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CHICAGO, ROCK ISLAND & PACIFIC RAILROAD v. U.S.

May 2, 1962

CHICAGO, ROCK ISLAND AND PACIFIC RAILROAD COMPANY, PLAINTIFF,
v.
UNITED STATES OF AMERICA AND INTERSTATE COMMERCE COMMISSION, DEFENDANTS.



Before Knoch, Circuit Judge, and Hoffman and Parsons, District Judges.

The opinion of the court was delivered by: Parsons, District Judge.

Pioneer Industrial Park, a 340 acre plot of undeveloped farm land situated northwest of Peoria, Illinois, was purchased by the Peoria Industrial Enterprises, Inc., and dedicated by it in September of 1959 for the purpose of attracting new industry to the vicinity of Peoria. Thus far, three businesses have built plants within the Park. In the southeast portion of the Park is the new plant of the C.A. Reed Company. Southwest of the center of the Park lies the new warehouse of the Super-Valu Company. Immediately north of Super-Valu has been built the new plant of the International Paper Company for its Muirson Label Division in the Midwest.

The Park is intersected on the east by a branch line of the Rock Island and Pacific Railroad Company extending from Peoria in a northwesterly direction. During 1960, the Rock Island commenced operations serving the C.A. Reed and Super-Valu Companies. Approximately 1.3 miles west of the Park runs the double track, East St. Louis Chicago main line of the Chicago and North Western Railroad.

Before building in the Park, the International Paper Company approached North Western concerning rail service, and the plant was built with its loading facilities arranged to accommodate a railroad siding from the North Western line. It was the attempt by North Western to begin construction of trackage from Radnor, a junction on its road, to the Muirson Plant that gave rise to this litigation. The proposed trackage is 10,095 feet in length. Six thousand eight hundred and eighty-six (6,886) feet would extend from the switch at Radnor to the boundary of the Park. An additional 2,214 feet would extend within the Park to the Muirson Plant. The estimated cost is $231,900. All but $28,090 of this expenditure already has been made.

In November 1960, Rock Island petitioned the United States District Court for the Southern District of Illinois, Northern Division, to enjoin North Western's construction of the line. The question was whether or not the tracks to be built by North Western were an "extension of its line" or a "spur or industrial track". If it was an "extension of a line", it would be unlawful under 49 U.S.C.A. § 1(18) until North Western had obtained a certificate of convenience and necessity from the Interstate Commerce Commission. On November 15, 1960, the District Court for the Southern District of Illinois found that the trackage constituted an "extension of a line" within the meaning of Paragraph 18, and that construction of the trackage was unlawful until North Western had received the Commission's certificate of convenience and necessity. Chicago Rock Island and Pacific Railroad Company v. Chicago and North Western Railway Company, 188 F. Supp. 549 (D.C.Ill. 1960).

Subsequently, by application filed December 2, 1960, North Western sought the necessary certificate from the Commission. After a hearing before an examiner on February 8 and 9, 1961, the Commission, on September 21, 1961, entered its report and order granting the certificate of public convenience and necessity to the North Western Road. On November 1, 1961, Rock Island petitioned the Commission to reconsider its order, but the Commission denied the petition.

On January 26, 1962, Rock Island filed a complaint in this Court under 28 U.S.C. § 1336, 1398, 2284 and 2321-2325, asking for a three judge court to enjoin and set aside the certification, and alleging that the Commission in granting the application contravened the legislative purpose of Section 1, Paragraph 18, of the Interstate Commerce Act, contravened the National Transportation Policy as set forth immediately preceding that Act, misapplied the law, and ignored judicial and commission precedent.

North Western, the International Paper Company and the Pioneer Industrial Park all intervened. (Rule 24[a] of the Federal Rules of Civil Procedure), 28 U.S.C.A. On January 31, 1962, a temporary restraining order was issued by this Court, the record and briefs were filed, and the matter was argued on April 11, 1962.

The principal question for determination at this time is whether the finding and conclusion of the Interstate Commerce Commission, that public convenience and necessity warrant the proposed extension of the line, was adequately supported by findings based on substantial evidence in the record.

Section 10(e) of the Administrative Procedure Act, 5 U.S.C.A. § 1009, reads as follows:

    "(e) Scope of Review — So far as necessary to
  decision and where presented the reviewing court
  shall decide all relevant questions of law,
  interpret constitutional and statutory provisions,
  and determine the meaning or applicability of the
  terms of any agency action. It shall (A) compel
  agency action unlawfully withheld or unreasonably
  delayed; and (B) hold unlawful and set aside agency
  action, findings, and conclusions found to be (1)
  arbitrary, capricious, an abuse of discretion, or
  otherwise not in accordance with law; (2) contrary
  to constitutional right, power, privilege, or
  immunity; (3) in excess of statutory jurisdiction,
  authority, or limitations, or short of statutory
  right; (4) without observance of procedure required
  by law; (5) unsupported by substantial evidence in
  any case subject to the requirements of sections 7
  and 8 or otherwise reviewed on the record of an
  agency hearing provided by statute; or (6)
  unwarranted by the facts to the extent that the
  facts are subject to trial de novo by the reviewing
  court. In making the foregoing determinations the
  court shall review the whole record or such
  portions thereof as may be cited by any party, and
  due account shall be taken of the rule of
  prejudicial error."

Defendants contend that the scope of judicial review is limited to an examination of the evidence supporting the conclusion reached by the Commission. For example, defendants, United States of America and Interstate Commerce Commission, cite the fifty-year old case, Interstate Commerce Commission v. Union Pacific Railroad Company, 222 U.S. 541, 32 S.Ct. 108, 56 L.Ed. 308 (1912), which held that "the courts will not examine the facts further than to determine whether there was substantial evidence to sustain the order". Other cases cited in defendants' briefs lend support to this restrictive view of the Court's power of review. It is true that prior to 1951, the Courts held that in order to determine if there was substantial evidence supporting the agency's decision, a district court need read only the side of the case for which the Commission had ruled, and, if it found any evidence there, the administrative action would be sustained. The record to the contrary would be ignored. (Report of the Attorney General's Committee 210-211).

Dissatisfaction with this restricted scope of review led to the enactment of the Administrative Procedure Act and the 1947 amendments to the Labor Relations Act. Those statutes contain an express direction to reviewing courts to consider the "whole" record in reaching a determination of whether administrative findings have the required substantial evidentiary support. Despite this, many courts held for several years subsequent to 1947 that the scope of review remained substantially what it had been before the enactment of the two statutes. (See observation in Universal Camera Corp. v. National Labor Relations Board, 340 U.S. 474 at 476, note 1, 71 S.Ct. 456, 95 L.Ed. 456). Still others, while acknowledging the new rule, limited their review to the scope of the old. In 1951, however, the Supreme Court, in two opinions, Universal Camera Corp. v. National Labor Relations Board, 340 U.S. 474, 71 S.Ct. 456, 95 L.Ed. 456 (1951) and National Labor Relations Board v. Pittsburgh S.S. Co., 340 U.S. 498, 71 S.Ct. 453, 95 L.Ed. 479 (1951), unanimously upheld the Court of Appeals for the Sixth Circuit, which had held that the courts' reviewing power had been materially broadened by the Administrative Procedure Act and the 1947 amendments to the Wagner Act. Pittsburgh S.S. Co. v. National Labor Relations Board, 180 F.2d ...


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