Central States Enterprises, Inc. v. I.C.C.

• Decision Date: 23 December 1985
• Docket Number: No. 84-2005,84-2005
• Citation: 780 F.2d 664
• Parties: CENTRAL STATES ENTERPRISES, INC., Petitioner, v. INTERSTATE COMMERCE COMMISSION and United States of America, Respondents.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 664

780 F.2d 664

CENTRAL STATES ENTERPRISES, INC., Petitioner, v. INTERSTATE COMMERCE COMMISSION and United States of America,

Respondents.

No. 84-2005.

United States Court of Appeals, Seventh Circuit.

Argued April 16, 1985.

Rehearing Denied Jan. 27, 1986.

Decided Dec. 23, 1985.

Carl M. Miller, Miller & Miller, New Haven, Ind., for petitioner.

Charles M. Rosenberger, Seaboard System R.R. Inc., Jacksonville, Fla., John J. McCarthy, Jr., I.C.C., Office of Gen. Counsel, Washington, D.C., for respondents.

Before CUDAHY and COFFEY, Circuit Judges, and GARZA, Senior Circuit Judge. ^*

COFFEY, Circuit Judge.

The petitioner, Central States Enterprises, Inc. ("Central"), requests that this court review the decision of the Interstate Commerce Commission ("Commission") denying Central's request for reciprocal switching and joint use of terminal services at Central's grain elevator located within the city limits of Camilla, Georgia. We deny Central's request to review the Commission's decision.

I

A. Introduction

The record reveals that Central presently operates grain elevators in Fort Wayne, Indiana and Camilla, Georgia. The Fort Wayne elevator purchases corn for export overseas and for bulk sales to feed industry, while the Camilla elevator sells smaller quantities of corn to the feed industry in the southeastern part of the United States. Central's Fort Wayne grain elevator is located adjacent to the tracks of the Southern Railroad, Inc. ("Southern") and Central's grain elevator in Camilla is located next to the tracks of the Seaboard System Railroad, Inc. ("Seaboard"), 1.4 miles from the point where the Seaboard and Southern tracks intersect. Central wants to ship corn directly from the grain elevator in Fort Wayne, Indiana to its grain elevator in Camilla, Georgia. In order for the corn to be shipped over rail directly from Central's elevator in Fort Wayne to its elevator in Camilla, Georgia, Seaboard's switching engines could pull the Southern train cars for the remaining 1.4 mile stretch of track from the intersection of the Southern and Seaboard Railroads to Central's Camilla grain elevator. This arrangement is termed a reciprocal switching agreement. ¹ In the alternative, Seaboard could allow Southern to complete the entire journey from Fort Wayne to Central's Camilla grain elevator by allowing Southern to pull its own train cars over the 1.4 miles of Seaboard's tracks. This is labeled a joint use agreement. The record presented to the Commission is not as detailed as it might be as to how the corn is presently received at Central's Camilla grain elevator, but Central apparently ships most of its corn via Southern Railroad from Fort Wayne to the intersection of the Southern and Seaboard tracks outside of Camilla, Georgia. The corn is then transported in trucks across town to its grain elevator. Once the corn reaches Central's grain elevator in Camilla, Georgia, the Seaboard Railroad transports the corn to the feed markets in the Southeastern United States. ²

B. Statutory Background

Central commenced this action, pursuant to 49 U.S.C. Sec. 11103(a) and (c), seeking an order from the Commission requiring that Seaboard open the 1.4 mile stretch of track leading to Central's elevator in one of two ways, either requiring Seaboard to enter into a reciprocal switching agreement, or a joint use agreement, with Southern Railroad. Section 11103(a) governs joint use agreements and provides, in part, that:

"The Interstate Commerce Commission may require terminal facilities, including main-line tracks for a reasonable distance outside of a terminal, owned by a rail carrier providing transportation subject to the jurisdiction of the Commission ... to be used by another rail carrier if the Commission finds that use to be practicable and in the public interest without substantially impairing the ability of the rail carrier owning the facilities or entitled to use the facilities to handle its own business...."

49 U.S.C. Sec. 11103(a) (1985) (emphasis added). While Section 11103(c)(1), which governs reciprocal switching agreements, provides:

"The Commission may require rail carriers to enter into reciprocal switching agreements, where it finds such agreements to be practicable and in the public interest, or where such agreements are necessary to provide competitive rail service. The carriers entering into such an agreement shall establish the conditions and compensation applicable to such agreement, but, if the carriers cannot agree upon such conditions and compensation within a reasonable period of time, the Commission may establish such conditions and compensation."

49 U.S.C. Sec. 11103(c)(1) (1985) (emphasis added). Subsection (c) of section 11103 was added to the statute in 1980, as part of the Staggers Railroad Act, in order to clarify the Commission's power to require reciprocal switching agreements. Both subsections (a) and (c) provide that the Commission "may" order relief in the form of a joint use or switching agreement where it is "practicable and in the public interest." Congress intended that the standard to be used in applying the "practicable and in the public interest" test be "the same standard the Commission has applied in considering whether to order the joint use of terminal facilities." H.R.Rep. No. 1430, 96th Cong., 2d Sess. 116-17, reprinted in 1980 U.S.Code Cong. & Ad.News 3978, 4148-49; S.Rep. No. 96-470 96th Cong., 1st Sess. 42 (1979). Subsection (c) also provides that the Commission may require the parties to enter into a switching agreement if it is "necessary to provide competitive rail service." The legislative history of subsection (c) reveals that Congress sought, in part, to encourage increased competition between railroads. S.Rep. No. 470 96th Cong., 1st Sess. 41 (1979); H.R.Rep. No. 1035 96th Cong., 2d Sess. 67 (1980). Thus, in enacting subsection (c), Congress attempted to increase competition "[i]n areas where reciprocal switching is feasible ..." and where the switching agreement would provide "an avenue of relief for shippers where only one railroad provides service and it's inadequate." H.R.Rep. No. 1430, 96th Cong., 2d Sess. 116-17, reprinted in 1980 U.S.Code Cong. & Ad.News 4148-49; S.Rep. No. 470, 96th Cong., 1st Sess. 42 (1979).

C. Administrative Proceedings

Subsequent to the filing of Central's complaint requesting a joint use or reciprocal switching agreement, Central and Seaboard filed briefs and affidavits with the Commission supporting their respective positions. Central argued that if it were allowed to ship directly from its Fort Wayne grain elevator to its grain elevator in Camilla, Georgia, it could save approximately $948 in shipping charges per three car unit. ³ In response, Seaboard noted that this rate differential failed to provide for any switching charges for use of its tracks and, thus, the potential saving to Central was overstated. Seaboard submitted evidence that it was able to ship grain to Central's elevator in Camilla, Georgia from other locations in the general geographic area of Fort Wayne, Indiana, such as Synthiana, Mount Vernon, Oaktown, Sullivan and Banbridge, Indiana and Cincinnati, Ohio, at rates equal to or less than Southern's rates from Fort Wayne, Indiana to Camilla, Georgia. Further, according to Seaboard, Central's elevator in fact is not located within the Camilla, Georgia switching district, but rather is located at a local station named Woodacre, and Seaboard's policy is not to enter into switching agreements with other railroads outside the switching district. ⁴ Finally, relying on Jamestown, N.Y., Chamber of Commerce, et al. v. Jamestown, Westfield & N.W.R.R., 195 I.C.C. 289 (1933), Seaboard contended that in order for a switching agreement to be in the public interest the petitioner must have demonstrated, "more than a mere desire on the part of [the] shipper" and that before "something substantial is to be taken away from a carrier for the sole benefit of such parties, actual necessity or some compelling reason must first be shown before ... such action [is found to be] in the public interest." Id. at 292.

After reviewing the supporting briefs and affidavits, the Administrative Law Judge ("ALJ") dismissed Central's complaint, noting:

"The Judge is inclined to agree with Seaboard that it is providing adequate service to Sowega's facility and that opening this facility to reciprocal switching would not be in the public interest since line-haul revenues would be transferred from Seaboard to Southern; and that what complainant really wants is to ship grain from one of its facilities to a second of its facilities providing in essence a substitution of line-haul carriers which 'certainly would not foster any sort of competitive situation.' ... While complainant states that Seaboard's service is not adequate when compared to the reciprocal switching available to its Camilla competitors, the Judge is not convinced that defendant's service is inadequate...."

Central appealed the ALJ's decision to the Commission's Review Board ("Board"). On April 20, 1983, the Board reversed the ALJ's initial decision and ordered Southern and Seaboard Railroads to enter into a switching agreement to provide service over the 1.4 miles of Seaboard track between the Southern and Seaboard tracks intersection and Central's grain elevator.

Seaboard appealed the Board's decision to the entire Commission which reversed the Board's order with Chairman Tailor, dissenting. The Commission initially described the permissive nature of the authority granted by Congress under 49 U.S.C. Sec. 11103(c)(1) ("the Commission may require rail carriers" to enter into switching agreements), and concluded that this language enabled the Commission to consider the totality of the circumstances in these proceedings rather than requiring that it mechanically apply the statutory tests set forth in Sec. 11103(c)(1). The Commission then considered whether the requested relief...