Phillips Co. v. Southern Pacific Rail Corp., Civ. A. No. 93-Z-1461.

• Decision Date: 02 October 1995
• Docket Number: Civ. A. No. 93-Z-1461.
• Citation: 902 F. Supp. 1310
• Court: U.S. District Court — District of Colorado
• Parties: The PHILLIPS COMPANY, a Colorado Limited Partnership, Plaintiff, v. SOUTHERN PACIFIC RAIL CORPORATION, a Delaware corporation, The Denver and Rio Grande Western Railroad Company, Inc., a Delaware corporation, and Southern Pacific Transportation Company, a Delaware corporation, Defendants.

902 F. Supp. 1310

The PHILLIPS COMPANY, a Colorado Limited Partnership, Plaintiff, v. SOUTHERN PACIFIC RAIL CORPORATION, a Delaware corporation, The Denver and Rio Grande Western Railroad Company, Inc., a Delaware corporation, and Southern Pacific Transportation Company, a Delaware corporation, Defendants.

Civ. A. No. 93-Z-1461.

United States District Court, D. Colorado.

October 2, 1995.

George Maurice Allen, Herbert S. Klein, Herbert S. Klein, P.C., Telluride, CO, for Phillips Co.

William D. Watson, John Robert Webb, Holme Roberts & Owen, LLC, Denver, CO, for Denver and Rio Grande Western Railroad Company, Southern Pacific Rail Corporation.

ORDER GRANTING SUMMARY JUDGMENT

WEINSHIENK, District Judge.

This case arises through plaintiff's claim against defendant The Denver and Rio Grande Western Railroad Company, Inc. ("D & RGW") under 43 U.S.C. § 912 ("Section 912") to ownership of a portion of D & RGW's railroad right-of-way as a result of an alleged abandonment. Plaintiff alleges that the abandonment occurred prior to October 4, 1988. The date of any abandonment is of importance because the provision of Section 912 under which plaintiff claims was amended effective October 4, 1988 by the passage of 16 U.S.C. 1248(c).

In August, 1993, D & RGW moved to dismiss plaintiff's complaint on the basis that the alleged abandonment could not have occurred without authorization by the Interstate Commerce Commission ("ICC") under 49 U.S.C. § 10903(a) ("Section 10903"), which D & RGW asserted had not been granted. Plaintiff has never asserted that the ICC authorized abandonment under Section 10903.

The Court referred that motion to United States Magistrate Judge Abram, who recommended that the case be dismissed. Rather than accepting that recommendation, the Court followed the suggestion of plaintiff and referred the issue of whether abandonment had occurred prior to October 4, 1988, to the ICC by Order dated January 4, 1994, pursuant to 28 U.S.C. § 1336(b). The Court referred this matter to the ICC because there was case law concerning railroad abandonment, particularly Allard Cattle Co. v. Colorado & S.R. Co., 33 Colo.App. 39, 516 P.2d 123 (1973), aff'd, 187 Colo. 1, 530 P.2d 503 (1974), in which the ICC was not mentioned.

Thereafter, the Phillips Company filed a document captioned Application for Abandonment with the ICC. After both procedural and substantive objections by the D & RGW to processing of the filing as an abandonment application, the ICC issued an Order on August 22, 1994, ordering that the Phillips Company's ICC filing be handled as a declaratory order matter, rather than as an adverse abandonment matter.

In response to the Court's referral, on April 4, 1995 the ICC issued a decision (the "ICC Decision", Finance Docket No. 32518). A copy of the ICC Decision is attached. Based on the ICC Decision, defendants¹ moved for judgment on the pleadings. The Court treated the motion as a motion for summary judgment and has considered the parties' briefs, as well as oral argument presented on September 20, 1995.

As the referring Court under 28 U.S.C. § 1336(b), this District Court has jurisdiction to review the ICC's decision (which is a Final Order of the ICC) under both 28 U.S.C. § 1336(b) and 28 U.S.C. § 1398(b).

The ICC has determined the issue of abandonment by stating clearly, "D & RG cannot be found to have abandoned the line under 43 U.S.C. 912 and 16 U.S.C. 1248(c). That is so because the commission has never exercised its authority at 49 U.S.C. 10903 to permit the abandonment." (ICC Decision, p. 4.) The ICC has written a very detailed decision drawing a bright line. The bright line is that abandonment under Section 912 could occur only after ICC approval of abandonment under Section 10903. The ICC noted that Section 10903 and 16 U.S.C. § 1247(d), "reflect a Congressional policy of regulating the termination of service and the dismantling of right of way, a policy that would be jeopardized under Phillips' theory that de facto abandonment enables a court to authorize transfer of the line under 43 U.S.C. 912." (ICC Decision, p. 6.) The decision goes on to say that "Phillips' theory would in effect create a system of dual jurisdiction over abandonments for large segments of the nation's rail system under which anyone with a reversionary interest in railroad right of way could circumvent our jurisdiction by obtaining an abandonment ruling in a state or federal court. Indeed, under Phillips' theory, railroads could terminate their service obligation without our consent simply by ceasing service and getting a court to declare that the property reverted because service had been abandoned de facto." Id.

Extensive case law prescribes that when a court reviews an agency's construction of a statute within the jurisdiction of that agency, it has to look first of all as to whether Congress had directly spoken to the precise issue. If the intent of Congress is clear, the court can look no further, for the court as well as the agency must give effect to the unambiguous intent of Congress. However, if the court determines that Congress has not addressed directly the precise question at issue, then the court does not impose its own construction of the statute. Rather, if the statute is silent or ambiguous with respect to the specific issue, the sole question for the court is whether the agency's answer is based on a permissible construction of the statute. Chevron, U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 842-43, 104 S.Ct. 2778, 2781-82, 81 L.Ed.2d 694 (1984). The Tenth Circuit in Rubio-Rubio v. Immigration and Naturalization Service, recognized the heavy burden to show that an administrative agency reached "an impermissible construction." 23 F.3d 273, 276 (10th Cir.1994).

The ICC has decided that the railroad property could not have been transferred to plaintiff under Section 912 before the ICC authorized abandonment of the line under Section 10903. Section 10903 is a statute within the jurisdiction of the ICC. Congress has not directly spoken to the interplay of Section 912 and Section 10903. This case is apparently one of first impression as to the interplay between the reversion provisions of 43 U.S.C. § 912 and those provisions of the Interstate Commerce Act providing for regulatory authority as to abandonment of rail service under 49 U.S.C. § 10903. The ICC bright line rule that abandonment under Section 912 cannot occur without ICC permission to abandon under Section 10903 is not arbitrary and capricious. The Court finds the ICC interpretation reasonable, and will defer to that reasonable interpretation.

Plaintiff challenges the ICC decision by claiming that D & RGW submitted a false Verified Statement to the ICC. The Court notes that the language of the ICC's April 18, 1995 Order, under the heading "Issues Raised by the Parties" references a Verified Statement filed by a D & RGW witness as follows: "DRGW admits that rebuilding would be necessary to restore service but argues that Phillips has overstated the extent that would be required. DRGW witness James L. Ozment estimates that, based on observations made in July 1993, an expenditure of $30,000 could repair the line between Mid Continent and Woody Creek for minimal freight service." The court need not address this claim because the ICC Decision does not rely on this Verified Statement or, for that matter, any other factual issue beyond the undisputed fact that the ICC has not authorized abandonment.

Plaintiff also complains that the ICC improperly treated the referral as a declaratory rather than an abandonment proceeding. The Court finds the ICC Decision resolves the issue referred by the Court. Nothing in this Order either precludes plaintiff from commencing a new ICC proceeding for a decree of prospective abandonment under Section 10903 or resolves any question as to plaintiff's standing to commence such a proceeding.

Accepting the ICC analysis of the interplay of Section 912 and Section 10903, the Court will grant defendants' motion for summary judgment.

ACCORDINGLY, it is ordered that:

1. Defendants' Motion for Judgment on the Pleadings, heard by this Court as a motion for summary judgment, is granted.

2. Plaintiff's complaint in this matter is dismissed with prejudice.

3. This order is stayed until October 1, 1995.

4. Each party shall bear its own costs.

APPENDIX

INTERSTATE COMMERCE COMMISSION DECISION

Finance Docket No. 32518

THE PHILLIPS COMPANY — PETITION FOR DECLARATORY ORDER

Decided: April 4, 1995

We find that the Denver & Rio Grande Western Railroad Company (DRGW) has not obtained Commission approval under 49 U.S.C. 10903 to abandon its Aspen Branch line and that an abandonment may not take place without that approval. As a result, we need not reach the issue referred to us of whether DRGW abandoned service de facto before October 4, 1988, within the meaning of 16 U.S.C. 1248(c) and 43 U.S.C. 912.

BACKGROUND

The Phillips Company of Pitkin County, CO (Phillips) owns and operates a mobile home park adjacent to DRGW's Aspen Branch line. The Aspen Branch line extends in a southeast direction from its main line connection at milepost 360.10 at Glenwood Springs, CO, to milepost 393.66 at Woody Creek, CO. Phillips' property is at milepost 390. A 7.895-mile segment of the line from Woody Creek to Aspen was abandoned in 1968.

In 1992, DRGW discovered that Phillips' mobile home park had encroached upon a portion of its right-of-way. In an attempt to quiet title, Phillips filed a complaint in a Federal district court on July 12, 1993, asking the court to find that the railroad had abandoned the line and to declare that title to the right-of-way reverts to Phillips under 43 U.S.C. 912.¹ Under this provision, when a court decrees that a railroad right-of-way is no longer used and occupied for railroad purposes, title to the land passes to the adjacent landowner.

Phillips admitted in court that the...