Village of Palestine v. I.C.C.
| Decision Date | 28 June 1991 |
| Docket Number | No. 90-1418,90-1418 |
| Citation | 936 F.2d 1335 |
| Parties | VILLAGE OF PALESTINE, City of Robinson, Willow Hill Grain, Inc., and Patrick W. Simmons, Petitioners, v. INTERSTATE COMMERCE COMMISSION and United States of America, Respondents, Indiana Rail Road Company, Illinois Central Railroad Company, Intervenors. |
| Court | U.S. Court of Appeals — District of Columbia Circuit |
Petition for Review of an Order of the Interstate Commerce Commission.
Gordon P. MacDougall, Washington, D.C., and Frank J. Weber, Robinson, Ill., for petitioners.
Laurence H. Schecker, Atty., I.C.C., with whom Robert S. Burk, Gen. Counsel, Henri F. Rush, Deputy Gen. Counsel, I.C.C., James F. Rill, Asst. Atty. Gen., John J. Powers, III, and John P. Fonte, Attys., Dept. of Justice, were on the brief, Washington, D.C., for respondents.
John H. Broadley, Washington, D.C., entered an appearance for intervenor, Indiana R.R. Co.
Robert H. Wheeler, Washington, D.C., entered an appearance for intervenor, Illinois Cent. R. Co.
Before SILBERMAN, WILLIAMS and RANDOLPH, Circuit Judges.
Opinion for the Court filed by Circuit Judge RANDOLPH.
The Village of Palestine and others petition for review of an order of the Interstate Commerce Commission exempting a sale of rail lines and trackage rights from 49 U.S.C. Secs. 11343 and 11344(d). 1 The dispute centers on the meaning of 49 U.S.C. Sec. 10505(a), the provision authorizing the Commission to exempt transactions, and the extent to which this provision requires the Commission to evaluate each of the legislative goals collectively designated the "rail transportation policy" (49 U.S.C. Sec. 10101a). Petitioners also challenge the Commission's factual findings made in support of the exemption.
The sale of a rail line or trackage rights between a class I rail carrier and a class II or class III rail carrier normally requires Commission approval after a full-blown proceeding. See 49 U.S.C. Secs. 11343(a)(2) & (6), 11344(d), 11345. 2 The parties to the sale file an application and the Commission publishes a notice of the transaction in the Federal Register. Id. Sec. 11345(a). The public may comment on the application for 30 days after publication of the notice. Id. After reviewing the public's comments, the Attorney General and the Secretary of Transportation may choose to intervene as parties to the proceeding. Id. Sec. 11345(c)(1). The Commission may order public hearings or require written submissions from the parties. 49 C.F.R. Sec. 1180.4(e). The parties have between 105 days and 24 months to complete this evidentiary process, depending on how the rail carriers involved in the sale are classified. Id.
Based on the evidence received, the Commission must approve the sale unless it finds that the transaction will likely have an anticompetitive effect. 49 U.S.C. Sec. 11344(d)(1). If the Commission so finds, it still must approve the sale unless "the anticompetitive effects of the transaction outweigh the public interest in meeting significant transportation needs." Id. Sec. 11344(d)(2); see Illinois v. ICC, 687 F.2d 1047, 1053 (7th Cir.1982).
The Commission must exempt a transaction otherwise subject to full procedural review under sections 11343 and 11344(d) if two conditions are satisfied. 49 U.S.C. Sec. 10505(a). The first condition is that application of sections 11343 and 11344(d) is not necessary to carry out the "rail transportation policy" of 49 U.S.C. Sec. 10101a, which is reproduced fully in the appendix to this opinion. 49 U.S.C. Sec. 10505(a)(1). The second is that the sale "is of limited scope," or application of sections 11343 and 11344(d) is not "needed to protect shippers from the abuse of market power." 49 U.S.C. Sec. 10505(a)(2). Obtaining an exemption streamlines the regulatory process by eliminating notice and comment in some cases, by making a hearing unnecessary, and by expediting the final decision. See 45 Fed.Reg. 85,180-81 (1980).
This case concerns a petition filed by Indiana Rail Road and Illinois Central on September 28, 1989, for an exemption from sections 11343 and 11344(d). Subject to Commission approval, Illinois Central agreed to sell 90.3 miles of track to Indiana Rail Road. The rail lines are in two segments, one running from Sullivan, Indiana, to Newton, Illinois, the other from Newton to Browns, Illinois. Illinois Central also agreed to sell 16.2 miles of trackage rights along connecting lines. In a separate agreement not at issue here, and subject to Commission approval, Indiana Rail Road agreed to resell the Newton-Browns segment of the line to Garden Spot, a limited partner of Indiana Hi-Rail Corporation. So that Indiana Hi-Rail could operate pending Commission approval of the resale, it negotiated an interim agreement with Indiana Rail Road for assignment of trackage rights over the Newton-Browns segment. With respect to the assignment, Hi-Rail obtained another Commission exemption, the validity of which is not at issue here.
The Commission received 53 comments either opposing or raising concerns about Illinois Central's sale of the rail lines and trackage rights. Many of the commenters, including local and county governments, chambers of commerce, affected railroad employees, and railroad employee organizations, requested a local hearing. While not required to do so, the Commission assigned the exemption petition to an administrative law judge for hearing. The hearing occurred in Robinson, Illinois, on May 2, 1990; 33 witnesses testified and 11 others submitted written statements. The testimony opposing the transaction focused on Indiana Rail Road's ability to supply sufficient services, the elimination of 19 local railroad jobs, the considerable reduction in pay for those railroad employees who choose to continue working on the rail line under Indiana Rail Road's management, and the impact of a financially unstable railroad on the local economy.
The administrative law judge found, and the Commission later agreed, that the sale would not result in an abuse of market power. 49 U.S.C. Sec. 10505(a)(2)(B). Indiana Rail Road would transport a variety of goods, provide an adequate supply of rail cars for grain shippers, and maintain neutral access to several railroads offering long-haul transportation services. The administrative law judge also found that the transaction would foster rather than hamper competition, one of the central objectives of the rail transportation policy (49 U.S.C. Sec. 10101a(1), (4), (5), & (13)) and section 11344(d). The Commission adopted this finding as well. The administrative law judge decided, however, that exempting the sale from application of sections 11343 and 11344(d) would be inconsistent with other goals stated in the rail transportation policy. He found that the sale would not further fair working conditions (49 U.S.C. Sec. 10101a(12)) and, citing no particular subsection of the policy, that Illinois Central could operate the line better than Indiana Rail Road. On that score, the Commission reversed. It held that the administrative law judge's finding of no anticompetitive effect was enough to satisfy the rail transportation policy in this case. 3
The principal issue concerns the meaning of section 10505(a)'s command that "the Commission shall exempt ... a transaction ... when the Commission finds that the application of a provision of this subtitle--(1) is not necessary to carry out the transportation policy of section 10101a of this title...." Petitioners misread this language. They say it requires the Commission, in order to grant an exemption, to review the fifteen subsections in section 10101a, determine which might be implicated by the transaction, and make findings that the transaction is consistent with each. But section 10505(a)(1) does not ask whether the "transaction" implements the rail transportation policy. It focuses, as one might expect in a statute aimed at deregulation (CMC Real Estate Corp. v. ICC, 807 F.2d 1025, 1031 (D.C.Cir.1986); see also Central States Motor Freight Bureau, Inc. v. ICC, 924 F.2d 1099, 1100-01 (D.C.Cir.1991)), on the need for regulation.
Not every provision of the Interstate Commerce Act regulating railroads and the Staggers Rail Act (Pub.L. No. 96-448, 94 Stat. 1895 (1980)) implements each one of section 10101a's many goals. That would be a legislative impossibility. Different means must be employed to accomplish different ends. Section 10505(a)(1) simply assumes that the "provision of this subtitle," whichever it may be, carries out at least some portion of section 10101a's rail transportation policy. Since a section 10505(a) exemption may be granted only from "a provision of this subtitle," rather than from the statute as a whole, see Illinois Commerce Comm'n v. ICC, 787 F.2d 616, 627 (D.C.Cir.1986), one must first decide in what respect the "provision" implements the rail transportation policy. Only then can it be determined whether application of the provision is "necessary" to carry out that aspect of the policy in a particular case. Put differently, if a provision does not implement a particular goal set forth in the rail transportation policy, it follows in the language of section 10505(a) that application of the provision is not necessary to carry out that goal. The scope of the Commission's review in an exemption proceeding will therefore be a function of the "relationship between" the "section" from which an exemption is sought and "the national rail transportation policy...." Brae Corp. v. United States, 740 F.2d 1023, 1046-47 (D.C.Cir.1984), cert. denied, 471 U.S. 1069, 105 S.Ct. 2149, 85 L.Ed.2d 505 (1985).
Although petitioners believe that Illinois Commerce Commission, 787 F.2d at 630-31, supports them, it is far from clear why. The Commission there had granted an exemption from the abandonment provisions (49 U.S.C. Secs. 10903,...
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