Illinois Commerce Com'n v. I.C.C., s. 83-1836
| Decision Date | 04 April 1986 |
| Docket Number | Nos. 83-1836,83-1868,s. 83-1836 |
| Citation | 787 F.2d 616 |
| Parties | ILLINOIS COMMERCE COMMISSION and Patrick W. Simmons, Petitioners, v. INTERSTATE COMMERCE COMMISSION and United States of America, Respondents, Association of American Railroads, Illinois Central Gulf Railroad Company, Intervenors. The COMMISSIONER OF TRANSPORTATION OF the STATE OF NEW YORK, Petitioner, v. UNITED STATES of America and Interstate Commerce Commission, Respondents, People of the State of California, et al., Association of American Railroads, Intervenors. |
| Court | U.S. Court of Appeals — District of Columbia Circuit |
On Petition for Review of Orders of the Interstate Commerce commission.
Gordon P. MacDougall, and James E. Weging, for petitioners in No. 83-1836.
William J. Dwyer, for petitioner in No. 83-1868.
Louis Mackall, Atty., I.C.C., with whom J. Paul McGrath, Asst. Atty. Gen., Dept. of Justice, John Broadley, Gen. Counsel, I.C.C., at the time the brief was filed, Ellen D. Hanson, Associate Gen. Counsel, I.C.C., Barry Grossman and Edward T. Hand, Attys., Dept. of Justice, for respondents.
James I. Collier, Jr., for intervenor Ass'n of American Railroads.
Howard D. Koontz, for intervenor, Illinois Cent. Gulf R. Co.
Before ROBINSON, Chief Judge, and WRIGHT and WALD, Circuit Judges.
Opinion for the Court filed by Chief Judge ROBINSON.
These petitions for review challenge an order of the Interstate Commerce Commission deregulating abandonments of "out of service" rail lines. 1 Purportedly exercising authority conferred by the Staggers Rail Act of 1980, 2 the Commission exempted segments of line that have not been used for at least two years, and those upon which no traffic has originated or terminated for a like period, 3 from compliance with statutory standards and procedures that otherwise would govern abandonments. 4 Petitioners 5 contest this action contending that the exemption is arbitrary and unsupported by essential findings. Perceiving merit in some of petitioners' arguments, we remand these cases to the Commission for further consideration.
The Staggers Act erects a comprehensive scheme of standards and procedures for abandonments of rail lines. Under its provisions, a railroad subject to the Commission's jurisdiction 6 may abandon a segment of line only if the Commission finds that the present or future public convenience and necessity will be served thereby. 7 The railroad must apply to the Commission for a certificate of abandonment 8 and widely publicize the proposal. It must notify states directly affected and shippers who made significant use of the line during the preceding twelve months, 9 and it must publish a notice in local newspapers and post it in stations along the line. 10 The railroad must also maintain a complete diagram of its transportation system depicting lines projected for or potentially subject to abandonment, and must submit to the Commission and publish any amendments affecting its accuracy. 11 When an abandonment is opposed by a state, political subdivision, or significant user of the line during the previous twelve months, a certificate of abandonment ordinarily will not issue unless the line was described in the diagram or an amendment at least four months prior to the application. 12
If the Commission receives no protest within 30 days of the railroad's application, it must find that the soughtafter abandonment is consistent with the public convenience and necessity, and issue a certificate of abandonment. 13 If there is a timely protest, the Commission must then determine whether an investigation is needed. 14 Time limits are set for completion of any investigation, rendition of the Commission's decision without or after investigation, and issuance of any certificate of abandonment. 15
A Commission finding that the proposed abandonment fosters the public convenience and necessity does not, however, lead inexorably to a certificate of abandonment. Elaborate provision is made for offers to purchase the line or financially subsidize its operation as means of avoiding an actual abandonment. 16 The Commission must publish its finding in the Federal Register 17 and the railroad must promptly furnish to anyone potentially interested a variety of information enabling calculation of an adequate purchase price or subsidy. 18 Should a timely offer 19 meeting a statutory formula be made by a financially responsible person, 20 issuance of a certificate of abandonment is postponed pending negotiation of an agreement by the parties 21 or establishment by the Commission of the conditions of sale or subsidy. 22 A firm sale of the line assures its operation for at least two years. 23
It is from adherence to this statutory scheme that the Commission, invoking Section 10505 of the Staggers Act, has exempted out-of-service lines. With exceptions not pertinent here, 24 Section 10505(a) requires the Commission to exempt a transaction from the operation of a provision governing interstate rail transportation if its application is not essential to effectuation of the rail transportation policy delineated in Section 10101a, 25 and if either the transaction is of limited scope or application of the statutory provision is not needed to protect shippers from an abuse of market power. 26 We now turn to the proceeding from which the exemption emanated to ascertain whether the Commission complied with these mandates.
The Commission issued a notice proposing a rule exempting from regulation abandonments of rail lines that have been out of service for two years or more. 27 The notice explained that the Commission had recently granted a series of case-by-case exemptions enabling abandonment of lines unused for extended periods, 28 and that, because those lines had handled no traffic for many years, it had in no instance found any evident need for the line or any adverse effect on shippers, interstate commerce, or the rail transportation policy. 29 On the basis of this experience, the Commission surmised that a blanket exemption of out-of-service lines might be appropriate. 30
The notice of the upcoming rulemaking proceeding stated that "[p]rior approval of abandonment of out of service rail lines does not appear to be necessary to carry out the goals of the rail transportation policy outlined in Section 10101a." 31 An "out-of-service line" was defined as one over which no local or overhead traffic 32 has moved for two years, but commenters were asked to discuss whether the term should also include lines carrying overhead traffic that could be rerouted over another line of the carrier. 33 The notice further stated that "exempting the transactions may facilitate at least one of the policy objectives of Section 10101a--to minimize the need for regulatory control and to require expeditious decisions when regulation is necessary." 34 The notice declared that the exemption would not adversely affect shippers, but would protect rail labor and save railroads the expense of preparing applications and the Commission the expense of processing them. 35
The Commission deemed the proposed exemption in keeping with Section 10505(a)' § requirement of either a transaction of limited scope or an absence of need for application of the statutory abandonment provisions to protect shippers from an abuse of market power. The Commission reasoned that the exemption would have no operational or competitive impact because it would simply allow immediate de jure recognition of an already-existing de facto discontinuance of service. 36 The Commission considered regulation unnecessary to protect shippers from market-power abuses because any line eligible for exemption would have lain unused for at least two years. 37
The Commission envisioned an abbreviated procedure for effectuating an exempt abandonment. To begin with, the railroad would notify the public service commission or equivalent agency in each state through which the line proposed for abandonment runs. 38 One week prior to actual abandonment, the railroad would notify the Commission, 39 which then would publish notice of the abandonment in the Federal Register, 40 and any petition for revocation of the exemption would become due within 15 days thereafter. 41 The Commission anticipated that, because of the abandoned line's two years out of service, the railroad would receive no offers to purchase or subsidize the line, 42 and suggested that anyone with a continuing transportation interest in the line could petition for revocation of the exemption. 43
The Commission received 44 comments in response to the notice. 44 The railroads generally supported the exemption and favored broadening it to include lines carrying only overhead traffic, 45 but feared that the revocation procedure might be available even after the tracks had been physically removed. 46 Opponents of the exemption--primarily states, shippers, and their representatives--protested on a number of grounds. 47 They expressed apprehension that railroads could and would use embargoes 48 to obtain out-of-service status that would permit them to invoke the exemption. 49 They further argued that Section 10505 does not authorize exemption of a class of transactions, but only exemption of individual transactions, 50 and they objected to expansion of the definition of "out of service" to include lines handling overhead traffic. 51 They also contended that the proposed exemption procedures provided insufficient notice, 52 that the Commission improperly relied on past instances in which exemptions were granted on a case-by-case basis, 53 and that the Commission had not supported its belief that the exemption would not significantly affect the human environment or energy resources. 54
Ultimately, the Commission issued its...
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