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Cisco Cooperative Grain Co. v. United States

September 15, 1983

CISCO COOPERATIVE GRAIN COMPANY AND PRAIRIE CENTRAL RAILWAY COMPANY, PETITIONERS,
v.
INTERSTATE COMMERCE COMMISSION AND UNITED STATES OF AMERICA, RESPONDENTS; ILLINOIS CENTRAL GULF RAILROAD CO. AND PATRICK W. SIMMONS, ETC., INTERVENING RESPONDENTS.



Petitions for Review of Orders of the Interstate Commerce Commission.

Author: Cummings

Before CUMMINGS, Chief Judge, BAUER, Circuit Judge, and FAIRCHILD, Senior Circuit Judge.

CUMMINGS, Chief Judge. These consolidated petitions for review seek to set aside decisions of the Interstate Commerce Commission ("ICC") addressing the interaction of the feeder railroad development program, 49 U.S.C. § 10910, created by the Staggers Rail Act of 1980, and the abandonment program contained in 49 U.S.C. §§ 10903-10905. Petitionoer Cisco Cooperative Grain Company ("Cisco") sought to acquire under the feeder railroad development program 13.41 miles of track between Cisco, Illinois, and Green's Switch, Illinois ("the Cisco line"). Petitioner Prairie Central Railway Company ("PACY") sought to acquire under the same program 45.2 miles of track between Bloomington, Illinois, and Mason City, Illinois ("the Bloomington line"). After both petitioners had filed notices of intent to purchase the lines under the feeder program in accordance with then-existing ICC regulations, 49 C.F.R. 1128.2(a) (1981), but before they had filed actual applications to purchase, Illinois Central Gulf Railroad Company ("ICG") filed applications to abandon both lines. In a decision served May 10, 1982, the ICC decided that ICG's abandonment application took precedence over Cisco's previously-filed notice of intent to purchase the Cisco line and consequently dismissed it snotice of intent to purchase and rejected its motion to dismiss the abandonment application (Jt. App. 32-35). The next day it served a decision granting ICG's abandonment application for the Disco line (Jt. App. 36-39). On July 23, the ICC served two decisions, dismissing PACY's notice of intent to purchase the Bloomintgon line and granting ICG's abandonment application for that line (Jt. App. 45-45; 48-51). The basis of the ICC decisions dismissing the notices of intent to purchase under the feeder program was that a feeder development purchase application, rather than simply a notice of intent to file an application, is necessary to engage the Commission's jurisdiction under 49 U.S.C. § 10910. An abandonment application, even if filed after a notice of intent to purchase under the feeder program, bars ICC jurisdiction under Section 10910 as long as it is filed before a feeder development purchase application. The Commission therefore dismissed the feeder development proceedings for both Cisco and PACY.

Cisco filed an administrative appeal of the ruling, which was denied (App. 40-44). The Commission, however, did recognize that the dilemma in the present case was caused by its own regulation, which required a party desiring to acquire a line under the feeder railroad development program to file a notice of intent to purchase the line at least 90 days prior to filing an application to purchase. See 49 C.F.R. § 1128.2(a) (1981). Thus ICG was able to defeat the Commission's jurisdiction under the feeder line program by filing an abandonment application during the 90-day waiting period after Cisco filed its notice of intent to purchase. The Commission therefore began an internal review of the regulations, resulting in adoption of new regulations which eliminate the preapplication notice period. See Ex Parte No. 395 (Sub-No. 1), Feeder Railraod Development Program, 48 Fed. Reg. 9649 (March 8, 1983, effective April 7, 1983).

As an alternative means of acquiring the line, Cisco filed an offer of financial assistance in the abandonment proceeding in accordance with 49 U.S.C. § 10905. A purchaser under Section 10905, however, does not receive the same benefits as a purchaser under the feeder program. Under the feeder line statute, the Commission can require the selling carrier to provide the buyer with certain trackage rights and reasonable joint rates. A feeder program purchaser may elect to be exempt from Title 49 except as to joint rates, and may determine preconditions to be met by shippers who want service over the acquired line. These benefits are not available to a purchaser under Section 10905. In accordance with Seciton 10905 procedures, the ICC on August 24, 1982, set the purchase price for the line, and Cisco accepted the terms of purchase without prejudice to its position that it is entitled to purchae the line under the feeder development program. That decision is the subject of an appeal by ICG, also decided today by this Court.See Illinois Central Gulf Railroad Co. v. ICC, 717 F.2d 408 (1983). Cisco's offer of financial assistance postponed the issuance of the abandonment certificate for the Cisco line. PACY's offer of financial assistance for the Bloomington line, on the other hand, was not timely, and its dismissal was not appealed. This Court did, however, issue a partial stay of the abandonment certificate for the Bloomington line on August 26, 1982, which allowed ICG to discontinue service and abandon the line, but prohibited it from removing the track or commencing sale of the real estate (App. 52-53).

The petitions for review ask us to decide if the ICC actions in these cases are in accordance with the governing statute. After the cases were briefed, but before oral argument, Congress passed Section 506 of the Rail Safety and Service Improvement Act of 1982 (RSSIA), Pub. L. No. 97-468, 96 Stat. 2553-2554, which amends 49 U.S.C. § 10910 embodying the feeder railroad development program. Needless to say, the parties dispute the applicability of this amendment; the ICC has been singularly unhelpful in interpreting its impact since the Commission was unable to "reach a majority consensus" on the meaning of the legislative change. We begin our analysis of this case with a discussion of the statutory amendment.

Before the 1983 amendment 49 U.S.C. § 10910(b)(1) provided that the feeder line development program was available to a financially responsible person when

(A)(ii) a railroad line has been placed on a system diagram map as required under Section 10904 of this title, but the rail carrier owning such line has not filed an application to abandon such line under sections 10903 and 10904 of this title; and

(B) an application to purchase such line has been filed * * *.

Under Section 10904, each carrier must maintain a complete diagram of its rail system, including lines potentially subject to abandonment. ICC regulations provide that a line is placed in category 1 on the system diagram map if the carrier anticipates it will be the subject of an abandonment or discontinuance application within three years. All lines potentially subject to abandonment because of anticipated operating losses or excessive rehabilitation costs are placed in category 2. Lines for which an abandonment or discontinuance application is pending before the ICC are placed in category 3. All lines operated under the rail service continuation provisions of Section 10905 or other specified Sections are placed in category 4, and all other lines which the carrier owns and operates fall into category 5. See 49 C.F.R. § 1121.20 (1981). As discussed above, the ICC will take jurisdiction of a feeder line proceeding when the line has beenlisted as an abandonment candidate on the carrier's system diagram map and when a feeder line application, rather than a notice of intent to file an application, has been filed prior to the filing of an abandonment application.*fn1

The amended statute provides for feeder line jurisdiction when

(A)(ii) a railroad line is on a system diagram map as required under section 10904 of this title, but the rail carrier owning such line has not filed an application to abandon such line under sections 10903 and 10904 of this title before an application to purchase such line, or any required preliminary filing

with respect to such application, is filed under ...


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