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Parties Involved:
CSX Transportation, Inc.
Petitioner
Interstate Commerce Commission
Terminated Party
Pardee Curtin Lumber Company
Intervenor
Surface Transportation Board
Respondent
United States of America
Respondent
West Virginia Rail Authority
Intervenor

Document Text:

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1 Effective January 1, 1996, the ICC Termination Act of 1995, Pub. L. No. 104-88, 109 Stat.

803 (1995), abolished the Interstate Commerce Commission and transferred many of its functions

to a newly created Surface Transportation Board. On March 4, 1996, this court substituted the

Surface Transportation Board for the Interstate Commerce Commission as respondent in this

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued September 11, 1996 Decided October 11, 1996

No. 95-1513

CSX TRANSPORTATION, INC.,

PETITIONER

v.

SURFACE TRANSPORTATION BOARD AND

UNITED STATES OF AMERICA,

RESPONDENTS

WEST VIRGINIA RAIL AUTHORITY AND

PARDEE CURTIN LUMBER COMPANY,

INTERVENORS

On Petition for Review of an Order of the

Surface Transportation Board

Charles M. Rosenberger argued the cause for Petitioner, with whom R. Lyle Key, Jr. was on the

briefs.

TheodoreK. Kalick, Attorney, Surface TransportationBoard, argued the cause for respondents, with

whom Anne K. Bingaman, Assistant Attorney General, United States Department of Justice,

Catherine G. O'Sullivan and Andrea Limmer, Attorneys, were on the brief. Henri F. Rush, General

Counsel, and Craig M. Keats, Associate GeneralCounsel, Surface Transportation Board, were also

on the brief.

Francis G. McKenna, Special Attorney General, State of West Virginia, was on the brief for

intervenors West Virginia States Rail Authority and Pardee Curtin Lumber Company.

Before: EDWARDS, Chief Judge, HENDERSON and ROGERS, Circuit Judges.

Opinion for the Court filed by Chief Judge EDWARDS.

EDWARDS,Chief Judge: CSX Transportation, Inc. ("CSXT" or "petitioner"), a major railroad

company, operates a rail line between Tygart Junction and Bergoo, West Virginia. In January of

1995, CSXT applied to the Interstate Commerce Commission ("ICC")1to abandon the rail line. On

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case. 

2 Economic or "opportunity" cost represents "the economic loss experienced by the railroad

from foregoing a more profitable alternative use of its assets." See Baltimore & Ohio R.R. v.

I.C.C., 826 F.2d 1125, 1126 n.1 (D.C. Cir. 1987). 

July 11, 1995, after hearings before an administrative law judge ("ALJ"), the ICC found that public

convenience and necessity precluded abandonment of the rail line and denied CSXT's application.

See CSX Transportation, Inc.AbandonmentIn Barbour, Randolph, Pocahontas, and Webster

Counties, WV, Docket No. AB-55 (Sub-No. 500) 33-34 (ICC served July 11, 1995) (hereinafter

CSXT decision of July 11). On August 10, 1995, the ICC rejected CSXT's administrative appeal of

the July decision. See CSX Transportation, Inc.AbandonmentIn Barbour, Randolph,

Pocahontas, and Webster Counties, WV, Docket No. AB-55 (Sub-No. 500) 4 (ICC served August

10, 1995) (hereinafter CSXT decision of August 10). In its petition for review, CSXT claims that the

ICC decision finds no support in the record insofar as it declines petitioner's request to abandon the

portion of the line running from Elkins to Bergoo.

We agree with petitioner that the record lacks substantial evidence to support the ICC's

findingsregarding the Elkins-Bergoo railsegment. At the time when petitioner sought abandonment,

the segment had produced no revenue for more than a year; there were no credible projections for

rail traffic over the segment in the future; and it was undisputed that continued operation of the line

would force CSXT to incur substantial opportunity costs.2 Moreover, the ICC's denial of the

abandonment request in this case flies in the face of ICC precedent regarding speculative rail traffic.

Finally, as was noted by Government counsel during argument before the court, the ICC gave "a

promise of remedy" to petitioner if, in one year's time, no traffic materialized on the Elkins-Bergoo

line. No traffic has materialized, and, in the face of this reality, Government counsel acknowledged

that the court could appropriately remand the case to the agency for entry of an order granting

petitioner's requested abandonment.

For these reasons, we grant the petition for review, reverse the decision of the ICC, and

remand the case to the STB with instructions to grant petitioner's application to abandon the ElkinsBergoo segment.

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I. BACKGROUND

The rail line that CSXT initially sought to abandon comprises over 122.89 miles of track and

spans a mountainous region of West Virginia between Tygart Junction and Bergoo. From Tygart

Junction, the line travels southeast for 28.4 miles, where it passes through Elkins, West Virginia.

From Elkins, the line heads south, coming to a dead end at Bergoo.

In August of 1993, CSXT applied to the ICC for permission to abandon the Tygart-Bergoo

rail line; later, after hearing projections of increased rail traffic in the coming year, CSXT withdrew

the request. However, when the projected increased traffic never materialized, CSXT determined

that profitability from the line was unlikely in the near future. In January of 1995, CSXT submitted

a new application to abandon the Tygart-Bergoo rail line.

Upon receiving CSXT's new application, the ICC ordered an investigation by an ALJinto the

proposed rail abandonment. The ALJ conducted hearings, during which protests were voiced by

some local residents, shippers, and members of West Virginia's congressional delegation. Over the

course ofthe hearings, the ALJ developed an extensive record, which included written statements and

oraltestimonyfromnumerous CSXT officials and fromlocalresidents and businesspeople. One local

businessman, Charles Kelly, claimed that three coal-mining companies were interested in re-opening

Elkhead 1, a coal mine in Monterville, West Virginia. See Verified Statement of Charles J. Kelly

(sworn to on Feb. 24, 1995), reprinted in Joint Appendix A249-52. Elkhead 1 sits close to the dead

end of the rail line, near Bergoo, and it is the only potential business for the rail line between Elkins

and Bergoo.

In addition to calling for a hearing, the ICC requested CSXT to submit separate financial

information on the 28.4 mile Tygart-Elkinssegment of the rail line. The agency clearly distinguished

between the Tygart-Elkins and Elkins-Bergoo segments of the Tygart-Bergoo line, apparently

because the traffic patterns were quite different on each segment of the line. See CSX

Transportation, Inc.AbandonmentIn Barbour, Randolph, Pocahontas, and Webster Counties,

WV, Docket No. AB-55 (Sub-No. 500) 3 (ICC served March 13, 1995) (hereinafter CSXT decision

of March 13). CSXT provided separate revenue and cost information both for the Tygart-Elkins

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segment and for the Elkins-Bergoo segment. At the time of the ICC's request, some rail traffic

existed over the Tygart-Elkins segment, but there was no business on the Elkins-Bergoo segment.

On July 11, 1995, after considering the record developed by the ALJ and financial data

submitted on the line and its segments, the ICC denied CSXT's application. See CSXT decision of

July 11 at 34. However, the ICC decision included a proviso that, with respect to the Elkins-Bergoo

segment, if no rail traffic materialized in a year's time, the ICC would be receptive to and would

expeditiously consider a new application for abandonment by CSXT. See id. at 33.

CSXT administratively appealed the ICC's decision to deny abandonment of the ElkinsBergoo segment. The ICC rejected CSXT's appeal. See CSXT decision of August 10 at 4. CSXT

now petitionsfor review in this court, contending that the record lackssubstantial evidence to support

the ICC's denial of its request to abandon the Elkins-Bergoo segment.

II. ANALYSIS

We review the ICC's decision to ensure that it is supported by substantial evidence in the

record. See 5 U.S.C. § 706(2)(E) (1994). Having reviewed the record in this case, we conclude that

there is no credible evidence to support the ICC's decision to deny CSXT's abandonment of the

Elkins-Bergoo segment.

It is undisputed that, although CSXT first filed an application for abandonment of the entire

Tygart-Bergoo line, the ICC bifurcated the case so as to give separate consideration to the TygartElkins and Elkins-Bergoo segments. Before making its decision, the ICC invited CSXT to provide

separate financial data for these segments. See CSXT decision of March 13 at 4. The ICC also

considered and commented on each segment separately, dividing the "Discussion and Conclusions"

section of its opinion into separate headings for the "Bifurcated Segment" (the Tygart-Elkins

segment) and "The Elkins-Bergoo Segment." See CSXT decision of July 11 at 30-33. The

Commission ruled explicitly, "[W]e will deny the abandonment of the Elkins to Bergoo Segment...."

Id. at 33. The ICC ultimately concluded that, with respect to the Elkins-Bergoo segment, CSXT

should re-apply for abandonment in a year'stime if no rail traffic materialized. See id. The ICC made

no such proviso for the Tygart-Elkins segment. In our review of this case, we address only the ICC

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decision to deny abandonment of the Elkins-Bergoo segment.

In determining whether to allow the abandonment, the ICC was required to weigh the

inconvenience that might be suffered byshippers and affected communitiesifthe line were abandoned

against the costs that would be incurred by the railroad and interstate commerce if the line continued

in operation. See Colorado v. United States, 271 U.S. 153, 168 (1926). The ICC found that public

convenience and necessity precluded CSXT's abandonment of the Elkins-Bergoo segment, but there

was no record evidence justifying this conclusion. Rather, the record indicates that the burdens that

would befallCSXT in maintaining a line that drew no revenues, had no reasonable prospectsfor new

business, and incurred considerable opportunity costs substantially outweighed any hypothesized

burdensthat might be suffered by shippers and the public as a result of an abandonment of the ElkinsBergoo segment. Indeed, the agency's judgment to the contrary makes no sense in light of the record

that was before it.

Everything in this case points to the conclusion that CSXT's petition to abandon the ElkinsBergoo segment should have been granted. First, CSXT acted responsibly in addressing the matter.

The company originally applied for abandonment but, after hearing projections for increased rail

traffic, withdrew its application to avoid precipitous action. Not until a year later, when no new rail

traffic had materialized, did CSXT resubmit an application for abandonment of the line. Second, the

only businessserviced by the Elkins-Bergoo railsegment wasthe Elkhead 1 coalmine. The mine has

been closed since late 1994, and there is no real prospect of its reopening. Third, no other business

that will provide revenue to CSXT exists between Elkins and Bergoo. Finally, it is undisputed that

CSXT will continue to incur substantial opportunity costs absent an abandonment of the ElkinsBergoo segment. Financial data submitted to the ICC by CSXT placed economic loss from the

Elkins-Bergoo segment at $357,252 for the coming year. See CSXT decision of August 10 at 2-3.

This court has held that opportunity costs are relevant to abandonment applications. See Association

of Am. R.Rs. v. I.C.C., 846 F.2d 1465, 1467 (D.C. Cir. 1988).

Against the weight of this record in favor of abandonment, the ICC relied on only one

apparent considerationthe idle speculations of a local businessmanin rejecting CSXT's petition

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for abandonment. The businessman, Charles Kelly, testified that three coal-mining companies

expressed some ill-defined interest in operating Elkhead 1. At oral argument before this court, when

pressed on this point, Government counsel could point to no other basis for the ICC's decision, and

this court can find nothing else in the record. This lack of evidence is quite telling, because Kelly's

testimony is a promise of nothing, offering neither a commitment nor even a concrete proposal for

the operation of Elkhead 1. His claim that there were coal-mining companies interested in the mine

seems at best fanciful, especially since no such companies presented themselves to the ICC. CSXT

can hardly be expected to run a business on these terms, and Kelly's statements surely do not come

close to outweighing the case made by CSXT for abandonment.

The ICC's denial of the abandonment of the Elkins-Bergoo segment also flies in the face of

ICC precedent. We could find no case, and counsel could point us to none, where abandonment has

been denied on a similar record. Indeed, the ICC has granted abandonment even in circumstances

where there has been some traffic on the line to be abandoned. For example, in NewYork Cent. R.R.

Abandonment, 282 I.C.C. 283 (1952), the ICC approved an abandonment application even though

there were shippers available and in operation. The question there was whether the shippers could

offer enough business to make the line profitable. See id. at 288-90. In this case, there are no

shippers along the Elkins-Bergoo segment, and the segment produces no revenue whatsoever.

Finally, it is undisputed that the ICC gave CSXT "a promise of remedy" if no rail traffic

materialized on the Elkins-Bergoo segment. No rail traffic has materialized, further evidencing that

CSXT's request for abandonment of the Elkins-Bergoo segment should be granted.

In short, we find that the record lacks substantial evidence to support the ICC's decision to

deny CSXT's abandonment of the rail line between Elkins and Bergoo. It may be that, in granting

CSXT a "promise of remedy" if no rail traffic materialized within a year, the ICC understood that

there was no substantial evidence to support its decision. In any event, given the record at hand, it

comes as no surprise that no rail business materialized on the Elkins-Bergoo segment in the year

following the ICC's decision. Whatever else may be said about this case, it is clear that the "promise

of remedy" is now due. It is also clear that CSXT should have been given a remedy when they first

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asked for it, so it would be unfair to require the company to return to the agency for another round

of litigation.

III. CONCLUSION

For the reasons set forth above, the petition for review is granted. The decision of the ICC

is reversed, and the case is remanded to the Surface Transportation Board with instructions to grant

CSXT's request to abandon the Elkins-Bergoo segment.

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