Georgia Public Service Com'n v. U.S.

• Decision Date: 02 May 1983
• Docket Number: No. 82-8643,82-8643
• Citation: 704 F.2d 538
• Parties: GEORGIA PUBLIC SERVICE COMMISSION, et al., Petitioners, v. UNITED STATES of America and Interstate Commerce Commission, Respondents.
• Court: U.S. Court of Appeals — Eleventh Circuit

Page 538

704 F.2d 538

GEORGIA PUBLIC SERVICE COMMISSION, et al., Petitioners, v. UNITED STATES of America and Interstate Commerce Commission,

Respondents.

No. 82-8643.

United States Court of Appeals, Eleventh Circuit.

May 2, 1983.

Michael J. Bowers, Atty. Gen., Robert S. Stubbs, III, H. Perry Michael, J.O. Llewellyn, Thomas D. Watry, Asst. Attys. Gen., Atlanta, Ga., for Georgia Public Service Com'n and Georgia Dept. of Transp.

John P. Tucker, Jr., Atlanta, Ga., and Oliver H. Doss, Jr., Blue Ridge, Ga., for Fannin County, Ga., Zyrian Stone, Inc., City of Blue Ridge, Ga., and Mason Tractor Co., Inc.

John H. Broadley, Robert J. Grady, I.C.C., Washington, D.C., Frederic Freilicher, John J. Powers, III, Dept. of Justice, Washington, D.C., for respondents.

R. Lyle Key, Jr., Asst. Gen. Sol., Family Lines Rail System, John Wilson Humes, Jr., Asst. Gen. Atty., Jacksonville, Fla., for intervenor L & N R. Co.

Thomas H. Davis, Jr., Raleigh, N.C., for intervenor petitioner North Carolina Dept. of Transp.

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

Before GODBOLD, Chief Judge, KRAVITCH, Circuit Judge, and TUTTLE, Senior Circuit Judge.

KRAVITCH, Circuit Judge:

Petitioners ¹ appeal from the decision of the Interstate Commerce Commission ("ICC") permitting the abandonment by the Louisville and Nashville Railroad Company ("L & N") ² of a railroad line known as the "Murphy Branch." ³ We must decide whether the decision to permit the abandonment is unsupported by substantial evidence, or is "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law; ...." 5 U.S.C. Sec. 706(2)(A). We also must resolve several procedural questions. We reverse, finding that under either of the above standards the record does not support the determination of the ICC. ⁴

Abandonment

L & N filed an application seeking authority to abandon the Murphy Branch on December 31, 1981. By initial decision of May 28, 1982, the Administrative Law Judge ("ALJ") denied the application, and L & N appealed to the Commission. On September 10, 1982, the Commission reversed its ALJ and granted the abandonment. Petitioners filed an appeal in this court. They moved for a stay pending judicial review, which motion was denied without prejudice. Several Petitioners also appealed to the Commission for rehearing. On November 22, 1982, the ICC affirmed its previous decision. ⁵ Following oral argument we granted a stay of the abandonment and any ancillary proceedings. ⁶

The Revised Interstate Commerce Act permits a railroad to abandon any part of its railroad lines subject to ICC jurisdiction upon a finding by the Commission that the "present or future public convenience and necessity require or permit the abandonment...." 49 U.S.C. Sec. 10903(a). In making its finding the ICC specifically is charged with considering whether the abandonment will have a "serious, adverse impact on rural and community development." Id. If these requirements are met the ICC "shall issue to the rail carrier a certificate [of abandonment]." Id. (b)(2).

Courts consistently have held that a finding of public convenience or necessity involves balancing competing interests: "[t]he benefits to particular communities and commerce of continued operation must be weighed against the burden thereby imposed upon other commerce." Colorado v. United States, 271 U.S. 153, 168, 46 S.Ct. 452, 456, 70 L.Ed. 878, 885 (1926). E.g., State of Texas v. United States, 642 F.2d 87, 90 (5th Cir.1981) ⁷; State of Nebraska v. United States, 255 F.Supp. 718, 721 (D.Neb.1966). As we stated in State of Texas v. United States, 642 F.2d at 90:

The Commission's role in abandonment proceedings is to balance the immediate and local interests of the community and the shippers against the broader public interest in freeing interstate commerce from undue burdens. The ICC must consider whether the branch line is profitable or whether it imposes a drain on other income, as well as the likely expense of continued operation, ....

(citation omitted). Balancing requires the ICC to take into account a number of relevant factors, including the profitability of the line and the expense of continued operation, Purcell v. United States, 315 U.S. 381, 384, 62 S.Ct. 709, 710, 86 L.Ed. 910, 914 (1942), the likelihood of the line's future profitability, People of the State of Illinois v. United States, 666 F.2d 1066, 1079 (7th Cir.1981); State of Texas, 642 F.2d at 89, the availability of alternative transportation, People of the State of Illinois, 666 F.2d at 1080; State of Texas, 642 F.2d at 89, and the congressionally mandated examination of the harm to rural communities. 49 U.S.C. Sec. 10903(a). This appeal challenges the Commission's review of these factors.

L & N filed an application for abandonment with the ICC because it determined that the line was not profitable, was unlikely to become profitable in the future, and that the resources spent in maintaining service could better be utilized elsewhere on the system. The abandonment was protested vigorously by numerous state and municipal governmental agencies and shippers. The Protestants argued L & N deliberately downgraded service on the line over a period of time and refrained from soliciting, or actually discouraged, additional shippers so the line would not become profitable. Protestants further asserted that business on the line had steadily increased despite difficult economic times, and would become profitable upon improvement of the economy, if not sooner. Protestants expressed the fear that once L & N abandoned the Murphy Branch, it would proceed to abandon its main line into the area, that line having been deprived of any revenue from the Murphy Branch. Finally, Protestants claimed that as no alternative transportation for their industries existed the industries would likely be driven out of business, thereby causing great harm and loss of jobs to this rural area already suffering from severe economic depression.

Based on the evidence submitted as verified statements, and upon cross-examination on the record, the ALJ ruled against the railroad, denying the certification of public convenience and necessity necessary for abandonment. The ALJ accepted L & N's contention that the Murphy Branch was not profitable, explicitly stating that "[n]othing stated above should be taken to infer than L & N should be, or can be, required indefinitely to continue to provide service on the Line at an annual deficit. Under the statute, indeed under the constitution, such a requirement could not long be imposed." The ALJ found, however, that "from a cost, service and availability standpoint the shippers located [on the Murphy Branch] have no viable transportation alternative, and the fact that traffic on this Line is on the rise and not on the decline," (emphasis supplied).

The ALJ specifically addressed the impact of the abandonment on "rural and community development" noting that "[i]t is reasonable to conclude that the Congress [by specifying this criterion in the statute] attached more than a passing importance to this factor." Based on the testimony the ALJ found that in the face of abandonment "[t]he pulpwood and decorative stone industries in the communities would be virtually destroyed.... Even if these businesses were able to survive by relocating, as suggested by applicant, they would be lost to these communities."

The Commission found otherwise. It termed the financial burden on L & N, around $200,000 a year including opportunity costs, to be "substantial." It also found that the extent of future traffic potential was unsubstantiated on the record. The ICC thus concluded:

... a number of shippers might be forced to close or relocate as a result of the loss of L & N's rail access, and local communities may also be harmed to some extent as a result of the loss of employment and tax revenues which these industries provide. However, we find on the evidence before us, that the substantial burden on the carrier in continuing service outweighs the potential adverse effects on shippers and local communities which may result from abandonment.

Review

Our review of the Commission's decision is limited by the breadth of discretion accorded the ICC in determining when an abandonment is in the public convenience or necessity. State of Texas v. United States, 642 F.2d at 89; cf. Bowman Transportation, Inc. v. Arkansas-Best Freight System, Inc., 419 U.S. 281, 292, 95 S.Ct. 438, 445, 42 L.Ed.2d 447, 460 (1974) (public convenience and necessity to transport commodities). It is the conclusion of the Commission alone that we review. State of Texas, supra at 89. We may only overturn the decision if it is unsupported by substantial evidence, 5 U.S.C. Sec. 706(2)(E), or if it is "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law." Id. (A). ⁸

Although the parties agree generally with the scope of our review, they differ on the effect of the Commission's reversal of its ALJ. Petitioners argue that our scrutiny must be critical in the areas where the Commission differed with the ALJ, and that the differences must be clearly explained. It is the position of Respondents that the Commission is free to draw its own conclusions from the record and apply its expertise in weighing the evidence.

The "substantial evidence" test takes into account not only evidence supporting the conclusions of the ICC, but evidence which detracts from those conclusions as well. Universal Camera v. NLRB, 340 U.S. 474, 486, 71 S.Ct. 456, 463, 95 L.Ed. 456, 467 (1951); McHenry v. Bond, 668 F.2d 1185, 1190 (11th Cir.1982). Part of the record we review is the initial decision of the ALJ. Id. That does not mean that when the record is susceptible of two interpretations we will readily overturn the Commission in those situations where it differs from the ALJ. However,

evidence supporting a conclusion may be less substantial when an...