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Regional Transp. Auth. v. Burlington Northern





APPEAL from the Circuit Court of Cook County; the Hon. RICHARD L. CURRY, Judge, presiding.


On motion of Regional Transportation Authority (RTA) the trial court entered a preliminary injunction preventing Burlington Northern Inc. (Burlington) and Illinois Gulf Central Railroad Company from instituting fare increases approved by the Illinois Commerce Commission (ICC). Burlington has prosecuted this interlocutory appeal. The ICC has become a party by intervention.

Since July 1, 1975, Burlington and RTA joined in a "purchase of service" agreement. (See Regional Transportation Authority Act, Ill. Rev. Stat. 1979, ch. 111 2/3, par. 701.01 et seq. (RTA Act).) Under that agreement RTA set the fares on which Burlington operated its Chicago metropolitan commuter services. In return, RTA agreed to subsidize Burlington so as to make up any deficit between fare revenues and operating costs. The three-year contract was extended by the parties in 1978 and was due to expire on June 30, 1981.

On July 7, 1980, Burlington sent RTA a written request to enter into a new purchase of service agreement commencing July 1, 1981. In February, Burlington requested the then current agreement, set to expire on July 1, be extended for one year. In response, on March 31, 1981, RTA tendered Burlington a draft of a new purchase of service agreement to commence on July 1, 1981. Thereafter, Burlington informed RTA it wished to negotiate certain aspects of the new agreement. It is undisputed that the parties have since engaged in contract negotiations but have not finalized a new agreement.

As of January of 1981, because of its financial difficulties, RTA has been unable to meet many of its obligations, including those to Burlington. In early June of 1981, Burlington brought an action against RTA for some $2.4 million in unpaid subsidies accrued as of May 15, 1981.

On June 15, 1981, while this action against RTA was pending, Burlington filed a tariff with the ICC requesting a 12.5 percent fare increase commencing July 1. At the same time, Burlington announced its intention of seeking an additional two-tiered fare increase of 20 percent as of August 1, and 27.5 percent as of September 1. This plan would have resulted in an eventual increase of approximately 60 percent from the fares of June 1981. On June 17, the ICC asserted jurisdiction and approved the initial 12.5 percent increase. On the same day, RTA also announced a 12.5 percent fare increase for all commuter rail service within the system, including Burlington, pending adequate funding by the General Assembly.

These injunction proceedings were filed on June 19, 1981. Burlington sought to remove the cause to the Federal court. On motion of RTA the case was remanded to the circuit court of Cook County. (See Regional Transportation Authority v. Burlington Northern Inc. (N.D. Ill, No. 81 C 3487, filed June 23, 1981), ___ F. Supp. ___.) On June 24, Burlington received a letter from the RTA which requested Burlington to agree to extend the purchase of service agreement due to expire on June 30, for three additional months. On June 25, an officer for Burlington testified herein that his company "will not accept" this extension of the previous agreement.

After Burlington had filed a tariff with ICC in June, Burlington and RTA held some negotiations regarding their proposed new purchase of service agreement. While no final agreement was consummated, this court was advised on oral argument that negotiations had continued during the current month. Furthermore, Burlington never officially notified RTA it wished to withdraw from the RTA system, nor that it intended not to seek further RTA funding.

In this court, Burlington contends because no agreement between RTA and Burlington was formalized, their association terminated upon the expiration of the purchase of service agreement on June 30, 1981. Therefore, Burlington urges, jurisdiction over fares charged by Burlington reverted to the ICC under the Public Utilities Act. (Ill. Rev. Stat. 1979, ch. 111 2/3, par. 36.) Burlington further contends the application of the RTA Act by the trial court was contrary to the laws and Constitution of the United States, and, even if RTA retained jurisdiction over Burlington fares, the granting of an injunction was nevertheless improper.

The Illinois Commerce Commission contends it has never claimed jurisdiction against a valid and effective purchase of service agreement; the circuit court lacks jurisdiction because RTA failed to take the available legal remedy; and when a public utility terminates its RTA relationship, that utility is under exclusive jurisdiction of the Utilities Act.

RTA asserts the trial court was correct in granting the preliminary injunction because the RTA Act grants the RTA exclusive jurisdiction over fares within the RTA system. RTA maintains Burlington's written request for a new agreement and RTA's tender of a draft agreement effectively retained Burlington within the RTA system.

The RTA Act vests in the RTA exclusive authority to set and regulate fares charged and services offered for all transportation agencies within the RTA system. First, the Act provides the setting of fares to be charged is a precondition for any transportation agency to receive RTA funding (Ill. Rev. Stat. 1979, ch. 111 2/3, par. 702.04):

"Whenever the Authority [RTA] provides any public transportation pursuant to grants made after June 30, 1975, to transportation agencies for operating expenses * * * or pursuant to any purchase of service agreement, the purchase of service agreement or grant contract shall provide for the level and nature of fares or charges to be made for such services * * *."

Second, the RTA Act exempts the RTA and any transportation agency under its purview from the jurisdiction of the Public Utilities Act and the ICC (Ill. Rev. ...

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