Consolidated Rail Corp. v. U.S.
| Decision Date | 15 August 1988 |
| Docket Number | No. 87-3326,No. 86-3799,No. 86-3798,Nos. 86-3798,No. 87-3002,No. 393,86-3799,87-3325,No. 87-3325,87-3002,No. 87-3328,No. 87-3327,86-3798,87-3326,87-3327,87-3328,393,s. 86-3798 |
| Citation | 855 F.2d 78 |
| Parties | CONSOLIDATED RAIL CORPORATION, Petitioner in, v. UNITED STATES of America and Interstate Commerce Commission, Respondents, Association of American Railroads, Bessemer & Lake Erie Railroad Company, Edison Electric Institute, The Fertilizer Institute, and National Industrial Transportation League, Intervenors. ASSOCIATION OF AMERICAN RAILROADS, Petitioner in, v. UNITED STATES of America and Interstate Commerce Commission, Respondents, Consolidated Rail Corporation, Bessemer & Lake Erie Railroad Company, Edison Electric Institute, The Fertilizer Institute and National Industrial Transportation League, Intervenors. BESSEMER & LAKE ERIE RAILROAD COMPANY, Petitioner in, v. UNITED STATES of America and Interstate Commerce Commission, Respondents, Association of American Railroads, Consolidated Rail Corporation, Edison Electric Institute and National Industrial Transportation League, Intervenors. ALABAMA POWER COMPANY, Georgia Power Company, Gulf Power Company, Mississippi Power Company, and Southern Company Services, Inc., (collectively, the "Southern Electric System"), Petitioners in, v. INTERSTATE COMMERCE COMMISSION and United States of America, Respondents, Association of American Railroads, Edison Electric Institute, Consolidated Rail Corporation, and National Industrial Transportation League, Intervenors. WESTERN COAL TRAFFIC LEAGUE, Petitioner in, v. UNITED STATES of America and Interstate Commerce Commission, Respondents, Association of American Railroads, Edison Electric Institute, National Association of Regulatory Utility Commissioners, Consolidated Rail Corporation, and National Industrial Transportation League, Intervenors. CONSUMER OWNED POWER COALITION, Petitioner in, v. UNITED STATES of America and Interstate Commerce Commission, Respondents, Association of American Railroads, National Industrial Transportation League, Consolidated Rail Corporation, and National Association of Regulatory Utility Commissioners, Intervenors. ATLANTIC CITY ELECTRIC COMPANY, Co |
| Court | U.S. Court of Appeals — Third Circuit |
Before GIBBONS, Chief Judge, HIGGINBOTHAM and COWEN, Circuit Judges.
Various shipper and carrier interests 1 petition for review of an order of the Interstate Commerce Commission (the ICC), 3 I.C.C.2d 261 (1986), which partially revises the decision in Ex Parte No. 393 (Sub.-No. 1), Standards for Railroad Revenue Adequacy, 364 I.C.C. 803 (1981), which this court in Bessemer & Lake Erie R. Co. v. I.C.C., 691 F.2d 1104 (3d Cir.1982), cert. denied, 462 U.S. 1110, 103 S.Ct. 2463, 77 L.Ed.2d 1340 (1983) (Bessemer ) reviewed and affirmed. The order is the product of notice and comment rulemaking. 5 U.S.C. Sec. 553(c) (1982). This court has jurisdiction pursuant to 28 U.S.C. Sec. 2321(a) and 28 U.S.C. Sec. 2342(5) (1982). The scope of our review is determined under 5 U.S.C. Sec. 706(2) (1982). We will affirm 3 I.C.C.2d 261 (1986) in all respects.
The subject of our review is the most recent ICC revision of the appropriate standard for measuring railroad revenue adequacy. "The effect of an ICC determination that a carrier is revenue inadequate ... is to permit rail carriers to raise rates on services as to which they have market dominance, without ICC approval, within the zones of flexibility specified in" the Staggers Rail Act of 1980, Pub.L. 96-448, 94 Stat. 1895 ("the Staggers Act"). Bessemer and Lake Erie R. Co. v. I.C.C., 691 F.2d 1104, 1109 (3d Cir.1982). The revised standard is the ICC's fourth attempt to define and refine a standard of revenue adequacy since the direction to the ICC to develop a revenue adequacy standard issued in the Railroad Revitalization and Regulatory Reform Act of 1976, Pub.L. 94-210, 90 Stat. 31 () (the "4R Act"). We described the legislative background of the railroad revenue adequacy standard in Bessemer:
The second salient feature of the 4R Act is the enactment of a section dealing with the standard for ratemaking for those market dominant carriers still subject to ICC ratemaking jurisdiction. Section 205 of that Act directed the ICC:
within 24 months after the date of enactment of this paragraph, after notice and an opportunity for a hearing, [to] develop and promulgate (and thereafter revise and maintain) reasonable standards and procedures for the establishment of revenue levels adequate under honest, economical, and efficient management to cover total operating expenses, including depreciation and obsolescence, plus a fair, reasonable, and economic profit or return (or both) on capital employed in the business.
Congress further directed that: [s]uch revenue levels should (a) provide a flow of net income plus depreciation adequate to support prudent capital outlays, assure the repayment of a reasonable level of debt, permit the raising of needed equity capital, and cover the effects of inflation and (b) insure retention and attraction of capital in amounts adequate to provide a sound transportation system in the United States. [49 U.S.C. Sec. 10704 (a)(2).]
Acting under the mandate of section 205 the Commission conducted two revenue adequacy proceedings [issuing in Ex Parte No. 338, Standards and Procedures for the Establishment of Adequate Revenue Levels, 358 I.C.C. 844 (1978); Ex Parte No. 353, Adequacy of Railroad Revenue (1978 Determination), 362 I.C.C. 199 (1980) ]. Meanwhile two major midwestern railroads went bankrupt, necessitating emergency federal legislation. Congress, apparently dissatisfied with the pace of the ICC's revenue adequacy proceedings, passed [the Staggers Act]. That Act amended the 4R Act in several respects. In an effort to increase railroad revenues, it created zones of rail carrier rate flexibility in which even market dominant carriers, if found to be revenue inadequate, could increase rates without ICC approval. The Staggers Act also amended section 205 of the 4R Act to provide that "[t]he commission shall maintain and revise as necessary standards and procedures for establishing revenue levels." Pub.L. 96-448, Sec. 205(b)(1). Moreover the ICC was directed to conclude a section 205 proceeding within 180 days after the effective date of the Staggers Act. Pub.L. 96-448 Sec. 205(b)(3).
Bessemer, 691 F.2d at 1108-09 (footnotes omitted). In response to the passage of the Staggers Act, the ICC conducted a third notice and comment rulemaking proceeding issuing in Ex Parte No. 393, 364 I.C.C. 803 (1981). That revenue adequacy standard differed from those adopted earlier in Ex Parte Nos. 338 and 353 in that it (1) "determined that a railroad would be considered revenue adequate when it received a rate of return on net investment equal to the current cost of capital"; (2) "determined to measure current cost of capital by examining current cost of debt, rather than embedded or historical cost of debt, together with current cost of equity"; and (3) "included reserves for deferred taxes, authorized use of betterment accounting for valuation of track assets, valued assets at depreciated book value, and included in the investment base unused and unusable assets" in determining the rate base. Bessemer, 691 F.2d at 1109. This court affirmed the revenue adequacy standard adopted in Ex Parte No. 393 in all respects. Bessemer, 691 F.2d at 1116.
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Friends of the Atglen-Susquenhanna Trial, Inc. v. Surface Transp. Bd.
... ... RAIL LINES ... FAST seeks review of the actions of the STB ... "instead continues to seek to dictate the [STB's] procedures and compel us to reopen this case and declare this entire rail line historic." The STB ... See Consolidated Rail Corp. v. Surface Transp. Bd., 320 U.S. App. D.C. 130, 93 F.3d 793, ... ...