Consolidated Rail Corp. v. I.C.C.

• Decision Date: 22 July 1994
• Docket Number: 92-1528 and 92-1548,Nos. 92-1473,s. 92-1473
• Citation: 29 F.3d 706
• Parties: CONSOLIDATED RAIL CORPORATION, Petitioner, v. INTERSTATE COMMERCE COMMISSION and United States of America, Respondents, The City of New York and the Metropolitan Transportation Authority of the State of New York, Chelsea Property Owners, New York Convention Center Development Corporation, Intervenors. CITY OF NEW YORK and the Metropolitan Transportation Authority of the State of New York, Petitioners, v. INTERSTATE COMMERCE COMMISSION and United States of America, Respondents, Chelsea Property Owners, Consolidated Rail Corporation, Intervenors. CHELSEA PROPERTY OWNERS, Petitioner, v. INTERSTATE COMMERCE COMMISSION and United States of America, Respondents, Consolidated Rail Corporation, City of New York and the Metropolitan Transportation Authority of the State of New York, Intervenors.
• Court: U.S. Court of Appeals — District of Columbia Circuit

Page 706

29 F.3d 706

308 U.S.App.D.C. 60

CONSOLIDATED RAIL CORPORATION, Petitioner, v. INTERSTATE COMMERCE COMMISSION and United States of America,

Respondents,

The City of New York and the Metropolitan Transportation

Authority of the State of New York, Chelsea

Property Owners, New York Convention

Center Development

Corporation, Intervenors.

CITY OF NEW YORK and the Metropolitan Transportation

Authority of the State of New York, Petitioners, v. INTERSTATE COMMERCE COMMISSION and United States of America,

Respondents,

Chelsea Property Owners, Consolidated Rail Corporation, Intervenors.

CHELSEA PROPERTY OWNERS, Petitioner, v. INTERSTATE COMMERCE COMMISSION and United States of America,

Respondents,

Consolidated Rail Corporation, City of New York and the

Metropolitan Transportation Authority of the State

of New York, Intervenors.

Nos. 92-1473, 92-1528 and 92-1548.

United States Court of Appeals, District of Columbia Circuit.

Argued March 1, 1994.

Decided July 22, 1994.

Petitions for Review of an Order of the Interstate Commerce Commission.

Paul Cunningham, Washington, DC, argued the cause for Consolidated Rail Corporation, petitioner in No. 92-1473 and intervenor in Nos. 92-1528 and 92-1548. On briefs were Robert M. Jenkins, III, Joel A. Rabinovitz, Washington, DC, Constance L. Abrams and Jonathan M. Broder, Philadelphia, PA.

Peter A. Greene, New York City, argued the cause for the City of New York, et al., petitioners in No. 92-1528 and intervenors in Nos. 92-1473 and 92-1548. On briefs was Gail Rubin, Asst. Corp. Counsel, City of New York. Fabian G. Palomino, New York City, entered an appearance.

Scott N. Stone, Washington, DC, argued the cause for Chelsea Property Owners, petitioner in No. 92-1548 and intervenor in Nos. 92-1473 and 92-1528. On briefs was John L. Oberdorfer, Washington, DC.

Evelyn G. Kitay, I.C.C., Washington, DC, argued the cause for the respondents. On brief were Henri F. Rush, Acting Gen. Counsel, I.C.C., Ellen D. Hanson, Associate Gen. Counsel, I.C.C., Anne K. Bingaman, Asst. Atty. Gen., Dept. of Justice, and Catherine G. O'Sullivan and Andrea Limmer, Dept. of Justice, Washington, DC. Robert S. Burk, I.C.C., Washington, DC, entered an appearance.

Before: WALD, SILBERMAN and HENDERSON, Circuit Judges.

Opinion for the court filed by Circuit Judge HENDERSON.

KAREN LeCRAFT HENDERSON, Circuit Judge:

Petitioner Consolidated Rail Corporation (Conrail) seeks reversal of the issuance by the Interstate Commerce Commission (ICC or Commission) of a certificate of abandonment for a one and one-half mile section of elevated railroad track in New York City owned by Conrail and known as the Highline. Intervenors Chelsea Property Owners (CPO), who own property adjacent to the elevated track, and the City of New York, the Metropolitan Transit Authority of New York, the New York Convention Center Development Corporation and the New York State Department of Transportation (New York parties) ask that the issuance of the certificate be affirmed. As cross-petitioners, the New York parties ask that the ICC's decision to condition the abandonment on the posting of a surety bond by CPO be reversed. CPO supports the New York parties on the surety bond issue and Conrail supports the ICC.

This case involves an unusual practice known as adverse abandonment. In a typical abandonment case a railroad requests the ICC to allow it to discontinue service over a particular line. If the ICC finds that the public convenience and necessity require or permit abandonment, it issues an abandonment certificate. See 49 U.S.C. Sec. 10903(a). In an adverse abandonment, the carrier wants to continue service; it is a third party who seeks the issuance of an abandonment certificate. Generally, a third party seeks abandonment because it wants the rail line condemned; an abandonment certificate can be used in state court to establish that the line is not required for rail service in interstate commerce and therefore is not exempt from local or state condemnation. See Kansas City Pub. Serv. Freight, 7 I.C.C.2d 216, 225 (1990) (quoting Modern Handcraft, Inc., 363 I.C.C. 969, 972 (1981)). Once an abandonment certificate issues, property owners with reversionary rights in the rail line may be able to have the line condemned and their property restored.

This case follows the typical pattern: CPO seeks the abandonment certificate so that the Highline can be condemned and its members can assert their reversionary rights in the property. Conrail opposes abandonment ostensibly because it hopes to provide service over the line. Nevertheless, it appears that Conrail opposes abandonment at least in part because of its potential liability for demolition costs if the Highline is condemned. If Conrail could prevent the issuance of an abandonment certificate by opposing it, it would increase its leverage in negotiating with CPO and the New York Parties on the payment of demolition costs. For the reasons set forth below, the petitions for review are denied and the ICC's decision affirmed.

I.

The Highline is a 1.45 mile elevated rail line in Manhattan running along a viaduct from 34th Street at the north end to Gansevoort Street at the south end. Built in the 1930s, the Highline initially carried heavy traffic but it declined during subsequent decades and the line fell into disuse during the 1970s. Conrail ceased operations over the Highline in the mid-1970s. Over time, Conrail sold off portions of the land on which the Highline runs but maintained easements for freight service. By 1982 Conrail eliminated from the line all stations and team tracks (facilities at which freight is loaded and unloaded). Chelsea Property Owners, 8 I.C.C.2d 773, 775 (1992) (hereinafter Order).

In the early 1980s, the New York State Department of Transportation (NYSDOT) attempted to purchase the Highline to make way for a proposed highway project. Conrail asked the ICC for permission to abandon the line but a third party made an offer of financial assistance to keep the line operational. Joint Appendix (JA) at 44-45. If a financially responsible third party agrees to purchase a line or subsidize traffic over it, the ICC does not issue an abandonment certificate. See 49 U.S.C. Sec. 10905. By the time the ICC determined that the third party was not financially responsible, NYSDOT had abandoned the highway project and no longer wanted to purchase the Highline. In 1988, therefore, Conrail asked to withdraw its abandonment application. The ICC agreed to the withdrawal but nonetheless observed that "opponents are free to file their own application ... to abandon this line." Docket No. AB-167 (Sub-No. 493N), decision dated January 29, 1988 (served February 11, 1988) at 6.

Shortly thereafter, Conrail and CPO began negotiations for voluntary removal of the line; the negotiations failed, however. As a result, CPO filed an adverse abandonment application which was assigned to an administrative law judge (ALJ). Before the ALJ, CPO presented evidence that the Highline was deteriorating, dangerous and an eyesore. It offered to show that no demand for service on the line existed, that freight could not be loaded on the elevated line and that rehabilitation of the line was economically infeasible. Additionally, CPO claimed that Conrail had no intention of operating the line but instead opposed the abandonment in order to avoid potential demolition costs. The New York parties supported CPO's position. Conrail countered that the line could be rehabilitated at a relatively minimal cost, that demolition of the Highline would cost $34 million and that it had a prospective customer for the line's services in Browning Ferris Industries (BFI), a solid waste disposal company. Conrail proposed trucking raw waste to a site next to the Highline--to be acquired and equipped by Conrail--at which the waste would be containerized and loaded onto freight cars. The ALJ issued an initial decision denying the abandonment application. JA at 41-65. He found that Conrail had submitted credible evidence of potential traffic on the Highline and therefore the public convenience and necessity did not require or permit abandonment. JA at 65.

On appeal to the ICC, CPO produced evidence that BFI had allowed its letter of intent with Conrail to lapse; Conrail countered with a one-sentence letter from BFI stating that BFI continued to work with Conrail on the proposed project. CPO also offered evidence that BFI refused to become involved in the abandonment proceedings, would not fund the study of proposed waste-loading sites and had a corporate policy prohibiting it from developing projects that face serious community opposition, as the Highline apparently did. CPO also introduced into the record a demolition contractor's bid to remove the Highline for $6,728,000 and informed the ICC that it had offered to indemnify Conrail for any demolition expenses in excess of seven million dollars. CPO argued that "[t]his should effectively put to rest Conrail's claim that granting CPO's abandonment application would force Conrail to incur demolition costs in any amount over $7 million." JA at 596. The New York parties argued that the Highline was a safety hazard, there was no real demand for rail service over the line and the Highline impeded revitalization projects in the area.

In September 1992, the ICC issued its decision permitting abandonment of the Highline. It concluded that Conrail's proposed use of the Highline for waste haulage was neither practicable nor economically feasible. Order, 8 I.C.C.2d at 73-83. In evaluating economic feasibility, the ICC considered, among other things, land acquisition costs, payback periods for the land of five and ten years and demolition costs. Three estimates of demolition cost were considered: CPO's offer to indemnify for costs above $7 million, CPO's initial estimate of $11 million and Conrail's estimate of $34 million. The ICC found that the proposed waste haulage plan...