AP NEWS

Judge Hears Arguments In Long-running Rail Dispute

February 4, 2019

SCRANTON — A lawyer for the Pennsylvania Northeast Regional Railroad Authority asked a Lackawanna County judge Monday to dismiss a lawsuit filed by a for-profit railroad that contends the authority is competing with private enterprise in violation of state law. Attorney Jack Stover told Judge James A. Gibbons the complaint by the Reading Blue Mountain & Northern Railroad is based on an erroneous reading of the Municipality Authorities Act, which he argued does not apply to the PNRRA’s agreement with the Delaware-Lackawanna Railroad Co. Inc. to provide freight service in Lackawanna and three other counties. An attorney for Reading & Northern, Regina Blewitt, countered the MAA does apply in the case and maintained the authority is attempting to shield itself from the act’s requirements by mischaracterizing its agreement with the Delaware-Lackawanna as a lease. The arguments were the latest in a simmering dispute that began in December 2013, when Reading & Northern accused the PNRRA in a lawsuit of skirting state law by renewing its contract with Delaware-Lackawanna without giving other rail companies an opportunity to bid. Reading & Northern, which is based in Port Clinton, Schuylkill County, has since amended the lawsuit twice. In the most recent updated complaint, the railroad accused the PNRRA, which owns about 100 miles of track in Lackawanna, Monroe, Wayne and Northampton counties, of violating the MAA by failing to utilize competitive bidding and by directly competing with privately owned freight operators such as Reading & Northern. In seeking the suit’s dismissal, Stover said the section of the act barring competition with private enterprise does not apply to the leasing of property by an authority. He argued the PNRRA’s operating agreement with Delaware-Lackawanna has “all the characteristic hallmarks” of a lease and presented Gibbons with copies of documents from the court record in which he said Reading & Northern conceded the agreement is a lease. The railroad cannot make the argument now, he said, that the agreement is not a lease. If the agreement is a lease, that reason alone would be basis for a ruling in the PNRRA’s favor, Stover said. Blewitt said Reading & Northern’s position is the operating agreement with Delaware-Lackawanna is not a lease, at least in the traditional sense. While the agreement has elements that are like a lease, it has others that are not, she said. The operating agreement does not give Delaware-Lackawanna exclusive use of the authority rail lines, she noted, but instead grants only the right to use them for freight service. Gibbons did not indicate when he will rule on the authority’s motion. The PNRRA was formed in 2006, through a merger of the Monroe and Lackawanna county railroad authorities, both of which were established in the early 1980s. Contact the writer: dsingleton@timesshamrock.com, 570-348-9132