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Central Ill. Light Co. v. Commerce Com.

MARCH 12, 1973.




APPEAL from the Circuit Court of Peoria County; the Hon. EDWARD E. HAUGENS, Judge, presiding.


Alton and Southern Railroad, together with forty five other railroads (hereinafter railroads) filed a petition with the Illinois Commerce Commission on August 26, 1968, requesting that the Commission permit an increase in Illinois intrastate rates. The Commission granted the petition and rehearing and reconsideration was requested by four electrical utilities, Central Illinois Light Co., Central Illinois Service Co., Illinois Power Co. and Electrical Energy Inc., hereinafter referred to as the intervenors. After the petitions of the intervenors for rehearing were finally denied by the Commission on September 17, 1969, the intervenors commenced this action in the Circuit Court of Peoria County seeking review of the Commission's order. The railroads moved for dismissal of the action claiming the time for seeking judicial review had expired and the motion to dismiss the action was granted by the Circuit Court of Peoria County. On review to the Illinois Supreme Court at the instigation of the intervenors, the judgment of the Circuit Court of Peoria County was reversed in Central Ill. Light Co. v. Commerce Com., 47 Ill.2d 257, 265 N.E.2d 154, and remanded to the Circuit Court for further proceedings. Such further proceedings were held resulting in a judgment of the Circuit Court that the order of the Commission was invalid and the cause was remanded to the Commission for further proceedings. The judgment of the court holding the Commission's order invalid has been appealed to this court by the railroads and the Commission.

On June 24, 1968, at the request of the nation's railroads the Interstate Commerce Commission granted a general interim 3% rate increase in interstate freight rates. Requests for additional increases were postponed for further consideration but were later granted in January, 1969.

In August, 1968, forty six railroads doing an intrastate freight business in Illinois petitioned the Illinois Commerce Commission seeking approval of their tariff schedule 259A which represented increases in intrastate freight rates similar to those approved for interstate freight rates by the Interstate Commerce Commission in June, 1968. Tariff schedule 259A was approved finally on September 17, 1969 and is the only order subject to this appeal. Later, the railroads in a subsequent proceeding, sought approval of their tariff schedule 259B representing increases similar to those allowed in the final order of the Interstate Commerce Commission in January, 1969. The order of the Illinois Commerce Commission approving tariff schedule 259B is the subject of another appeal pending in this court in case number 72-111 and although involving similar questions it will be dealt with separately.

The first assignment of error urged by appellants is that the intervenors had no standing to seek review of the Commission's order since such order is not reviewable as such. According to the appellants, parties dissatisfied with a general rate order are required to institute administrative proceedings questioning the reasonableness of a particular rate or category of rates. In support of this contention appellants cite the construction of Federal statutes containing similar provisions as applied in Atlantic City Electric Co. v. United States (1969), 306 F. Supp. 338, (because of an equal division of the Court this case was affirmed without opinion in Atlantic City Electric Co. v. United States (1970), 91 S.Ct. 259, and (1971), 91 S.Ct. 579.)

• 1 We believe the intervenors do have standing to seek judicial review of the Commission order for several reasons. First and foremost we believe the prior Supreme Court case (Ill. Central Light Co. v. Commerce Com., 47 Ill.2d 257, 265 N.E.2d 154) is res judicata on this issue. The absence of any standing on the part of the intervenors to maintain the legal action could and should have been urged as an additional reason supporting the action of the trial court in dismissing the complaint for judicial review. The failure of the appellants to raise such issue before the Supreme Court at a time when the resolution of such issue was appropriate now precludes them for questioning the right of the intervenors to maintain the action.

• 2 Additionally we believe the language of section 72 (Ill. Rev. Stat. 1969, ch. 111 2/3, par. 72) authorizes the judicial review sought by the intervenors. In so far as is pertinent said section provides, "Within 30 days after the service of any order or decision of the Commission * * * any person or corporation affected by such rule, regulation, order or decision may appeal to the circuit court * * *". The statute authorizing judicial review makes no distinction between the types of action of the Commission which may be reviewed. This issue does not appear to have been raised in any prior Illinois case apparently because the language of the statute is so broad that problems were not thought to exist. In Village of Apple River v. Commerce Com., 18 Ill.2d 518, 165 N.E.2d 329, for example, numerous municipalities sought review of a Commission order increasing telephone rates even though such municipalities made no claim concerning the unreasonableness of a particular rate or rate category.

The railroads and Commission on this appeal argue the order included sufficient findings to justify the result and the trial court erred in holding to the contrary. In seeking to have the order of the Commission set aside, the intervenors made two basic but related contentions. First, the order of the Commission did not make sufficiently specific findings of fact and second, the Commission failed to determine and reflect in its order necessary factors relating to the propriety of Illinois intrastate freight rates i.e. rate base of assets used in connection with intrastate freight, the income and expenses attributable to intrastate freight transportation and finally the rate of return attributable to assets devoted to intrastate freight transportation.

• 3-5 The principle regarding review of orders of the Illinois Commerce Commission are well settled. It is sufficient to say that the order of the Commission should be deemed prima facie true and correct, the legislative expertise of the Commission should be given substantial deference and finally the order of the Commission should be approved unless unsupported by evidence or contrary to some rule of law. Illinois Bell Telephone Co. v. Commerce Com., 414 Ill. 275, 111 N.E.2d 329.

The increased intrastate freight rates were sought by or on behalf of forty six railroads. Financial data and exhibits relating to the operations of fifteen of the railroads were presented before the Commission, a major portion of such evidence being presented by Halpin, a cost witness employed by the Western Railroad Traffic Association. The evidence relating to this group of fifteen railroads concerned systemwide operations without segregation of interstate operations from intrastate operations. This group of railroads represented 90 percent of the total mileage operated in the State of Illinois by all Class 1 and Class 2 line haul carriers.

Evidence was given concerning data, including index numbers relative to the revenue, expenses, net income and ton-miles of freight handled for fifteen of the railroads herein for the first half of the years 1966, 1967 and 1968. As found by the order of the Commission, "The net railway operating income for these selected railroads fell from $226,289,055 in the first half of 1966 to $119,194,098 in the first half of 1968. Based on the index of 100 for the 1966 figure, the index for 1968 is 52.67." The decreases in net operating income were analyzed in terms of their relationship to increased labor costs, increased payroll taxes, increased cost of material and increased local taxation. Of the foregoing factors except for local taxation, the other increased costs were applicable to the operation of the railroads generally and had no particular application to either interstate or intrastate operations. Three major railroads (included in the group of fifteen discussed before) presented evidence describing their rates of return in 1967 on allocated portions of their Illinois properties. The method of allocating the carriers' Illinois investments and expenses was to use a revenue apportionment as between state and interstate traffic revenue.

The basic contention of the intervenors is that there is neither finding of fact nor evidence of the value of assets used or useable in intrastate freight transportation by the three railroads which made any effort to reflect Illinois intrastate operations in their financial statistics. Furthermore, according to the intervenors, even if there was evidence of the Illinois rate base respecting such three railroads there was no such evidence regarding the other twelve railroads which furnished data only on systemwide operations or for the other thirty one railroads which presented no financial information.

Referring to the exhibits of the railroads four, five and fifteen, which were respectively the financial data of Chicago & Eastern Illinois, Chicago, Burlington & Quincy and Illinois Central Railroads, incorporated by reference in the order of the Commission, the order of the Commission observes;

"The Illinois rates of return of these railroads as shown by the aforesaid exhibits were, in 1967, respectively: less than 0, .26% and 2.66%. These aforesaid exhibits are properly admitted into this case and may be considered along with other indicative items to assist this Commission in determining if there is a need on the part of the railroads for additional revenue from intrastate traffic to enable them to realize a fair return on such traffic. The evidence shows that the systemwide rate of return of the Illinois Central was 2.56% before the application of Ex Parte 259 increases (referring to increases approved by Interstate Commerce ...

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