a court of law.
In light of tbe important public interest involved in tbe ultimate costs to be borne by parties concerned with crossing construction work, it is my view tbat tbe cited cases, to tbe extent tbat they purport to limit tbe State’s police power in Commission proceedings to insuring safety at crossings and to reviewing rate schedules, should be considered no longer authoritative. Tbe reasoning of tbe Superior Court in Dept. of Highways v. PUC, 185 Pa. Superior Ct. 1, 7, 136 A. 2d 473 (1957), rev’d. on other ground, 394 Pa. 31, 145 A. 2d 538 (1958), appeals to me as persuasive: “Tbe cost of relocating tbe utilities enters into tbe rate structure of tbe public utility companies, and is paid for by tbe companies’ rate payers. It is error to intimate or suggest tbat such cost is borne by tbe officials or even tbe stockholders of tbe companies. Tbe question of whether tbe cost of tbe required relocation of telephone poles
There can be no doubt that by §911 of the Public Utility Law the Commission has been given power to pass upon contracts between any public utility and any municipal corporation. Today’s decision limits the exercise of that power to contracts which “directly influence] rates or actual operations of the public utility”. (See the court’s opinion, supra, p. 410). In my judgment this limitation may seriously undermine effective utility regulation in Pennsylvania; what will not pass muster directly may now be attempted indirectly. To me, §911 itself is a clear indication that the legislature did not intend such a restrictive application of its delegation of the state’s police power to the Commission. As discussed above, by granting to the Commission power to review all contracts entered into between public utilities and municipalities, not just those involving rates and crossings, the legislature recognized the public interest inherent in all such public contracts and empowered the Commission, in cases where it has jurisdiction, to exercise the State’s police power over the entire contract field.
What no doubt troubles the majority of the court is that the intervenor utilities have for many years
For all the reasons stated above, I would reverse the order of the court below and reinstate the order of the Public Utility Commission.
Mr. Justice Roberts joins in this dissent.
A similar provision investing the predecessor Public Service Commission with similar power was contained in The Public Service Company Law of 1913. Act of July 26, 1913, P. L. 1374, art. V, §12.
The parallel provision in The Public Service Company Law was contained in §12 of the Act of 1913.
This common law rule received express recognition in Article V, Section 12 of The Public Service Company Law. No similar provision was contained in the successor Public Utility Law of 1937. This omission was interpreted by the PUC and the Superior Court to be an abrogation of the common law rule. Dept. of Highways v. PUC, 185 Pa. Superior Ct. 1, 136 A. 2d 473 (1957) ; Delaware River Port Authority v. PUC, 180 Pa. Superior Ct. 315, 119 A. 2d 855 (1956). We reversed in both cases, holding that to effect a change in the common law, the legislature must express itself in clear and unequivocal language. Section 411 could not be read as such an expression. Dept. of Highways v. PUC, 394 Pa. 31, 145 A. 2d 538 (1958) ; Delaware River Port Authority v. PUC, 393 Pa. 639, 145 A. 2d 172 (1958).
The permits in Philadelphia Electric, supra, were issued pursuant to applications made in 1901, 1914 and 1916.
“No contract or agreement between any public service company and any municipal corporation shall be valid unless approved by the commission. . . .” Act of July 26, 1913, P. L. 1374, art. Ill, §11.
At least one permit in Philadelphia Electric was issued prior to 1913. See footnote 6, page 7. In Collingdale Borough v. Philadelphia Rapid Transit Company, 274 Pa. 124, 117 Atl. 909 (1922), we held that the filing requirement of the Public Service Company Law was not retroactive.
The majority opinion omits, in its rendition of the clauses in the permits as quoted in footnote 3 thereof, what to me is an important reference to the Board of Highway Supervisors. The complete clause reads as follows: “If, in the laying of water or gas pipes, sewers, or any other municipal work, it shall become
Section 920 of the Public Utility Law of 1937, 66 P.S. §1360, is consistent with this interpretation of the reach of the Commission’s police powers. It provides in pertinent part: “The Commission shall have power and authority to vary, reform, or revise, upon a fair, reasonable, and equitable basis, any obligations, terms, or conditions of any contract heretofore or hereafter entered into between any public utility and any person, corporation, or municipal corporation, which embrace or concern a public right, benefit, privilege, duty, or franchise, or the grant thereof, or are otherwise affected or concerned with the public interest and the general well-being of the Commonwealth.”