Preseault v. I.C.C.

• Decision Date: 04 August 1988
• Docket Number: No. 764,D,764
• Citation: 853 F.2d 145
• Parties: J. Paul PRESEAULT and Patricia Preseault, Petitioners, v. INTERSTATE COMMERCE COMMISSION and the United States of America, Respondents. State of Vermont, Agency of Transportation, and City of Burlington, Vermont and Vermont Railway, Inc., Intervenors. ocket 87-4117.
• Court: U.S. Court of Appeals — Second Circuit

Page 145

853 F.2d 145

J. Paul PRESEAULT and Patricia Preseault, Petitioners, v. INTERSTATE COMMERCE COMMISSION and the United States of America, Respondents State of Vermont, Agency of Transportation, and City of Burlington, Vermont and Vermont Railway, Inc., Intervenors.

No. 764, Docket 87-4117.

United States Court of Appeals Second Circuit.

Argued Feb. 22, 1988.

Decided Aug. 4, 1988.

Richard E. Davis, Barre, Vt. (Richard E. Davis Associates, Inc., T. Christopher Green, of counsel), for petitioners.

Louis Mackall, Washington, D.C. (Robert S. Burk, Gen. Counsel, I.C.C., Ellen D. Hansen, Associate Gen. Counsel, Roger J. Marzulla, Acting Asst. Atty. Gen., Jacques Gelin, Mark L. Pollot, Attys., Dept. of Justice, of counsel), for I.C.C. and U.S.

John K. Dunleavy, Montpelier, Vt. (Jeffrey L. Amestoy, Atty. Gen., Vt. John T. Leddy, of counsel), for intervenors.

Before FEINBERG, Chief Judge, PRATT, Circuit Judge, and JOSEPH M. McLAUGHLIN, District Judge for the Eastern District of New York, sitting by designation.

GEORGE C. PRATT, Circuit Judge:

Concerned about the disintegration of our national rail system due, in part, to abandonment of rail corridors, congress called for a study on establishing a "rail bank" consisting of selected abandoned railroad rights-of-way. Railroad Revitalization and Regulatory Reform Act of 1976, Sec. 809, P.L. 94-210, Title VIII, 90 Stat. 144 (codified as amended at 49 U.S.C. Sec. 10906 (1980)). One significant impediment to the preservation of rail corridors has been that much railroad right-of-way is held by easement only and, under the laws of some states, once rail service is discontinued such easements automatically expire and the rights-of-way revert to adjacent property owners.

To address this problem, congress enacted 16 U.S.C. Sec. 1247(d) as part of the 1983 Trails Act Amendments in order (1) to preserve for possible future railroad use rights-of-way that are not currently in service and (2) to allow interim use of the rail corridors as recreational trails. When a rail corridor is "rail banked" for future use and made available for interim use as a trail under this statute state property laws are preempted and any reversionary interest in the corridor does not vest, even though rail service is discontinued.

This case tests whether the statute, by so preempting state property law, works a taking without just compensation in violation of the fifth amendment of the United States Constitution.

I. Procedural Background.

Petitioners Paul and Patricia Preseault are Vermont landowners who claim to hold a reversionary interest in a railroad right-of-way adjacent to their land. Claiming that title to the right-of-way reverted to them in 1975, or earlier, when Vermont Railway discontinued rail service over that route, the petitioners, along with other adjacent land owners, sought a declaratory judgment from the Superior Court of Chittenden County that the easement had been abandoned and was extinguished. On review of the superior court's dismissal, the Vermont Supreme Court held that, because the railway had not been authorized by the Interstate Commerce Commission ("ICC") to abandon or discontinue service on any part of the railroad line, the railway was still under ICC jurisdiction and, thus, the state court lacked jurisdiction to make any determination regarding the issue of abandonment. Trustees of the Diocese of Vermont v. State, 145 Vt. 510, 496 A.2d 151 (Sup.Ct.1985).

The property owners next filed a petition with the ICC seeking a certificate of abandonment with respect to the rail line. Vermont responded that it holds title to the railroad right-of-way in fee simple or, in the alternative, that there would be no reversion while the right-of-way was still employed for a public purpose, even if the state's interest is an easement. In 1962 the state of Vermont acquired from the Rutland-Canadian Railway Company whatever interest Rutland had in the right-of-way and then leased the right-of-way to Vermont Railway, Inc., which operated a railroad across the land until about 1970. While the property owners' petition was still pending the State of Vermont and Vermont Railway, Inc., filed a notice seeking a "class exemption" for the abandonment or discontinuance of out-of-service lines under 49 C.F.R. 1152.50 and indicated Vermont's intention to enter into an interim trail use agreement with the City of Burlington pursuant to 16 U.S.C. Sec. 1247(d).

By a Notice of Exemption decided January 2, 1986, the ICC granted an exemption to the State of Vermont and Vermont Railway, Inc., allowing the railway to discontinue service over the North Burlington branch rail line between mile post 124.687 and mile post 122.910. The ICC also approved the agreement between the State of Vermont and the City of Burlington for interim trail use under 16 U.S.C. Sec. 1247(d), noting that the state did not seek to abandon any properties, but only to discontinue service. At the same time, the ICC dismissed the property owners' petition for a certificate of abandonment. This appeal followed.

Petitioners do not argue on appeal that the ICC incorrectly interpreted Sec. 1274(d),--indeed, they concede that the statute required the result that the ICC reached. Instead petitioners contend that the statute itself is unconstitutional. Therefore, we need not discuss the statutory question except to note that the ICC's interpretation and application of the statute, through its regulations and through its order in this case, are fully consistent with congress's expressed intent.

II. Jurisdiction.

We reject the argument advanced by the ICC that this court lacks jurisdiction over petitioners' facial challenge to the constitutionality of 16 U.S.C. Sec. 1247(d). Under 28 U.S.C. Sec. 2342

The Court of Appeals * * * has exclusive jurisdiction to enjoin, set aside, suspend (in whole or in part), or to determine the validity of * * * (5) all rules, regulations, or final orders of the Interstate Commerce Commission made reviewable by Sec. 2321 of this title and all final orders of such Commission made reviewable under Sec. 11901(j)(2) of Title 49, United States Code.

This ICC order is reviewable under Sec. 2321 which provides:

Except as otherwise provided by an Act of Congress, a proceeding to enjoin or suspend, in whole or in part, a rule, regulation or order of the Interstate Commerce Commission shall be brought in the courts of appeals * * *.

No act of congress specifically provides for jurisdiction in the district courts to review ICC actions. Thus, this court clearly has exclusive jurisdiction to review the ICC's orders, rules, and regulations interpreting statutes, see National Wildlife Federation, et al. v. ICC, 850 F.2d 694 (D.C.Cir.1988); Washington State Department of Game v. ICC, 829 F.2d 877 (9th Cir.1987), and the ICC does not dispute this. Rather, the ICC argues that, because it cannot rule on the facial constitutionality of its own governing statutes, this court, in reviewing an ICC order, cannot consider petitioners' challenge to the constitutionality of 16 U.S.C. Sec. 1247(d), which is presented for the first time on this appeal. According to the ICC, while this court may consider challenges--including challenges on constitutional grounds--to the ICC's own regulations and rules, any challenge to the constitutionality of the statute may be brought only in the district court. As authority for this proposition, the ICC relies primarily on a dictum in a footnote in State of Texas v. United States and ICC, 730 F.2d 409, 419 n. 42 (5th Cir.1984), amended, 749 F.2d 1144, reh'g denied, 756 F.2d 882, cert. denied, 472 U.S. 1032, 105 S.Ct. 3513, 87 L.Ed.2d 642 (1985). Because petitioners' claim for review is exclusively based on challenges to the constitutionality of the statute, rather than on the ICC's interpretation of the statute, the ICC's position, if valid, would effectively prevent review of its order in this proceeding.

A party seeking judicial review of administrative action may, ordinarily, "draw in question the constitutionality" of the statute under which the agency acted. Fleming v. Nestor, 363 U.S. 603, 607, 80 S.Ct. 1367, 1370, 4 L.Ed.2d 1435 (1960). An order of the ICC based on the plain wording of a statute--even where the constitutionality of the statute is beyond the power of the ICC to adjudicate--is nonetheless a decision of the ICC for the purposes of judicial review, and the reviewing court may consider a constitutional challenge to the statute as it affects the validity of the order. Cf. Weinberger v. Salfi, 422 U.S. 749, 764, 95 S.Ct. 2457, 2466, 45 L.Ed.2d 522 (1975). Even where judicial review of agency decisions has been prohibited by statute, challenges to the constitutionality of the underlying statute have been permitted. See Johnson v. Robinson, 415 U.S. 361, 94 S.Ct. 1160, 39 L.Ed.2d 389 (1974) (38 U.S.C. Sec. 211(a), which prohibits review of administrator's decisions, did not prohibit action which challenged the constitutionality of veterans' benefits legislation); Califano v. Sanders, 430 U.S. 99, 97 S.Ct. 980, 51 L.Ed.2d 192 (1977) ("constitutional questions are obviously not suited to resolution in administrative hearing procedures and, therefore, access to the courts is essential to the decision of such questions." Id. at 109, 97 S.Ct. at 986).

The ICC suggests that petitioners' facial challenge to the constitutionality of Sec. 1247(d) should be brought in a federal district court under 28 U.S.C. Secs. 1331 and 1337. Indeed, district courts do have jurisdiction to hear constitutional challenges to statutes where no administrative action has yet been taken. Public Utilities Comm'n of Cal. v. United States, 355 U.S. 534, 540, 78 S.Ct. 446, 450-51, 2 L.Ed.2d 470 (1958) (where challenging the constitutionality of a statute in an administrative procedure would be futile, "the administrative agency may be defied and judicial relief sought as the only effective way...