Burlington Northern R. Co. v. Department of Public Service Regulation

• Decision Date: 21 June 1985
• Docket Number: No. 84-3941,84-3941
• Citation: 763 F.2d 1106
• Parties: BURLINGTON NORTHERN RAILROAD COMPANY, Plaintiff-Appellant, v. DEPARTMENT OF PUBLIC SERVICE REGULATION; Public Service Commission; Gordon E. Bollinger; Clyde E. Jarvis; Thomas E. Schneider; John Driscoll; and Howard Ellis, Defendants-Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1106

763 F.2d 1106

BURLINGTON NORTHERN RAILROAD COMPANY, Plaintiff-Appellant, v. DEPARTMENT OF PUBLIC SERVICE REGULATION; Public Service Commission; Gordon E. Bollinger; Clyde E Jarvis; Thomas E. Schneider; John Driscoll; and Howard Ellis Defendants-Appellees.

No. 84-3941.

United States Court of Appeals Ninth Circuit.

Argued and Submitted Jan. 18, 1985.

Decided June 21, 1985.

K. Kent Koolen, Burlington Northern R. Co., Billings, Mont., for plaintiff-appellant.

Opal Winebrenner, Helena, Mont., James L. Highsaw, Highsway & Mahoney, Washington, D.C., for defendants-appellees.

Appeal from the United States District Court for the District of Montana.

Before GOODWIN and SKOPIL, Circuit Judges, and VUKASIN, ^* District Judge.

GOODWIN, Circuit Judge.

Burlington Northern Railroad Company appeals from a judgment for the Department of Public Service Regulation, in which the district court, on cross motions for summary judgment, upheld as constitutional a Montana statute requiring the railroad to maintain and staff certain freight offices in the state of Montana. We affirm.

Burlington Northern operates in Montana a railroad which is regulated by the Montana Public Service Commission pursuant to statute. Mont.Code Ann. Sec. 69-14-111. The Commission has statutory authority to compel the railroad to maintain and operate adequate train service (both freight and passenger), to provide suitable accommodation for the public and to provide facilities for passengers and freight at all stations. Mont.Code Ann. Sec. 69-14-117. Burlington Northern has a virtual monopoly over rail service in Montana.

The statute compels the railroad to maintain and staff station facilities in towns of at least 1,000 persons. ¹ Burlington Northern has challenged the statute by attacking the regulation promulgated by the Commission. That regulation tracks closely the statutory language:

(1) No railway company now or hereafter operating within the State of Montana shall:

(a) Discontinue a station agent who now is or may hereafter be installed, without first giving notice thereof to and receiving permission from the Public Service Commission of the State of Montana to make such change.

Mont.Admin.R. Sec. 38.4.301.

Burlington Northern filed petitions with the Commission seeking authority to close, discontinue or consolidate freight agency operations at a number of towns in Montana including Browning, Choteau, Whitehall, Big Timber, Columbus, Wibaux, Circle and Terry. Burlington Northern claims that station agents are no longer needed in these towns because many of the duties historically performed by station agents are currently performed in centralized, computerized service centers. Now that the railroad no longer handles less-than-carload freight, freight traffic from these small stations has declined significantly in recent years, so much so that some station agencies rarely handle any freight at all. The railroad alleges that operation of the compelled stations is redundant and economically wasteful.

The Commission dismissed all the petitions without a hearing, taking judicial notice that the population of each of these communities is 1,000 or more. Citing Mont.Code Ann. Sec. 69-14-202, the Commission said it had no authority to consider the petitions and did not, therefore, have to hold a hearing or consider the financial burden of these stations on Burlington Northern before denying its petitions.

Burlington Northern's suit challenges the constitutionality of the statute and of the Commission regulation under the due process clause, the equal protection clause and the commerce clause of the Constitution. The railroad has the burden of proving unconstitutionality under a rationality review; statutes are presumed to be constitutional. Brown v. Maryland, 25 U.S. 419, 436, 12 Wheat 419, 436, 6 L.Ed. 678 (1827).

The standard for judging the constitutionality of a statute such as Mont.Code Ann. Sec. 69-14-202, which regulates economic activity, is the same under the due process, equal protection or commerce clauses. Legislation will be upheld if it bears a rational relationship to a legitimate state interest. Williamson v. Lee Optical Co., 348 U.S. 483, 488, 75 S.Ct. 461, 464, 99 L.Ed. 563 (1955) (due process); Dandridge v. Williams, 397 U.S. 471, 485, 90 S.Ct. 1153, 1161, 25 L.Ed.2d 491 (1970) (equal protection); Southern Pacific Co. v. Arizona, 325 U.S. 761, 781-82, 65 S.Ct. 1515, 1526-27, 89 L.Ed. 1915 (1945) (commerce).

In the context of state regulation of transportation utilities, it is generally agreed that legitimate state interest is defined by the state's need to ensure that carriers serve the public convenience and necessity. See Chicago, M.St.P. & P.R.R. v. Board of R.R. Comm'rs, 126 Mont. 568, 255 P.2d 346, 349, cert. denied, 346 U.S. 823, 74 S.Ct. 40, 98 L.Ed. 349 (1953). The public convenience and necessity may require a railroad to provide adequate and suitable facilities for the convenience of the communities served by the railroad. Atchison, T. & S.F.R.R. v. R.R. Comm'n, 283 U.S. 380, 394-95, 51 S.Ct. 553, 557, 75 L.Ed. 1128 (1931). See Norfolk & W. Ry. v. Pub. Service Comm'n, 265 U.S. 70, 74, 44 S.Ct. 439, 440, 68 L.Ed. 904 (1924) (state may require railroads to provide stations to serve railroad customers). The scope of permissible regulation over carriers is comprehensive so long as the regulation is designed to serve the public convenience and necessity, see Chicago, M.St.P. & P.R.R., 255 P.2d at 351; such regulation can be effected either directly through legislation or through a public service commission. See Atchison, T. & S.F.R.R. v. R.R. Comm'n, 283 U.S. at 394, 51 S.Ct. at 557.

It is clear on the face of the statute that Mont.Code Ann. Sec. 69-14-202, when enacted, was designed to serve the public convenience and necessity and that the statutory and regulatory requirements were related, therefore, to a legitimate state interest. The Montana statute and regulation can withstand constitutional attack today unless the railroad can prove that the regulatory scheme is no longer rationally related to that interest in fostering public convenience and necessity.

Montana has had a statutorily defined population criteria for minimum rail facilities since the turn of the century. See Sec. 1, Ch. 26 L. 1905 (codified as R.C.M. Sec. 72-627) (railroads must maintain facilities at any platted townsite along the railroad route with a population of at least 100 persons). In 1969, the Montana legislature revised this section to require railroads to maintain any existing station facilities in towns of at least 1,000 persons. Sec. 1, Ch. 266 L.1969. The Commission cites to hearings in the legislative history which suggest that the legislature considered, but rejected, leaving to Commission discretion the appropriateness of requiring railroad facilities in towns of at least 1,000 population. In part because Burlington Northern has a virtual monopoly on Montana rail service, the legislature apparently wanted to avoid the risk that the railroad itself would exercise undue influence over what constitutes the public convenience and necessity.

Rationality of Statute and Regulation

Current railroad statistics reveal that the Montana statute today is only imperfectly related to the state's interest in ensuring that towns receive a minimum level of service. But only rationality, not a perfect relation is required. See Metropolis Theatre Co. v. Chicago, 228 U.S. 61, 69, 33 S.Ct. 441, 443, 57 L.Ed. 730 (1913). In Minnesota v. Clover Leaf Creamery Co., 449 U.S. 456, 101 S.Ct. 715, 66 L.Ed.2d 659 (1981), the Supreme Court outlined the analysis which we must follow in determining whether the railroad station requirement is rational. So long as the purposes cited or relied upon by the legislature are legitimate state purposes (as they are here), courts do not challenge the theoretical correctness of the legislature's conclusion or the empirical correlation between staffed railroad facilities and local freight needs. Id. at 463, 101 S.Ct. at 723. It is "not our function to weigh evidence ... to determine whether the regulation is sound or appropriate; nor is it our function to pass judgment on its wisdom." Railway Express Agency, Inc. v. New York, 336 U.S. 106, 109, 69 S.Ct. 463, 465, 93 L.Ed. 533 (1949).

Whether in fact the public convenience and necessity are benefitted by Mont.Code Ann. Sec. 69-14-202 is not essentially a judicial inquiry; it is enough that the Montana legislature rationally could have decided that public convenience and necessity require these stations to remain open. Clover Leaf Creamery, 449 U.S. at 466, 101 S.Ct. at 725. Among other reasons for restraint, this court should be appropriately cautious about deciding questions of local or regional economic policy in two-party litigation. We do not know what intermediate positions might be presented by other interested parties who are not before this court but who may be equally concerned about operation of Burlington Northern freight stations. Questions of economic policy are appropriate issues for the political arena which spill over into the judiciary only when they implicate constitutional rights. We do not, therefore, express any view on the political or economic merits of the Montana statute; Montana is not required to convince this court of the correctness of its legislative judgment that these towns need freight facilities. ² On the contrary, Burlington Northern has the burden of showing that the "legislative facts on which [the statute] is apparently based could not reasonably be conceived to be true" by the legislature. Clover Leaf Creamery, 449 U.S. at 464, 101 S.Ct. at 724, quoting Vance v. Bradley, 440 U.S. 93, 111, 99 S.Ct. 939, 949, 59 L.Ed.2d 171 (1979). See In re Lara, 731 F.2d 1455, 1460 (9th Cir.1984). Burlington Northern has presented no evidence to establish that the Montana legislature, in 1969, acted irrationally when it fixed a...