749 F.2d 841 (D.C. Cir. 1984), 83-2301, Pennsylvania Public Utility Com'n v. United States

Docket Nº:83-2301.
Citation:749 F.2d 841
Party Name:PENNSYLVANIA PUBLIC UTILITY COMMISSION, Petitioner, v. UNITED STATES of America and Interstate Commerce Commission, Respondents, Greyhound Lines, Inc., Intervenor.
Case Date:December 05, 1984
Court:United States Courts of Appeals, Court of Appeals for the District of Columbia Circuit

Page 841

749 F.2d 841 (D.C. Cir. 1984)



UNITED STATES of America and Interstate Commerce Commission,


Greyhound Lines, Inc., Intervenor.

No. 83-2301.

United States Court of Appeals, District of Columbia Circuit

December 5, 1984

Argued Oct. 31, 1984.

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Robert J. Longwell, Harrisburg, Pa., with whom Charles F. Hoffman, Harrisburg, Pa., was on brief, for petitioner.

Dennis J. Starks, Atty., I.C.C., Washington, D.C., with whom J. Paul McGrath, Asst. Atty. Gen., John Broadley, Gen. Counsel, Lawrence H. Richmond, Deputy Associate Gen. Counsel, I.C.C., Robert B. Nicholson and John P. Fonte, Dept. of Justice, Washington, D.C., for U.S.

E. Barrett Prettyman, Jr., Washington, D.C., for intervenor Greyhound Lines, Inc.

Before WILKEY, WALD, and SCALIA, Circuit Judges.

Opinion for the Court filed by Circuit Judge WALD.

WALD, Circuit Judge.

Section 16 of the Bus Regulatory Reform Act of 1982 (the "Bus Act" or "BRRA"), Pub.L. No. 97-261, 96 Stat. 1102, 1117 (codified at 49 U.S.C. Sec. 10935), authorizes the Interstate Commerce Commission ("ICC" or "Commission") to let carriers discontinue unprofitable intrastate passenger service when specific "exit" conditions are met. In this proceeding, the Pennsylvania Public Utilities Commission ("PaPUC") challenges an ICC order authorizing Greyhound Lines, Inc. ("Greyhound") to terminate intrastate operations over twelve routes in Pennsylvania. PaPUC denied the discontinuance application in a prior state proceeding. We now affirm the Commission's decision concerning eleven of the twelve routes in question. With respect to the remaining route, we conclude that the ICC erroneously interpreted the Bus Act and failed to base its ultimate findings on a reasoned consideration of the policies underlying the statute. We therefore remand that portion of the ICC's order for further proceedings consistent with this opinion.


This case concerns the continued availability of intrastate bus service to small communities. Specifically, we must determine whether the ICC correctly interpreted and applied the statutory standard governing the conditions under which large bus carriers may discontinue marginally unprofitable routes that provide the only available bus service to small communities. We survey the relevant sections of the BRRA and its legislative history before turning to the facts of this proceeding.

  1. Section 16 of the Bus Act

    Under the pre-BRRA Interstate Commerce Act, Pub.L. No. 95-473, 92 Stat. 1337 (1978), a bus carrier that wished to terminate a route serving both interstate and intrastate passengers was required to seek discontinuance authority from both the ICC and the relevant state regulatory body. The state and federal proceedings were completely distinct and were governed by different statutes. See H.R.Rep. No. 334, 97th Cong., 1st Sess. 42 (1981) [hereinafter cited as House Report]. Section 16 of the Bus Act was designed to eliminate this dual system of regulation.

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    Under the BRRA, a carrier must still apply to the appropriate state authority for permission to discontinue intrastate service. See 49 U.S.C. Sec. 10935(a). If the state regulatory authority denies a carrier's discontinuance request, or if the state does not act on the request within 120 days, the carrier can petition the ICC for discontinuance authority. See id. If no one objects to the petition before the ICC, the Commission must grant the discontinuance request. If any person objects to the proposed route termination, however, the Commission must consider the petition under the standard elaborated in section 16. See 49 U.S.C. Sec. 10935(e)(1). 1

    The substance of this discontinuance standard engendered substantial dispute in Congress. Congress undoubtedly enacted section 16 in order to reduce unnecessary government regulation of intrastate service and to enhance the long-term viability of the intercity bus industry. See, e.g., S.Rep. No. 411, 97th Cong., 2d Sess. 4-5, 7-8 (1982) [hereinafter cited as Senate Report]; House Report at 21-23, U.S.Code Cong. & Admin.News 1982, p. 2308. Yet Congress expressly rejected both the ICC's and the bus industry's entreaties that it completely deregulate intrastate bus carriage and permit carriers to discontinue intrastate service at will. See, e.g., 128 Cong.Rec. H6694 (daily ed. Aug. 19, 1982) (statement of Rep. Clausen); 128 Cong.Rec. S7714 (daily ed. June 30, 1982) (statement of Sen. Abdnor); 127 Cong.Rec. H8588-89 (daily ed. Nov. 19, 1981) (statement of Rep. Anderson); id. at H8589 (statement of Rep. Clausen); cf. Trailways, Inc. v. ICC, 727 F.2d 1284, 1288 (D.C.Cir.1984). Instead, Congress took great pains to ensure that regulatory reform of the bus industry would protect the public interest in continued service to rural America. See H.R.Rep. No. 780, 97th Cong., 2d Sess. 47-50 (1982) [hereinafter cited as Conference Report]; Senate Report at 6-7; House Report at 27. 2

    These competing concerns spawned an initial, complex House version of section 16, a series of Senate amendments to that version, and a detailed compromise worked out in conference. 3 As enacted, section 16 provides, in relevant part, that the Commission "shall grant" a discontinuance request

    unless the Commission finds, on the basis of evidence presented by the person objecting to the granting of such permission, that such discontinuance or reduction is not consistent with the public interest or that continuing the transportation, without the proposed discontinuance or reduction, will not constitute an unreasonable burden on interstate commerce.

    49 U.S.C. Sec. 10935(e)(1)(A). 4 An objector can succeed under this section, and thereby

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    block route termination, if she can demonstrate either that discontinuing the service would be inconsistent with the public interest or that continuing the service would not constitute an unreasonable burden on interstate commerce. 5 This disjunctive interpretation of section 16 reflects Congress' unmistakable intent that the ICC evaluate a discontinuance request under two separate criteria and that an affirmative finding under either one require continued service. See Conference Report at 47-50; 128 Cong.Rec. H6694 (daily ed. Aug. 19, 1982) (noting that section 16 creates "an either-or test, with an affirmative finding in either case serving as grounds to deny the ... discontinuance") (statement of Rep. Clausen). 6

    Two additional provisions of the statute flesh out subsection 16(e)(1)'s alternative discontinuance standards. See 49 U.S.C. Sec. 10935(g). First, under subsection 16(g)(1), id. Sec. 10935(g)(1), the Commission is directed to give "great weight to the extent to which" variable costs exceed intrastate and interstate revenues for the routes in question "in making a finding under subsection (e)(1)." The carrier bears the burden of proving that variable costs exceed revenues for any particular route. See id. Second, section 16(g)(2), id. Sec. 10935(g)(2), provides that the Commission, "in making a finding under subsection (e)(1)," shall consider, to the extent applicable, the national transportation policy of 49 U.S.C. Sec. 10101, 7 the carrier's actual or promised receipt of a subsidy, whether the route at issue is the last bus service to any point, and the availability of a reasonable alternative to such service. 8

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  2. The Proceedings in This Case

    On December 17, 1982, Greyhound filed an application with PaPUC to discontinue motorbus service on twelve routes and route segments in Pennsylvania. Notice of the proposed discontinuance was given to the relevant cities and towns, 9 and a PaPUC administrative law judge ("ALJ") held hearings on the application in Harrisburg, on April 15, 1983, and in Scranton, on April 21, 1983. See Petition of Greyhound, Inc., for a Review of a Decision of the Pennsylvania Public Utility Commission Pursuant to 49 U.S.C. 10935, No. MC-1515 (Sub-No. 339), slip op. at 2 (Oct. 25, 1983) [hereinafter cited as ICC Decision]. On May 2, 1983, the ALJ entered an opinion denying Greyhound's application under Pennsylvania law. See id. 10 Shortly thereafter, PaPUC accepted the ALJ's opinion and denied Greyhound's discontinuance application. See id. Greyhound thereupon petitioned the ICC under section 16 of the Bus Act for authority to discontinue service over the twelve routes.

    After receiving objections from PaPUC and evidence from both parties, the ICC granted Greyhound's termination request in full on July 19, 1983. The Commission found that, with one exception, Greyhound had demonstrated that its variable costs exceeded revenues by a wide margin. See ICC Decision at 8-9. According this factor "great weight" as provided in section 16(g)(1), the Commission concluded that PaPUC could not demonstrate that the discontinuance of Routes 1-A through 5-A was inconsistent with the public interest as defined by the BRRA or that continuance would not constitute an unreasonable burden on interstate commerce. See id. at 10, 12-13. With respect to the remaining route, Route 5-B, the ICC concluded that Greyhound did not meet its statutory burden of demonstrating that variable costs exceeded revenues. The Commission nonetheless "inferred" a burden on interstate commerce from the very fact of Greyhound's petition, see id. at 11, and balanced this burden against the public interest in continued service. See id. at 11-12. The ICC then concluded that this "balance" favored discontinuance chiefly because, in its view, "a smaller carrier which may have lower operating costs may be able to provide service over this route profitably." Id. at 12.

    On appeal, PaPUC broadly challenges the Commission's conclusions concerning the public interest in continued service and its evaluation of Greyhound's variable cost and revenue data for all of the...

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