Delaware River Joint Toll Brid v. Secretary Pennsylvania Departm ( 2021 )

PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
_____________
No. 20-1898
_____________
DELAWARE RIVER JOINT TOLL BRIDGE
COMMISSION
v.
SECRETARY PENNSYLVANIA DEPARTMENT
OF LABOR AND INDUSTRY,
Appellant
_____________
On Appeal from the United States District Court
for the Eastern District of Pennsylvania
(D.C. No. 2-19-cv-02978)
District Judge: Honorable Mark A. Kearney
_____________
Argued on November 12, 2020
Before: HARDIMAN, SCIRICA, and RENDELL, Circuit
Judges
(Filed: January 12, 2021)
Thomas W. Nardi, Jr.
Jeffrey M. Scott [Argued]
Shelley R. Smith
Archer & Greiner
Three Logan Square
1717 Arch Street, Suite 3500
Philadelphia, PA 19103
Counsel for Appellee Delaware River Joint Toll Bridge
Commission
Bruce P. Merenstein [Argued]
Schnader Harrison Segal & Lewis LLP
1600 Market Street
Suite 3600
Philadelphia, PA 19103
Darryl J. Liguori
Marsha A. Sajer
Pennsylvania Department of Labor & Industry
Office of General Counsel
651 Boas Street
10th Floor
Harrisburg, PA 17121
Counsel for Appellant Secretary Pennsylvania
Department of Labor and Industry
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OPINION OF THE COURT
________________
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HARDIMAN, Circuit Judge.
This dispute concerns an interstate compact between
Pennsylvania and New Jersey that created the Delaware River
Joint Toll Bridge Commission. The Commission obtained
from the District Court a declaratory judgment that prohibited
the Secretary of the Pennsylvania Department of Labor and
Industry from regulating aspects of the Commission’s new
Scudder Falls Administration Building in Bucks County,
Pennsylvania. The Secretary appeals, claiming the District
Court erred by holding that Pennsylvania ceded its sovereign
authority to enforce its building safety regulations when it
entered into the Compact. We will affirm.
I
In 1934, the Pennsylvania and New Jersey legislatures
enacted laws creating the Commission, which Congress
approved in 1935 under the Compact Clause of the United
States Constitution. See U.S. CONST. art. I, § 19, cl. 3. The
Commission was tasked with, among other things, “the
acquisition of toll bridges over the Delaware River,” and “[t]he
administration, operation, and maintenance” of such bridges.
Act of Aug. 30, 1935, Pub. L. No. 74-411, § 9, 49 Stat. 1051,
1059.1
1
The Compact has been amended several times since its
creation in 1935; none of these amendments have altered the
relevant language here. See e.g., Federal Aid Highway Act of
1987, § 151, Pub. L. No. 100-17, 101 Stat. 132, 206. The
Compact is also codified in Pennsylvania’s and New Jersey’s
statutes. See 36 PA. CONS. STAT. § 3401; N.J. STAT. § 32:8-1
et seq.
3
To assist the Commission in the discharge of its duties,
Pennsylvania and New Jersey granted it the power “[t]o
acquire, own, use, lease, operate, and dispose of real property
and interest in real property, and to make improvements
thereon,” as well as “[t]o determine the exact location . . . and
all other matters in connection with, any and all improvements
or facilities which it may be authorized to own, construct,
establish, effectuate, maintain, operate or control.” Id. at 1060.
The Commission also was granted sweeping authority
[t]o exercise all other powers . . . reasonably
necessary or incidental to the effectuation of its
authorized purposes or to the exercise of any of
the powers granted to the commission . . . except
the power to levy taxes or assessments for
benefits; and generally to exercise, in connection
with its property and affairs and in connection
with property under its control, any and all
powers which might be exercised by a natural
person or a private corporation in connection
with similar property and affairs.
Id. Since its creation, the Commission has “owned,
constructed, operated, and maintained bridges between the two
states under the Compact.” Del. River Joint Toll Bridge
Comm’n v. Oleksiak, -- F. Supp. 3d --, 2020 WL 1470856, at
*2 (E.D. Pa. 2020).
The controversy giving rise to this appeal began in
2017, when the Commission undertook a project to replace the
Scudder Falls Bridge that connects Bucks County,
Pennsylvania with Mercer County, New Jersey. As part of that
project, the Commission purchased ten acres of land near the
bridge on the Pennsylvania side of the river and broke ground
4
on the Scudder Falls Administration Building, which would
house the Commission’s executive and administrative staff in
a single location. A year later, inspectors with the Pennsylvania
Department of Labor and Industry observed construction at the
site, even though the Commission never applied for a building
permit as required under the Department’s regulations. The
Department stated it would issue a stop-work order for want of
a permit. The Commission responded that it was exempt from
Pennsylvania’s regulatory authority under the express terms of
the Compact.
The Commission pushed forward and completed the
Scudder Falls Administration Building. The Department
eventually turned its attention to the Commission’s elevator
subcontractor, threatening it with regulatory sanctions for its
involvement in the project.
Within weeks of the threat against its elevator
subcontractor, the Commission filed a complaint against the
Secretary in the District Court seeking declaratory and
injunctive relief. The Commission sought a declaration that the
Department lacked the authority to enforce Pennsylvania’s
building regulations (as well as its flammable and combustible
liquid regulations) “absent express language in the Compact
itself.” Dist. Ct. Dkt. No. 1. It also sought a preliminary
injunction to prevent the Secretary from enforcing the
Department’s regulations.
The District Court granted the Commission’s
preliminary injunction motion, enjoining the Secretary from
directing the Department to “seek[] to inspect or approve the
elevators in the . . . Scudder Falls Administrative Building or
from further impeding, interfering or delaying the Plaintiff’s
5
contractors or subcontractors from immediately repairing and
activating the elevator systems.” Dist. Ct. Dkt. No. 16, at 2.
After the District Court granted the preliminary
injunction, the Secretary filed an answer and counterclaim for
declaratory relief. The Secretary denied the Commission’s
claims that Pennsylvania lacked the power to enforce its
building and safety regulations against the Commission. In the
Secretary’s view, Pennsylvania “reserved its regulatory power
over certain property use matters as an exercise of its
fundamental police powers to protect the health, safety and
welfare of its citizens.” Dist. Ct. Dkt. No. 17, at 24. Among the
claimed reserved regulatory powers was the ability to enforce
“critical safety-based laws applying to building construction,
elevator construction, boiler installation and operation, and
combustible and flammable liquid storage and dispensing.” Id.In February 2020, the parties filed cross-motions for
summary judgment. As relevant here, the District Court
granted the Commission’s motion for declaratory relief,
reasoning that “under the express terms of the . . . Compact
creating the [Commission],” the Secretary “may
not . . . unilaterally interfere, direct, inspect, or regulate” the
Commission’s “elevator operations” under the Pennsylvania
Uniform Construction Code or the Commission’s “tanks,
pumps, and other fuel-dispensing devices” under the
Department’s Combustible and Flammable Liquids Act
regulations, at the Scudder Falls Administration Building. Dist.
Ct. Dkt. No. 67, at 2. The Secretary timely appealed.
II
The interpretation of a bi-state compact approved by
Congress presents a federal question. Int’l Union of Operating
6
Eng’rs, Local 542 v. Del. River Joint Toll Bridge Comm’n, 311
F.3d 273, 275 (3d Cir. 2002) (citation omitted). The District
Court had jurisdiction under 28 U.S.C. § 1331, and our
jurisdiction lies under 28 U.S.C. § 1291. Id.III
The Secretary first claims the District Court lacked
jurisdiction because the Commission’s complaint was barred
by the Eleventh Amendment to the United States Constitution.
The Eleventh Amendment states: “The Judicial power of the
United States shall not be construed to extend to any suit in law
or equity, commenced or prosecuted against one of the United
States by Citizens of another State, or by Citizens or Subjects
of any Foreign State.” U.S. CONST. amend. XI. Although the
text of the Eleventh Amendment only explicitly mentions
“Citizens of another State, or . . . Citizens . . . of any Foreign
State,” the Supreme Court has consistently held the scope of
state immunity extends beyond the text of the Eleventh
Amendment. See, e.g., Hans v. Louisiana, 134 U.S. 1, 14–15
(1890) (holding the Eleventh Amendment bars suits against a
state commenced by its own citizens); Principality of Monaco
v. Mississippi, 292 U.S. 313, 330 (1934) (same as to foreign
nations); Blatchford v. Native Vill. of Noatak & Circle Vill.,
501 U.S. 775, 779 (1991) (“[W]e have understood the Eleventh
Amendment to stand not so much for what it says, but for the
presupposition of our constitutional structure which it
confirms.”). As a general rule, “‘federal courts may not
entertain a private person’s suit against a State’ unless the State
has waived its immunity or Congress has permissibly
abrogated it.” Waterfront Comm’n of N.Y. Harbor v. Governor
7
of N.J., 961 F.3d 234, 238 (3d Cir. 2020) (quoting Va. Off. for
Prot. & Advoc. v. Stewart (VOPA), 563 U.S. 247, 254 (2011)).2
Under a federal court’s equitable powers, however,
there is an important exception to this general rule: in certain
circumstances, a plaintiff may bring a federal suit against state
officials. See Ex parte Young, 209 U.S. 123 (1908). In such
cases, state officials are stripped of their official or
representative character and thereby deprived of the State’s
immunity when they commit an ongoing violation of federal
law. Waterfront Comm’n, 961 F.3d at 238.
The legal fiction recognized in Ex parte Young is
narrow in scope. See Pennhurst State Sch. & Hosp. v.
Halderman, 465 U.S. 89, 114 n.25 (1984). It requires us to
“conduct a straightforward inquiry into whether the complaint
alleges an ongoing violation of federal law” and whether it
“seeks relief properly characterized as prospective.” Verizon
Md., Inc. v. Pub. Serv. Comm’n of Md., 535 U.S. 635, 645
(2002) (cleaned up).
The terms of the Compact adopted by Congress are
federal law. See Operating Eng’rs, 311 F.3d at 275. By
alleging the Secretary’s actions would violate the Compact the
Commission has alleged an ongoing violation of federal law.
2
A state-created entity, such as the Commission, with the
power “[t]o sue and be sued,” Pub. L. No. 74-411, § 9, 49 Stat.
at 1060, may bring an action against a state subject to the same
Eleventh Amendment limitations as a private citizen. See
VOPA, 563 U.S. at 256 (“[T]he validity of an Ex parte Young
action [does not] turn on the identity of the plaintiff.”).
8
The relief sought by the Commission—a declaration as
to Pennsylvania’s power to regulate the Scudder Falls
Administration Building—is prospective. Just as the injunction
upheld in Ex parte Young enjoined the Attorney General of
Minnesota to conform his conduct with federal law (the
Fourteenth Amendment), the relief sought here likewise
requires the Secretary to conform his conduct to federal law
(the Compact). See Ex parte Young, 209 U.S. 123, 145. In sum,
the Commission’s suit seeks prospective relief to prevent an
ongoing violation of federal law by the Secretary. It falls
squarely within the Ex parte Young exception to sovereign
immunity.
The Secretary argues Ex parte Young does not apply
because the Commonwealth of Pennsylvania, not the
Secretary, is the real party in interest. We disagree. The relief
sought—a declaration that the Secretary cannot lawfully
enforce Pennsylvania’s building regulations against the
Commission—neither “expend[s] itself on the public treasury
or . . . interfere[s] with public administration,” nor operates as
“an order for specific performance of a State’s contract.”
Waterfront Comm’n, 961 F.3d at 239 (internal citations and
quotation marks omitted).
First, the relief sought does not resemble a money
judgment that interferes with public administration. While the
declaratory judgment may have an impact on Pennsylvania’s
revenues (such as the loss of inspection fees), “[s]uch an
ancillary effect on the state treasury is a permissible and often
an inevitable consequence of the principle announced in Ex
parte Young.” Edelman v. Jordan, 415 U.S. 651, 668 (1974).
Second, the relief sought is not specific performance of
a Pennsylvania contract. In arguing otherwise, the Secretary
9
relies heavily on our recent decision in Waterfront
Commission. There, we overturned the District Court’s order
requiring New Jersey “to continue to abide by the terms of [a
bi-state] agreement” after the State had taken the affirmative
step of repealing its earlier legislation that had contributed to
the formation of the compact. Waterfront Comm’n, 961 F.3d at
237, 241–42. Forcing New Jersey to abide by a compact it had
expressly rejected through proper legislative channels, we
held, was “tantamount to specific performance [that] would
operate against the State itself.” Id. at 241. Quite unlike that
situation, here Pennsylvania did not seek to disavow the
Compact. A declaratory judgment requiring the Secretary to
respect the Compact as written does not constitute an
impermissible order of specific performance—to hold
otherwise would allow state officials to evade federal law by
merely invoking the Eleventh Amendment.
Because the relief sought would neither drain public
funds nor amount to “an order for specific performance of a
State’s contract,” Waterfront Comm’n, 961 F.3d at 239,
Pennsylvania is not the real party in interest; the Secretary is.
Having confirmed our jurisdiction, next we consider the
scope of the powers Pennsylvania ceded under the Compact.
IV
The District Court found Pennsylvania unambiguously
ceded some of its sovereign authority through the Compact.
“[W]e review de novo the text of the Compact to determine
whether we agree with the District Court that it is
unambiguous.” Wayne Land & Min. Grp. LLC v. Del. River
Basin Comm’n, 894 F.3d 509, 528 (3d Cir. 2018). “[I]f we
agree that the text is unambiguous, then we also review de novo
10
whether [the Secretary’s] proposed activities . . . fall within the
scope of the Compact’s text.” Id.Our decisions in Operating Engineers and HIP
Heightened Independence & Progress, Inc. v. Port Authority
(HIP), 693 F.3d 345, 358 (3d Cir. 2012), two similar Compact
Clause cases, guide our approach to the Compact here. In
Operating Engineers, we were asked to determine whether
New Jersey or Pennsylvania collective bargaining laws could
be applied against the Commission. 311 F.3d at 274. We
refused “[t]o read into the Compact any collective bargaining
requirements” because the Compact’s silence as to the
authority of the States to enforce such laws did not amount to
a grant of permission. Id. at 281. Mindful of the important
“[p]rinciples of federalism” at issue, we held that, absent
express language to the contrary, “[a] bi-state entity created by
compact, is ‘not subject to the unilateral control of any one of
the States that compose the federal system.’” Id. (quoting Hess
v. Port Auth. Trans-Hudson Corp., 513 U.S. 30, 42 (1994)). To
interpret the Compact otherwise “would be to rewrite the
agreement between the two states without any express
authorization to do so.” Id. Now, as then, “[t]hat is simply not
our role.” Id.Similarly, in HIP we considered a bi-state compact that
created the Port Authority of New York and New Jersey, and
addressed the power of New Jersey to apply its civil rights and
construction laws to property of the Port Authority. HIP,
693 F.3d at 349. We declined to enforce New Jersey’s statutes
against the Port Authority even though the Compact lacked an
“express surrender of state sovereignty regarding external
relations.” Id. at 358. Such an argument, we held,
“misapprehends the notion of sovereignty surrender” discussed
by the Supreme Court in Hess and this Court in Operating
11
Engineers. Id. Although “court[s] must be hesitant to find a
surrender of sovereignty where it is ambiguous,” the creation
of a bi-state entity pursuant to the Compact Clause is an
unambiguous surrender. Id. “By expressly creating the bi-state
entity, [the compacting States] relinquished all control over the
[entity] unless otherwise stated in the compact.” Id. Here, as in
HIP, the surrender of sovereignty was expansive and clear;
Pennsylvania and New Jersey “relinquished all control over
the [Commission].” See id. (emphasis added).
The specific language of the Compact also indicates that
Pennsylvania and New Jersey delegated the relevant regulatory
authority. “Interstate compacts are construed as contracts
under the principles of contract law.” Tarrant Reg’l Water
Dist. v. Herrmann, 569 U.S. 614, 628 (2013). So we look to
“the express terms of the Compact as the best indication of the
intent of the parties.” Wayne Land, 894 F.3d at 527 (quoting
Tarrant, 569 U.S. at 628).
As the District Court held, the Compact’s text
unambiguously cedes Pennsylvania’s sovereign authority over
building safety regulations. It grants the Commission the
power “[t]o acquire, own, use, lease, operate, and dispose of
real property and interest in real property, and to make
improvements thereon,” as well as power over “all other
matters in connection with[] any and all improvements or
facilities which it may be authorized to own, construct,
establish, effectuate, maintain, operate or control.” Pub. L. No.
74-411, § 9, 49 Stat. at 1060. In defining real property, the
Compact includes “structures,” id. at 1062, i.e., “[t]hat which
is built or constructed; an edifice or building of any kind,” see
Structure, BLACK’S LAW DICTIONARY (3d ed. 1933). Thus, the
Compact grants the Commission the authority to acquire
property (the Scudder Falls site), the ability to make
12
improvements upon the property (construction of the
Administration Building), and the power over “all other
matters in connection with . . . [its] facilities” (the operation
and maintenance of elevators).
Pennsylvania (and New Jersey) also ceded sovereign
authority to the Commission when they authorized it, in the
broadest terms, “[t]o exercise all other powers . . . which may
be reasonably necessary or incidental to the effectuation of its
authorized purposes . . . except the power to levy taxes.” Pub.
L. No. 74-411, § 9, 49 Stat. at 1060 (emphasis added). As the
District Court noted, “[t]he ordinary meaning of ‘all other
powers’ does not provide a limitation retaining the
Commonwealth’s police power.” Del. River, 2020 WL
1470856, at *13. Finally, the fact that Pennsylvania and New
Jersey expressly reserved their taxing power—but not other
powers—supports the District Court’s conclusion that they did
not intend to retain the authority to enforce building safety
regulations.
* * *
For the reasons stated, we hold Pennsylvania ceded its
sovereign authority to enforce its building safety regulations as
to the Scudder Falls Administration Building. We will
therefore affirm the District Court’s declaratory judgment
against the Secretary of the Pennsylvania Department of Labor
and Industry.
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