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People v. United States and Interstate Commerce Commission

decided: October 5, 1981.


Petition for Review of an Order of the Interstate Commerce Commission.

Before Sprecher and Cudahy, Circuit Judges, and East, Senior District Judge.*fn*

Author: Cudahy

Petitioners*fn1 seek review of an I.C.C. Decision permitting the Missouri Pacific Railroad ("MoPac") to abandon 25.7 miles of railroad in southern Illinois. The Administrative Law Judge ("ALJ") initially denied the abandonment application.*fn2 A panel of the I.C.C. disagreed and issued a Report and Order approving the abandonment.*fn3 On appeal by way of a petition to review the I.C.C.'s order, this court permitted a voluntary remand to the full I.C.C. for further consideration. The subsequent Decision of the full Commission,*fn4 which also approved the abandonment, is now before this court for review of: 1) Whether the I.C.C. erred as a matter of law about the effect on the abandonment of certain prior conditions imposed by the I.C.C. incident to a prior MoPac merger, 2) Whether the I.C.C. findings of fact are supported by substantial evidence, and 3) Whether this court has jurisdiction to review an I.C.C. decision to withhold certain documents under the Freedom of Information Act. For the reasons stated below, we deny the petition challenging the I.C.C.'s decision of April 21, 1980.

I. Facts

In 1967, a hotly contested battle for stock ownership of the Chicago & Eastern Railroad ("Eastern") was resolved when the Supreme Court upheld the I.C.C.'s award of conditional purchase authority to MoPac rather than to the competing Illinois Central Gulf Railroad ("IC") in the "Control case".*fn5 Shortly thereafter, Eastern acquired trackage rights over a MoPac line, permitting through traffic to be routed around the 25.7 miles of track at issue in this case. In 1972, Eastern filed to abandon this track but the hearing was enjoined until the I.C.C. could include an environmental impact study in its deliberations.*fn6 Due to the staleness of the record, a de novo hearing was scheduled for June 3, 1976. Eastern petitioned for reconsideration, arguing that the record was adequate to dispose of the issues. The I.C.C. granted the petition, cancelled the de novo hearing, and, on April 21, 1976, released the ALJ's Initial Decision denying the abandonment.*fn7

The Initial Decision suggested that the decline in rail traffic on the line was at least partially attributable to Eastern's shortage of railroad equipment. Further, rerouting traffic over the MoPac line was found to have contributed to the financial losses on the line. Finally, the ALJ held that the I.C.C.-imposed conditions in the Control case conflicted with the proposed abandonment.

Eastern filed exceptions to the adverse decision, and the I.C.C. reopened the proceeding under a modified procedure whereby written evidence is submitted to update the record. Shortly thereafter, Eastern was merged into MoPac,*fn8 and the relevant conditions imposed in the Control case were continued.*fn9 After the I.C.C. reopened the abandonment proceeding, MoPac was substituted for Eastern as the petitioner. On March 24, 1978, an I.C.C. panel released its Report and Order.

The Report and Order approved the 25.7 mile abandonment. The I.C.C. panel found that the railroad was sustaining losses in providing service over the line and that traffic was declining. Further, the panel found that appellant Tammsco, Inc., the largest shipper along the line, could find alternate rail service. Finally, the I.C.C. stated:

We turn now to the two factors the Administrative Law Judge found decisive. Neither supports a denial of the abandonment application. First, there is no basis for the assumption that, if additional equipment were available, the line would generate substantially more traffic. Secondly, our approval of the MoPac-C&EI merger, without specific routing conditions, served to eliminate the two restrictions which the Administrative Law Judge felt had been violated.

354 I.C.C. at 796. The Report and Order of March 24, 1978, concluded that the adverse effect on shippers did not outweigh the carrier's burden, and therefore, that the abandonment of the 25.7 mile line should be granted. After petitions for administrative review were denied, an appeal to this court was terminated by a voluntary remand to the I.C.C. to correct material error and receive further evidence.

A divided Commission again approved the abandonment in the April 21, 1980, Decision of the full I.C.C. The carrier's losses were recalculated under a new accounting procedure. The potential for future increases in traffic from petitioner-appellant Tammsco, Inc. was also considered and found to be too speculative "to support the conclusion that there is a reasonable likelihood of future traffic increases eliminating the existing operating deficit being incurred by the line."*fn10 Finally, with regard to the merger conditions, the I.C.C. explained:

We have considered the parties' arguments regarding the effect of the traffic conditions imposed in the Merger case and conclude that those conditions have no relevance to the issues in this proceeding. The traffic conditions imposed in the Merger case (known as standard DT&I conditions) are designed to protect the interests of connecting railroads. These conditions require that gateways and junctions with connecting lines be kept open and that neutrality of handling inbound and outbound traffic be observed. These conditions do not apply to a railroad's routing of traffic over its own lines through its internal gateways. Use of an alternate route for bridge (or through) traffic is a matter of managerial discretion. Missouri Pac. R. Co. Abandonment, 324 I.C.C. 357, 366 (1965). Further, continued operation of a line should not be required merely because of bridge traffic that can be handled as expeditiously over another route. Gainesville Midland R. Co. Abandonment, 267 I.C.C. 256, 262 (1947).

At the time the traffic conditions were originally imposed in the Control case, the involved C&EI line connected with MoPac and connected with ICG at Tamms. In 1975, ICG discontinued the interchange at Tamms. After approval of the MoPac-CE&I merger in the Merger case, the MoPac-CE&I gateways became MoPac internal gateways. Therefore, although the Merger case continued to impose the standard DT&I conditions, these conditions are not relevant to operations over the abandonment segment because alternate MoPac routes are available which can handle bridge traffic with equal or greater efficiency and economy. MoPac's decision in late 1976, to start routing bridge traffic over other MoPac routes was a proper exercise of managerial discretion and did not violate the traffic conditions.

I.C.C. Decision at 9-10.

Since the I.C.C. Decision, a petition to reopen the abandonment was denied in 1980. A petition for review by this court was filed and the matter argued on June 1, 1981. After briefing, but prior to the argument, petitioners filed a motion to have the I.C.C. reopen the proceedings in light of further ...

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