Commonwealth of Pennsylvania v. United States

• Decision Date: 10 May 1973
• Docket Number: Civ. A. No. 72-837.
• Citation: 360 F. Supp. 658
• Parties: COMMONWEALTH OF PENNSYLVANIA et al., Plaintiffs, v. UNITED STATES of America et al., Defendants.
• Court: U.S. District Court — Eastern District of Pennsylvania

360 F. Supp. 658

COMMONWEALTH OF PENNSYLVANIA et al., Plaintiffs, v. UNITED STATES of America et al., Defendants.

Civ. A. No. 72-837.

United States District Court, W. D. Pennsylvania.

May 10, 1973.

J. Shane Creamer, Atty. Gen., Harrisburg, Pa., John M. Duff, Deputy Atty. Gen., Pittsburgh, Pa., Gordon P. MacDougall, Sp. Asst. Atty., Washington, D. C., Philip P. Kalodner, Harrisburg, Pa., J. Lee Miller, Thomas P. Shearer, Pittsburgh, Pa., for plaintiffs.

Richard B. Allen, Baltimore, Md., John J. Repcheck, Pittsburgh, Pa., James F. Tao, Interstate Commerce Commission, Washington, D. C., for defendants.

Before ALDISERT, Circuit Judge, and KNOX and SCALERA, District Judges.

OPINION

SCALERA, District Judge.

This action seeks to set aside a certificate and order of the Interstate Commerce Commission (I.C.C.) dated June 13, 1972, which authorizes the Baltimore and Ohio Railroad Company (B & O) and the Indian Creek Valley Railroad Company to abandon a 17.57 mile branch rail line located in Fayette and Westmoreland Counties, Pennsylvania.

HISTORY OF THE CASE

On December 9, 1971, the B & O and its wholly-owned subsidiary, the Indian Creek Valley Railroad Company, filed a joint application with the I.C.C. under 49 U.S.C. § 1 (18-20) of the Interstate Commerce Act. The railroads sought a certificate of public convenience and necessity permitting abandonment of the Indian Creek Valley Branch, which runs between Indian Creek and Roaring Run in Fayette and Westmoreland Counties, Pennsylvania. In addition to the main track, the railroads' petition requested permission to abandon .46 miles of side track, 8 turnouts, 7 bridges and 11 public highway grade crossings.

Various protests were entered against the abandonment and the application was assigned to a review board for handling under modified procedure by which evidence and arguments were submitted to the I.C.C. in written form. 49 C.F.R. 1100, 45-54. Protestants who filed verified statements were Babcock Lumber Company, the only patron served by the line, the United Transportation Union, the Commonwealth of Pennsylvania and the Pennsylvania Public Utility Commission (P.U.C.). The Commonwealth and the P.U.C. filed a joint statement. The record was closed on April 10, 1972. On June 13, 1972, the I.C.C.'s Review Board Number 5 entered a certificate and order accompanied by a report, granting the abandonment.

On September 14, 1972, petitions for reconsideration filed by the Babcock Lumber Company and jointly by the Commonwealth of Pennsylvania and the Pennsylvania Public Utility Commission were denied by Division 3 of the I.C.C., sitting as an appellate division. The Commission's June 13 order was to become effective on October 22, 1972, twenty days from the date of service of the order denying reconsideration.

This complaint seeking to enjoin, suspend and set aside the order of the I.C. C. was filed on October 10, 1972. In compliance with 28 U.S.C. §§ 2284 and 2325, a three-judge court was convened.

Parties to the action stipulated that the authority for abandonment would not be exercised prior to January 15, 1973. Briefs were ordered in accordance with the schedule proposed by the parties and a hearing was held on January 26, 1973.

REVIEW OF EVIDENCE PRESENTED IN PROCEEDINGS BEFORE THE INTERSTATE COMMERCE COMMISSION

The railroads argued before the I.C.C. that there was insufficient business on the line to justify its continued operation. They presented evidence to show that since the closing of the Melcroft Mine in 1967, traffic on the line has been less than 2 carloads per week. As a result, the branch has been operated unprofitably for the past 3 years. In order to conserve losses only minimal amounts were expended on maintenance during this period, most of which was spent to have the track inspected in its entirety before each operation. Little actual maintenance work was performed on the line.

The railroads contended that as a result, the track and bridges are now in such poor condition that major rehabilitation is required. It was estimated that it would cost $839,800 to restore the line to satisfactory operating condition in compliance with Federal Railroad Administration (F.R.A.) Class 2 safety standards, which permit operating speeds of 11 to 25 m. p. h., and $50,000 annually to maintain the line under this classification. The railroads concluded that the small volume of traffic and the unlikelihood of an increase in traffic did not justify such a substantial rehabilitation expenditure as well as continued operating losses.

Babcock argued that its use of the line had been increasing and that more cars could have been utilized but the railroad had been "unable or unwilling" to provide them. Considerable sums were recently spent by Babcock to improve its Roaring Run operation in reliance on the continued availability of railway service. It was asserted that elimination of the branch would adversely affect Babcock's business, necessitating a reduction of its lumbering force.

The Commonwealth of Pennsylvania and the P.U.C. argued that at the present volume of traffic a major rehabilitation is not required for safe operation of the branch. Moreover, they contended that the line does not need to be upgraded to comply with F.R.A. Class 2 requiremements. The Commonwealth and the P.U.C. argued that with a maintenance expenditure of $10,000 per year, an increase of approximately $4,000 over current maintenance expenditures, the line could be safely operated at the existing volume of traffic for the next 5 years without a major rehabilitation.

Averring that the railroads' current operating losses are de minimis, the Commonwealth of Pennsylvania and the P.U.C. further argue that abandonment of line should not be permitted in an economically depressed area unless it is clear that the railroad will suffer substantial losses, as rail transportation is necessary to promote needed industrial development.

The Transportation Union adopted the arguments of the other protestants.

FINDINGS OF THE INTERSTATE COMMERCE COMMISSION

The review board concluded that public convenience and necessity permit abandonment of the branch. It found that operation of the branch had been unprofitable in the past and would continue to be unprofitable in the future even with minimal maintenance expenditures. The board found that traffic on the branch had dropped to about 2 cars per week, a volume which made it impossible for the railroads to break even financially. No convincing evidence had been introduced that new traffic would be generated sufficient for profitable operation of the branch.

The board noted that although there was no reason to upgrade the line to permit speeds up to 25 m. p. h., considerable rehabilitation was necessary for safe operation of the branch. The cost of required rehabilitation was so great that the railroads would never be able to recoup this expenditure from business on the line.

Balancing the unprofitable operation and the need for substantial rehabilitation against the public need for rail service, the review board found that although Babcock would probably suffer financial harm from discontinuation of the line, the public would be more effectively served if the railroad's good financial position were not weakened by requiring it to continue operation of an unprofitable line in need of extensive rehabilitation.

REHABILITATION

Plaintiffs argued before this court that the Commission's determinations that operation of the branch is unprofitable, that substantial rehabilitation is required for continued operation, and that the costs of rehabilitation cannot be recovered from business on the line are not supported by adequate findings and by substantial evidence. Plaintiffs attack the Commission's rehabilitation determination for several reasons. They attack as inadequate the Commission's finding that considerable rehabilitation is needed for safe operation because the Commission failed to set forth the cost of rehabilitation required. Plaintiffs argue that when a decision to grant abandonment is predicated in large part on a finding that substantial rehabilitation is necessary, which issue was contested in proceedings before the Commission, an estimate of the cost of rehabilitation is required to permit the Commission's decision to be challenged on grounds of lack of substantial evidence as well as to assure proper judicial review.

The plaintiffs contend that because the railroad only presented evidence on the amount of rehabilitation which would be required in order to comply with the F.R.A. Class 2 safety standards which the Commission found did not have to be met, and because the railroads failed to present an estimate on the amount of rehabilitation which would be required to comply with Class 1 standards, the evidence presented by the P.U.C. expert that no rehabilitation is needed to comply with Class 1 standards should have been controlling.

Plaintiffs also contend that the opinion of the P.U.C. expert on the rehabilitation issue should have been binding on the Commission because the Commission has little or no expertise in matters of railway safety, whereas the P.U.C. presently has jurisdiction over railway safety for lines in the Commonwealth and it is anticipated that it will soon be certified as the agency which will administer track safety standards adopted by the U.S. Secretary of Transportation under the Railway Safety Act of 1970, 45 U.S.C. § 421.

Finally, it is asserted to be error for the board to have rejected the railroad's estimate of rehabilitation as excessive but, nevertheless, to have relied on this estimate instead of accepting the estimate of the P.U.C. expert.

We do not think the board's rehabilitation determination is inadequate. The Commission may determine that substantial rehabilitation is needed for safe operation without setting forth an approximation of the expenses involved. As was said in Transit Commission v....