Com. of Pennsylvania v. Surface Transp. Bd.
| Citation | 290 F.3d 522 |
| Decision Date | 17 May 2002 |
| Docket Number | No. 01-3685.,01-3685. |
| Parties | THE COMMONWEALTH OF PENNSYLVANIA and Senator Arlen Specter, Petitioners v. SURFACE TRANSPORTATION BOARD and United States of America, Respondents Norfolk Southern Corporation<SMALL><SUP>*</SUP></SMALL> and Norfolk Southern Railway Company, Intervenors/Respondents Transport Workers Union of America,<SMALL><SUP>*</SUP></SMALL> National Conference of Firemen and Oilers/SEIU, International Association of Machinists & Aerospace Workers, International Brotherhood of Boilermakers and Blacksmiths, International Brotherhood of Electrical Workers, Sheet Metal Workers' International Association, and Transportation Communications International Union, Intervenors/Petitioners. |
| Court | United States Courts of Appeals. United States Court of Appeals (3rd Circuit) |
Scott N. Stone (Argued), Patton Boggs, Washington, D.C., for Petitioner Commonwealth of Pennsylvania.
Arlen Specter (Argued), United States Senator, United States Senate, Washington, D.C., for Petitioner Arlen Specter.
Theodore K. Kalick (Argued), Ellen D. Hanson, General Counsel, Craig M. Keats, Deputy General Counsel, Surface Transportation Board, Office of General Counsel, John P. Fonte, Robert B. Nicholson, Charles A. James, Assistant Attorney General, United States Department of Justice, Antitrust Division, Washington, D.C., for Respondents Surface Transportation Board and United States.
Carter G. Phillips (Argued), G. Paul Moates, Jeffrey S. Berlin, Virginia A. Seitz, Sidley Austin Brown & Wood, Washington, D.C., Richard A. Allen, Scott M. Zimmerman, Adam F. Hulbig, Zuckert, Scoutt & Rasenberger, Washington, D.C., J. Gary Lane, Henry D. Light, Joseph C. Dimino, George A. Aspartore, Jeffrey H. Burton, John V. Edwards, Norfolk Southern Corporation, Norfolk, VA, for Norfolk Southern Corporation and Norfolk Southern Railway Company, Intervenors/Respondents.
Richard S. Edelman (Argued), O'Donnell, Schwartz & Anderson, Washington, D.C., for the Unions Intervenors/Petitioners.
Before: SLOVITER and AMBRO, Circuit Judges, and POLLAK, District Judge**.
The Commonwealth of Pennsylvania and Arlen Specter, one of the United States Senators from Pennsylvania, joined by various interested unions,1 petition this court for review of the decision of the Surface Transportation Board ("STB" or "Board") rejecting their petition to cancel the planned shutdown by Norfolk Southern ("NS")2 of its Hollidaysburg Car Shops ("HCS") located outside Altoona, Pa.
Before the Board, petitioners relied primarily on the representations condition that the Board had imposed on NS requiring it to "adhere to all of the representations" NS had made during the course of the proceeding by which it received approval to acquire Conrail properties, including the HCS. It will be evident to anyone who reviews the record that in the course of seeking the Board's approval of NS's acquisition of a portion of Conrail, which included the Hollidaysburg Car Shops, NS had represented before the Board and to various affected constituencies that it would keep the HCS open, that as a result NS was able to garner support from the Commonwealth, Senator Specter and others, that these supporters understood that the HCS would remain operational for more than two years, but that NS announced plans to close the HCS in less than that time, and that only the stay imposed by this court pending decision on this petition for review has kept the HCS open. Although the Board found that NS had represented that "the heavy repair shop at Hollidaysburg would continue to be utilized," the Board declined to cancel the shutdown, concluding that NS's representations did not require continued operation in the face of "deteriorating economic conditions." It is from this order that petitioners seek review. We regret that on this record this court is powerless to grant the petitions.
The Surface Transportation Board is the independent federal agency established by Congress within the Department of Transportation and has the responsibility for the economic regulation of the country's railroads.3 The Board has exclusive authority over the approval and supervision of railroad mergers. See, e.g., 49 U.S.C. § 11321 (2001); Union R.R. v. United Steelworkers of America, 242 F.3d 458, 466 (3d Cir.2001).
Congress has prescribed a number of factors for the Board to consider in the exercise of its authority to approve mergers. Those factors include the merger's effect on the adequacy of transportation available to the public, the impact on the public interest of the inclusion or exclusion of other carriers, the total fixed charges from the merger, the interest of the railroad employees affected by the merger, and the effect of the merger on competition between rail carriers. 49 U.S.C. § 11324(b). Thus it was to the Board that the prospective acquirers of Conrail looked for ultimate approval.
Initially, two railroad companies, Norfolk Southern Corporation and Norfolk Southern Railway Company (collectively "NS") and CSX Corporation and CSX Transportation, Inc. (collectively CSX), had battled over the extent to which either entity would acquire Conrail, with each company publicly insisting its acquisition of Conrail would better serve the interests of influential constituencies. For example, both CSX and NS suggested they would consider moving their headquarters to Philadelphia. Henry J. Holcomb, Norfolk Southern Launches Hostile Bid for Conrail, Phila. Inquirer, Oct. 24, 1996. According to commentators, winning the congressional support of the Pennsylvania delegation was a key component of NS's strategy. See, e.g., Don Phillips, Norfolk Southern Tops CSX's Bid for Conrail; $9.1 Billion Offer is Likely to Start a Messy Battle, Wash. Post, Oct. 24, 1996, at El. Bud Shuster, Altoona's U.S. Congressman, and then-chairman of the House Transportation and Infrastructure Committee, announced he would "launch[] a `bloody, bruising legislative battle' if need be to protect the 1,300 jobs [at Conrail's Altoona-area shops]." Tom Gibb, Bud Shuster Vows to Fight to Protect Railroad Jobs, Pittsburgh Post-Gazette, Nov. 2, 1996, at C-5.
During this period and after it joined forces with CSX to seek approval of the Conrail transaction, NS made a number of representations regarding the Hollidaysburg Car Shops, located near Altoona, Pennsylvania. NS's CEO, David Goode, publicly stated that "Conrail's locomotive and car repair shops, which make up the lion's share of the economy of Altoona, Pa., would grow under Norfolk Southern." Holcomb, supra. NS bought advertising in the New York Times representing that "Norfolk Southern is committed to continuing to operate Conrail's Hollidaysburg Car Shop ... and will promote employment there." App. at 358. NS issued a press release to the same effect. In a fact sheet issued around the time NS filed its Conrail application, NS indicated its intent to invest an "`[e]stimated $4 million in capital improvements at [the] Hollidaysburg shop.'" CSX Transp. & CSX Transp., Inc., STB Fin. Docket No. 33388, slip op. at 5 (STB May 21, 2001) (hereinafter Decision No. 186) (alterations in original).
However, when Goode testified before a subcommittee of the U.S. Senate's Committee on Appropriations, he stated only that "we are in a position of not only being able to give assurances that we will keep [the Hollidaysburg and Altoona shops] and keep them operating, we are going to need them." Conrail Merger Implications: Hearing Before a Subcomm. of the Senate Comm. on Appropriations, 105th Cong. 49 (1998) (statement of David R. Goode, President and CEO, Norfolk Southern). But then-influential Representative Shuster reported that he had received "strong verbal reassurances that the [Altoona-area] shops will remain ... at least at the current level." Gibb, supra.
In its application before the STB, NS observed that the Altoona/Hollidaysburg shops were "excellent," "while NS's comparable facilities are in Roanoke, Virginia." App. at 378. According to NS, "important efficiencies can be gained by concentrating different types of mechanical work at each location." Id. NS concluded by noting that Id. NS indicated it would market the services offered by the HCS in order to expand the opportunities there. Decision No. 186, slip op. at 5. In the operating plan NS submitted as part of the merger approval process, NS again represented it would invest four million dollars in capital improvements to the HCS.
Representative Shuster, Pennsylvania's then-Governor Ridge, and the Pennsylvania Senate and House Transportation Committees all expressed support for NS's acquisition of Conrail, explicitly founding their support on the representations made by NS regarding the Hollidaysburg shop. Decision No. 186, slip op. at 6; CSX Transp. & CSX Transp., Inc., 3 S.T.B. 196 (Decision No. 89) Appendix K, slip op. at 321 (July 20, 1998) (hereinafter Decision No. 89). On July 20, 1998, the STB approved the acquisition and division of Conrail by NS and CSX.
The Board "approv[ed] the primary application in its entirety," Decision No. 89, slip op. at 17, observing the application was "endorsed by more than 2,700 parties, including more than 2,200 shippers, more than 350 public officials, and more than 80 railroads," id. at 12. The Board found that the merger, as conditioned by its decision approving the transaction, "is consistent with the public interest; (b) ... the... transaction will not adversely affect the adequacy of transportation to the public; (c) ... failure to include other railroads will not adversely affect the public interest; ... [and] (e) ... the interests of employees affected by the proposed transaction do not make...
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