Consolidated Rail Corp. v. Surface Transp. Bd.

• Decision Date: 20 August 1996
• Docket Number: 95-1410 and 95-1602,95-1353,Nos. 95-1312,s. 95-1312
• Citation: 93 F.3d 793,320 U.S. App. D.C. 130
• Parties: CONSOLIDATED RAIL CORPORATION, Petitioner, v. SURFACE TRANSPORTATION BOARD, et al., Respondents, Commonwealth of Pennsylvania, et al., Intervenors.
• Court: U.S. Court of Appeals — District of Columbia Circuit

Page 793

93 F.3d 793

320 U.S.App.D.C. 130

CONSOLIDATED RAIL CORPORATION, Petitioner, v. SURFACE TRANSPORTATION BOARD, et al., Respondents Commonwealth of Pennsylvania, et al., Intervenors.

Nos. 95-1312, 95-1353, 95-1410 and 95-1602.

United States Court of Appeals District of Columbia Circuit.

Argued April 15, 1996.

Decided Aug. 20, 1996.

On Petitions for Review of Orders of the Interstate Commerce Commission.

Gerald P. Norton, Washington, DC, with whom Paul A. Cunningham, James M. Guinivan, Washington, DC, Constance L. Abrams and John J. Paylor, Philadelphia, PA, were on the briefs, argued the cause for petitioner. Jonathan M. Broder, Philadelphia, PA, entered an appearance.

Evelyn G. Kitay, Attorney, Surface Transportation Board, Washington, DC, with whom Henri F. Rush, General Counsel, Surface Transportation Board, and Anne K. Bingaman, Assistant Attorney General, United States Department of Justice, John J. Powers III, and John P. Fonte, Attorneys, United States Department of Justice, were on the brief, argued the cause for respondents.

Richard R. Wilson argued the cause and filed the brief for intervenor Northwest Pennsylvania Rail Authority.

Jan M. Tamanini, Assistant Counsel, Harrisburg, PA, filed the brief for intervenor Pennsylvania Department of Transportation.

Before SILBERMAN, BUCKLEY and ROGERS, Circuit Judges.

Opinion for the court filed by Circuit Judge BUCKLEY.

BUCKLEY, Circuit Judge:

Consolidated Rail Corporation ("Conrail") petitions for review of a series of Interstate Commerce Commission ("ICC" or "Commission") orders reopening an earlier decision that authorized Conrail to abandon a line connecting two Pennsylvania communities and directing the railroad to sell the line to a group of municipalities. The ICC's orders are defended on appeal by the Surface Transportation Board ("STB"), which has assumed the Commission's functions pursuant to the ICC Termination Act of 1995. Because Conrail had satisfied the formal requirements for an abandonment under existing ICC precedent, thereby depriving the ICC of jurisdiction over the line, and because there is no basis for concluding that the abandonment was authorized as a result of mistake, fraud, or ministerial error, we grant the petition and vacate the orders.

I. BACKGROUND

A. Regulatory Background

On January 1, 1996, many functions of the ICC, including authority over abandonment proceedings, were transferred to the STB in the Department of Transportation. ICC Termination Act of 1995, Pub.L. No. 104-88, § 201, 109 Stat. 803, 932-34 (1995). In its savings provision, the ICC Termination Act provides that

[t]his Act shall not affect suits commenced before the date of the enactment of this Act.... In all such suits, proceeding shall be had, appeals taken, and judgments rendered in the same manner and with the same effect as if this Act had not been enacted.

§ 204(c)(1), 109 Stat. at 942. See also H.R. Conf. Rep. No. 422, 104th Cong., 1st Sess. 236-37 (1995); In re Olympia Holding Corp., 88 F.3d 952, 961 n. 23 (11th Cir.1996). Accordingly, for purposes of this appeal, we treat the provisions of the Interstate Commerce Act as they existed prior to the enactment of the ICC Termination Act.

During the times relevant to this appeal, the ICC had, pursuant to the Interstate Commerce Act, exclusive jurisdiction over the construction and operation of virtually all the nation's rail lines. A rail carrier could not be relieved of its legal obligation to provide rail service over a particular line until it had first obtained ICC permission to discontinue or "abandon" service. See 49 U.S.C. § 10903(a) (1994). When the carrier had abandoned the line and the ICC had issued an "abandonment certificate," the Commission was generally deemed to have been relieved of its jurisdiction over the line, see Preseault v. ICC, 494 U.S. 1, 5 n. 3, 110 S.Ct. 914, 919 n. 3, 108 L.Ed.2d 1 (1990); and the owner was free to "remove the track and dispose of the land," Illinois Commerce Comm'n v. ICC, 787 F.2d 616, 620 n. 1 (D.C.Cir.1986).

The ICC had authority over abandonments since 1920. For most of this period, Congress set no time limit for abandonment proceedings. See Hayfield N. R.R. Co. v. Chicago & N.W. Transp. Co., 467 U.S. 622, 628, 104 S.Ct. 2610, 2614, 81 L.Ed.2d 527 (1984). Commentators observed that the Commission "acted as a judicial brake upon possible abandonments." See Stephen R. Wild, A History of Railroad Abandonments, 23 Transp. L.J. 1, 5 (1995). "Railroads consequently found themselves enmeshed in lengthy proceedings" while awaiting issuance of an abandonment certificate and were thus prevented from "unburden[ing] themselves promptly of unprofitable lines." Hayfield, 467 U.S. at 628, 104 S.Ct. at 2614.

In 1976 and 1980, Congress adopted amendments to the Act to facilitate line abandonments by establishing deadlines for processing abandonment applications. See Railroad Revitalization and Regulatory Reform Act of 1976 ("4-R Act"), Pub.L. No. 94- 210, § 802, 90 Stat. 31, 127, originally codified at 49 U.S.C. § 1a (1976) (subsequently recodified without substantive change at 49 U.S.C. § 10903 et seq. (1994)); Staggers Rail Act of 1980, Pub.L. No. 96-448, § 402, 94 Stat. 1895, 1941-1945, codified at 49 U.S.C. §§ 10903-10906 (1994). As the Supreme Court explained, these amendments were intended to "alleviate the costly delays imposed upon railroads by protracted proceedings before the Commission." Hayfield, 467 U.S. at 629, 104 S.Ct. at 2615; see also Simmons v. ICC, 775 F.2d 854, 857 (7th Cir.1985) (amendments evinced "the congressional desire to see abandonment proceedings expedited").

The 4-R Act and the Staggers Rail Act created the following guidelines for abandonment proceedings: The Commission determined, within specified time limits following the filing of an application to abandon any part of a railroad line, whether the public convenience and necessity permitted the proposed abandonment. See generally 49 U.S.C. §§ 10903, 10904. Upon finding that the public convenience and necessity permitted such an abandonment, the Commission was required, "concurrently with the service of the decision upon the parties, [to] publish the finding in the Federal Register." Id. § 10905(c). Within ten days following such publication,

any person may offer to pay the carrier a subsidy or offer to purchase the line. Such offer shall be filed concurrently with the Commission. If the offer to subsidize or purchase the line is less than the carrier's estimate [of the subsidy or minimum purchase price required to keep the line in operation], the offer shall explain the basis of the disparity, and the manner in which the offer of subsidy or purchase is calculated.

Id. If such an offer of financial assistance ("OFA") was made, the ICC, within fifteen days of the publication, determined whether the offeror was financially responsible and the offer satisfied certain financial criteria. If the ICC so found, it postponed the issuance of the abandonment certificate to allow the parties to negotiate the amount of the purchase price or subsidy. Id. at § 10905(d). The parties had 30 days to reach agreement on their own. If they failed to do so, either party could request that the ICC, within 60 days, establish the conditions and amount of compensation. Id. at § 10905(e) and (f)(1)(A) & (B).

B. Factual Background

In June 1994, Conrail requested the ICC's authorization to abandon a rail line between Corry and Meadville, Pennsylvania ("Meadville line" or "line"), where it had estimated losses of $640,000 in 1993. The abandonment application was not protested; and on August 1, 1994, the ICC issued Conrail an abandonment certificate for the line, subject to the filing of an OFA within ten days. Eight days later, a group of municipalities served by the line ("Municipalities") filed an OFA to purchase the line for its $2.9 million net liquidation value. The ICC postponed the issuance of the abandonment certificate to allow the parties to negotiate its sale.

The parties having failed to reach an agreement, the Municipalities requested that the ICC set the terms and conditions for the sale of the line. One of these terms related to the liability for toxic and hazardous substances that might exist along the line. Conrail had proposed terms that limited its liability to actions that occurred during, but not before, it owned and operated the line. The Municipalities objected that, as public bodies, they could not indemnify Conrail for open-ended liabilities that might accrue, under applicable environmental laws, as a result of the presence of such substances along the line before Conrail owned it.

In a decision and order served November 7, 1994, the ICC declined to impose terms relating to environmental liability because it found such provisions to be beyond the standard terms of sale in an OFA proceeding. Consolidated Rail Corporation--Abandonment--Between Corry and Meadville, in Erie and Crawford Counties, Pa., Docket No. AB-167 (Sub-No. 1139), 1994 WL 605848 at * 3 ("November 7, 1994 Decision"). The Commission established the line's purchase price as $2.9 million, and it ordered consummation of the sale within 90 days (or by February 6, 1995). Id. The Commission provided that the Municipalities were to produce that amount, and "Conrail shall convey all property by quitclaim deed." Id. at * 4.

On February 3, 1995, Conrail advised the Municipalities that it had completed preparation of a quitclaim deed and was prepared to proceed to closing. After the Municipalities refused to accept the quitclaim deed, Conrail advised the Commission that no agreement had been reached; and it again requested authorization to abandon the line. On February 8, 1995, the Municipalities opposed Conrail's request for the issuance of an abandonment certificate, arguing that Conrail was "attempt[ing] to impose through its tender of deed the same conditions which the Commission specifically...