Tri-B Corporation, Shelby, Iowa v. ICC

• Decision Date: 29 April 1966
• Docket Number: Civ. No. 3-649-W.
• Citation: 253 F. Supp. 715
• Parties: TRI-B CORPORATION, SHELBY, IOWA, Farmers Elevator, Inc., Shelby, Iowa, Albert Schirm, Walnut, Iowa, Van Nostrand Grain Co., Avoca, Iowa, Farmers Cooperative Creamery, Avoca, Iowa, Farmers Savings Bank, Shelby, Iowa, Town of Shelby, Iowa, and Iowa State Commerce Commission, Plaintiffs, v. INTERSTATE COMMERCE COMMISSION and the United States of America, Defendants, and Chicago, Rock Island and Pacific Railroad Company, Intervenor.
• Court: U.S. District Court — Southern District of Iowa

253 F. Supp. 715

TRI-B CORPORATION, SHELBY, IOWA, Farmers Elevator, Inc., Shelby, Iowa, Albert Schirm, Walnut, Iowa, Van Nostrand Grain Co., Avoca, Iowa, Farmers Cooperative Creamery, Avoca, Iowa, Farmers Savings Bank, Shelby, Iowa, Town of Shelby, Iowa, and Iowa State Commerce Commission, Plaintiffs, v. INTERSTATE COMMERCE COMMISSION and the United States of America, Defendants, and Chicago, Rock Island and Pacific Railroad Company, Intervenor.

Civ. No. 3-649-W.

United States District Court S. D. Iowa, W. D.

April 29, 1966.

Manning Walker, Avoca, Iowa, Leo J. Steffen, Des Moines, Iowa, for plaintiffs.

Thomas H. Ploss, Washington, D. C., for defendants.

B. A. Webster, Jr., Des Moines, Iowa, Thomas I. Megan, Chicago, Ill., for intervenor.

Before JOHNSEN, Circuit Judge, and STEPHENSON and HANSON, District Judges.

HANSON, District Judge.

This is an action by the plaintiffs to enjoin the defendants under Title 28, U. S.C., Section 2323.

The following facts are admitted:

On September 12, 1963, the railroad filed with the Interstate Commerce Commission its application for abandonment of a line extending in a westerly direction from Avoca to Shelby, a distance of 8.39 miles, and in an easterly direction from Avoca to Walnut, a distance of 6.40 miles.

"That after protestants filed their resistance to said application, a hearing was held at Council Bluffs, Iowa, on January 20 and 21, 1964, before Examiner Hyman J. Blond; and as a result of which hearing, said examiner filed his written recommendations, consisting of twelve pages, in which said examiner recommended that Division 3 of the Interstate Commerce Commission find that the present and future public convenience and necessity had not been shown to permit the abandonment of the branch lines by the railroad company.

"That thereafter the applicant railroad company filed exceptions to the Examiner's recommendations, to which exceptions reply was duly made by these protestants and the matter was considered by Division 3 of the Interstate Commerce Commission without benefit of oral argument and on the 6th day of October, 1964, a decision and order of Division 3 was issued and in which the following finding was made:

`That the evidence considered in the light of the exceptions and the reply thereto does not warrant a result different from that reached by the hearing examiner; that the statement of facts, and conclusions and findings of the hearing examiner, being proper and correct in all material respects, should be, and they are hereby, affirmed and adopted as our own.'

And the Division ordered:

`That the order of the hearing examiner, served May 11, 1964, recommending that the application be denied be, and it is hereby, adopted as the order of the Commission, Division 3, and that applicant's request for oral argument be, and it is hereby, denied.'

"That thereafter on the 26th day of October, 1964, a document entitled `Notice to the parties' was served upon these plaintiffs wherein it was stated that the order served on October 6, 1964, had no force and effect.

"That thereafter Division 3 of the Interstate Commerce Commission issued a Report of the Commission dated December 10, 1964, permitting abandonment by the railroad company of those portions of its branch line between Shelby and Walnut, Iowa.

"That thereafter these plaintiffs filed a petition for reconsideration and for further hearing and requesting oral argument * * * and under service date of February 4, 1965, a document entitled `Notice to the parties' was issued by the Interstate Commerce Commission staying the effective date of the Certificate and Order dated December 10, 1964, pending disposition of the protestants' petition for reconsideration and further hearing.

"Thereafter under service date of March 25, 1965, Division 3 of the Interstate Commerce Commission acting as an appellant division issued an order denying the protestants' petition for reconsideration and further hearing.

"That thereafter the protestants, these plaintiffs, filed a petition for Commission determination of the presence of issue of general transportation importance and requested oral argument thereon.

"The Interstate Commerce Commission issued an order denying said petition and making the effective date of Certificate and Order of December 10, 1964, effective twenty days from the service date thereof."

(1) The plaintiffs allege that the I. C.C. (Interstate Commerce Commission) lacked jurisdiction to change its decision of October 6, 1964, in that (a) it was beyond the statutory authority of the I.C.C.; (b) it was changed without notice to the parties; (c) that no party excepted to the October 6, 1964, Order or requested reconsideration; and (d) that it violates the rules of administrative law relating to finality of process.

(2) The plaintiffs allege that the decision of the I.C.C. is contrary to the facts established in the record. Eleven specific errors are alleged.

(3) The plaintiffs allege that the I.C.C. decision violated due process in that (a) hearing and oral argument on the reconsideration was denied; and (b) the decision was contrary to the facts.

(4) The plaintiffs allege that the I.C.C. erred in its ultimate conclusion issuing the Certificate which is contrary to the facts.

(5) The plaintiffs allege that the decision of the I.C.C. exceeded its power and is so arbitrary as to transcend the powers conferred upon it.

The scope of review in railroad abandonment cases is well settled. See Moeller v. Interstate Commerce Commission, 201 F.Supp. 583 (S.D. of Iowa).

The scope of authority committed to the I.C.C. is to determine the past and future public necessity and convenience. Burlington Truck Lines v. United States, 371 U.S. 156, 167, 83 S.Ct. 239, 9 L.Ed.2d 207; Title 49, Section 1(18).

With reference to the track in question, the Examiner found that due to continuous deferment of maintenance work, the line's condition is generally poor. The stations on the line in question are non-agencies at Walnut, population 777, and Shelby, population 533. These stations are operated by the agent at Avoca which is 6.3 miles from Walnut and 8.5 miles from Shelby. The Chicago Great Western Railway operates within 17 miles of Walnut and 6 miles from Shelby. Shelby and Walnut are served by Iowa Highway 83, a county highway which transverses Avoca.

During the past five years freight service has been operated over the line on a tri-weekly schedule. Railroad service at Walnut is utilized by a grain elevator, a retailer of lumber and building materials, and a produce and feed dealer; and at Shelby, by two grain elevators, a lumber dealer, and a coal merchant.

The Examiner found the railroad sustained a loss of $10,513.00 in 1961, a loss of $7,862.00 in 1962, and a loss of $1,971.00 for the first six months of 1963. Evidence is also noted by the Examiner which tended to show what the costs would be to the railroad in maintaining the line. The Examiner further found that these costs about equal the property tax that must be paid even if the line is abandoned; that the effect of operation of the line has been near the break even point; and that prospects for future traffic on the line is not dim and immediate foreseeable expenditures would not be inordinate.

The Commission reversed the Examiner and allowed the abandonment. Principally, the Commission differed with the Examiner on foreseeable expenditures. The Commission found that such expenses would be large in the future and require abandonment. They concluded that if the line would have to be abandoned in the near future, it would not be reasonable to require the expensive overpass to be built. The overpass does not have to be built if the line is abandoned. The Commission also found that the railroad would save large expenses while losing only a small amount of revenue since the products would be shipped to Avoca by railway and from there to Shelby and Walnut by truck and vice versa. The Commission found that the abandonment would not leave the area without adequate transportation.

The dissenting Commissioner felt that where two segments of a line are to be abandoned the evidence as to each of them should be considered separately before it can be said that the entire line should be abandoned. He cites Southern Pac. Co. Abandonment, 320 I.C.C. 38.

It is also undisputed in the record that the abandonment would put some burden on the local business served by the present line. When such is the case, the benefit of the abandonment must be weighed against this burden. Moeller v. Interstate Commerce Commission, supra; State of Colorado v. United States, 271 U.S. 153, 168, 46 S.Ct. 452, 70 L.Ed. 878; Burlington Truck Lines v. United States, supra; Southern R. Co. v. North Carolina, 376 U.S. 93, 84 S.Ct. 564, 11 L.Ed.2d 541. In this case the Commission did weigh the conflicting interests, and although this court might well have reached a contrary conclusion, it cannot be said there was a lack of substantial evidence to support the Commission's findings. Accordingly, the decision of the Commission cannot be said to be against the evidence and arbitrary or capricious in any respect.

It is necessary also that the decision of the Commission be based on the proper standards and criteria, I.C.C. v. J-T Transport Co., 368 U.S. 81, 93, 82 S.Ct. 204, 7 L.Ed.2d 147, but the court cannot say that the Commission improperly considered any of the standards or criteria. See Title 49 U.S.C., Sections 18, 19, 20, and 21.

The Commission has some discretion in this field. Pennsylvania R. Co. v. United States, 40 F.2d 921 (D.C.Pa.); State of North Carolina v. United States, 124 F.Supp. 529 (D.C.N.C.). The question of partial abandonment was considered in Creston Grain & Lumber, Inc. v. United States, D.C., 214 F.Supp. 840. The Commission has the authority to allow partial or complete abandonment of the line in question. There is evidence as a whole to support the decision of the...