Source: https://law.justia.com/cases/federal/appellate-courts/F2/604/519/8017/
Timestamp: 2019-04-18 12:17:00+00:00

Document:
Gordon P. MacDougall, Washington, D. C., James Weging, Asst. Atty. Gen., Commerce Commission Division, Chicago, Ill., for petitioners.
Kenneth P. Kolson, I. C. C., Washington, D. C., for respondents.
Samuel W. Witwer, Jr., Chicago, Ill., for intervenor.
Before CUMMINGS, Circuit Judge, MOORE, Senior Circuit Judge,* and TONE, Circuit Judge.
This petition for review was filed by the State of Illinois, the Illinois Commerce Commission and the United Transportation Union and asks us to set aside and remand the report and order of Division 3 of the Interstate Commerce Commission in Prairie Trunk Railway Acquisition and Operation, 348 I.C.C. 832 (1977). The Brotherhood of Locomotive Engineers intervened on behalf of petitioners and the Baltimore & Ohio Railroad Company (sometimes referred to as B & O), the Prairie Trunk Railway, Trans-Action Associates, Incorporated, the Shawneetown Regional Port District and the Baltimore & Ohio Concerned Citizens of Southern Illinois1 intervened in support of respondents Interstate Commerce Commission and the United States. In all, nine briefs have been filed in this Court in support of the positions taken by the parties and intervenors.
In the Interstate Commerce Commission's decision presently under review, the Commission authorized the Prairie Trunk Railway to acquire and operate the 73.27-mile line2 of the Baltimore & Ohio Railroad Company between Flora and Shawneetown, Illinois. 348 I.C.C. 832. In the same report, as shown Infra, the Commission authorized Prairie Trunk to issue not more than 750,000 shares of no-par value common stock to holding company Trans-Action, authorized Trans-Action to control Prairie Trunk and dismissed the application of the Baltimore & Ohio to abandon the line of railway being acquired by Prairie Trunk.
A different administrative law judge approved the Section 1(18) acquisition proposed by Prairie Trunk subject to (1) the Commission's subsequent approval of an appropriate application under Section 5(2) of the Act6 by Trans- Action to control Prairie Trunk, (2) the Burlington conditions for the protection of railway employees,7 the expense of which was to be borne by the Baltimore & Ohio, and (3) certain other conditions pertaining to the acquisition.
In September 1974, Trans-Action filed an application under Section 5(2) of the Act seeking the Commission's approval for control of Prairie Trunk.
These various matters were consolidated for disposition by the Commission in a single report, and on February 17, 1977, the Commission disposed of them. It found that the present and future public convenience and necessity required the acquisition and operation by Prairie Trunk of the Flora-Shawneetown line of railroad subject to (1) the Burlington conditions for the protection of employees, which cost was to be borne by the Baltimore & Ohio; (2) the placing by Trans-Action of $750,000 in cash or equivalent assets at the disposal of Prairie Trunk; and (3) for a period of five years after the acquisition, no abandonment application could be filed by Prairie Trunk prior to a bona fide offer of resale "to any party to this proceeding at a purchase price no less favorable than the $500,000 to be paid to the Baltimore & Ohio Railroad Company for the acquisition, adjusted to Consumer Price Index changes."8 348 I.C.C. at 854.
"(The Louisiana Midland line) is separated geographically from the southeastern Illinois line of railroad and area of service identified with the proposed Prairie Trunk operation by well in excess of 500 miles. * * * (T)he two railroad operations are so clearly separate and unrelated as to merit our concluding that common ownership and control of Louisiana Midland and Prairie Trunk by Trans-Action will have no adverse competitive effect upon the utilizers of their respective services." 348 I.C.C. at 846.
Finally, the Commission found that the Baltimore & Ohio's application for abandonment should be dismissed and that "this decision is not a major Federal action significantly affecting the quality of the human environment within the meaning of the National Environmental Policy Act of 1969." 348 I.C.C. at 855. Consequently, on the same day the Commission issued a certificate of public convenience and necessity and an order carrying out the Commission's report (J.App. 61-62). We affirm.
In order to obtain the more liberal employee labor protective conditions established in Oregon Short Line R. Co. Abandonment, Goshen, 354 I.C.C. 76 (1977); 354 I.C.C. 584 (1978) and --- I.C.C. --- (1979),10 petitioners mainly argue that Prairie Trunk's acquisition should have been considered by the Commission under Section 5(2) (note 6, Supra) rather than under Section 1(18) of the Act (note 3, Supra) . We disagree.
As far back as 1928, the Supreme Court recognized that Section 1(18) of the Act is applicable to obtain initial interstate operating authority by a non-carrier like Prairie Trunk. Texas & C.R.R. v. Northside Ry., 276 U.S. 475, 479, 480, 48 S. Ct. 361, 72 L. Ed. 661, and Commission cases cited at 480-481, n.1. Accordingly, the Commission has often held that Section 1(18) governs applications by a non-carrier for authority to acquire and operate an existing line of railroad. Acquisition by Frankfurt & Cincinnati R.R., 124 I.C.C. 500 (1927); Iowa Term. R. Co. Acquisition and Operation, 312 I.C.C. 546 (1961); Cadillac & Lake City Ry. Co. Acquisition and Operation, 320 I.C.C. 617 (1964); Northwestern Employees Pur. Chicago & N.W. Ry. Co., 342 I.C.C. 58, 65-66 (1972); Okmulgee Northern Ry. Abandonment, 320 I.C.C. 637 (1964). It is immaterial whether a corresponding abandonment application for the line of track to be acquired has been filed by the existing operating carrier or has been denied. Acquisition by Frankfurt & Cincinnati R.R., supra; Iowa Term. R. Co. Acquisition and Operation, supra; Northwestern Employees Pur. Chicago & N.W. Ry. Co., supra. On the other hand, Section 5(2) is applicable to various purchase transactions between two or more carriers.
Petitioners concede that Section 1(18) is concerned with the acquisition of a line being abandoned by another carrier and acknowledge that the Section 1 (18) proceeding would have been proper for Prairie Trunk's acquisition of this branch line if the Commission had approved abandonment of the line by the vendor Baltimore & Ohio (Nov. 1977 Br. 16, 18-19; United Transportation Union and Brotherhood of Locomotive Engineers Group Reply Br. 2). However, the language of Section 1(18) (note 3, Supra) does not so require, and, as seen, the precedents are to the contrary.
In the present proceeding, the Commission explained the basis for considering this application under Section 1(18) rather than under Section 5(2). It stated that the latter is the appropriate provision for dealing with the unification of existing railroad enterprises, such as a consolidation or merger.11 348 I.C.C. at 850-851. On the other hand, the Commission explained that Section 1(18) was intended to deal with the acquisition, abandonment and extension of an individual line of railroad and was essentially directed at the transportation-oriented activities of a single rail carrier or applicant.12 348 I.C.C. at 851. Because the present proceeding is concerned with the simple acquisition of a line by a prospective new rail carrier, the Commission followed Section 1(18). Ibid. We are satisfied that this rationale13 was permissible and therefore rule that pre-1976 Section 1(18) governs this 1971 abandonment-1973 acquisition proceeding.14 Indeed where applicants have mistakenly filed proceedings under Section 5(2), the Commission has treated their applications as if filed under Section 1(18). Okmulgee Northern Ry. Co. Abandonment, 320 I.C.C. 637 (1947); Iowa Term. R. Co. Acquisition and Operation, 312 I.C.C. 546 (1961). Moreover, in other cases the Commission has dismissed a pending abandonment while approving a simultaneous acquisition by a new applicant. Louisiana Midland Railway Company Acquisition (1974) (Finance Docket No. 27450, unreported, reproduced as App. A to Prairie Trunk Br.); Acquisition of Chicago, Terre Haute & Southeastern Ry. Co., 70 I.C.C. 20 (1921); Cadillac & Lake City Ry. Co. Acquisition and Operation, 320 I.C.C. 617 (1964). Even though the initial administrative law judge had recommended against abandonment by the Baltimore & Ohio, it was nevertheless appropriate for the Commission itself to authorize Prairie Trunk to operate the Flora-Shawneetown line.15 Acquisition by Frankfurt & Cincinnati R.R., 124 I.C.C. 500 (1927). In Okmulgee Northern Ry. Co. Abandonment, supra, the only case relied upon to the contrary, abandonment was authorized before the acquisition was. However, the Commission never stated that abandonment was an essential element for the acquisition procedure. Therefore it cannot be said, as petitioners do in their opening brief, that "the usual procedure in a section 1(18) acquisition proceeding is for the I.C.C. to approve an abandonment by the vendor carrier" (Br. 18).
"However, his findings of jurisdiction do not completely meet the requirements of this case since section 5(2) though encompassing the purchase of the properties of two or more carriers, does not deal with the licensing of a noncarrier applicant such as Netco, that has never performed common carrier service.
"Authorization of assignment of Chessie System's (B & O's) trackage rights as a part of approval of the proposed transaction is consistent with the language of section 1(18), so long as there is no change in the substantive terms of the arrangement" (J.App. 19).
The ALJ and the Commission were justified in proceeding this way.
The North Western and Newrail cases are distinguishable on a number of grounds. First, those cases involved the acquisition of huge interstate rail systems with complex facilities-sharing arrangements with a number of different carriers.17 Thus the acquisition of trackage and related rights was substantial and a very important part of the transaction. In the present case, the acquisition was of one intrastate short line, which happened to include trackage rights jointly owned with one other carrier over only 5.36 miles of track. As the Commission recognized in the excerpt quoted Supra, Section 1(18) and 5(2) transactions will often be closely related. Here the Commission was justified in concluding that the De minimis involvement of joint trackage rights did not compel proceeding under Section 5(2) in what was otherwise a Section 1(18) case.
Second, the decision to proceed under Section 1(18) was fully consistent with the rationale that Section 1(18) applies to single applicants, whereas the focus in Section 5(2) proceedings is on the potential competitive effect of multi-carrier transactions.18 The potentially anti-competitive impact of the acquisition of ownership rights in key facilities to which other carriers need access is obvious. In both the North Western and the Newrail cases the Commission, acting under Section 5(2), imposed appropriate conditions to preserve routes, gateways and other traffic and operating relationships involving other carriers. Of course, there is no occasion for any such concern in the present case, and therefore no need to assume Section 5(2) jurisdiction.
Third, the employee protective provisions usually applied in Section 1(18) proceedings are appropriate here. The Commission explained that its practice had been to apply the Burlington conditions when protection was deemed appropriate in Section 1(18) cases, whereas different and somewhat more expansive protection was normally imposed in Section 5(2) proceedings. The reason for the difference, according to the Commission, is that the Burlington conditions were applied when the employees of only a single rail carrier would be affected. 348 I.C.C. at 851. Here only the vendor has protectible employees, and in this respect the proceeding is analogous to an abandonment, which would be dealt with under Section 1(18). In contrast, the North Western and Newrail cases really amounted to a reorganization of existing lines, with the same employees continuing operations under a new corporate form. From the employees' point of view the situation in those cases was similar to a combination of existing carriers and the conditions usually imposed in Section 5(2) proceedings were therefore appropriate.
Thus the fortuitous involvement of a few miles of shared track does not alter our conclusions that the Commission correctly proceeded under Section 1(18) and that the most appropriate employee protective provisions were applied.
Position Is Required by Public Convenience and Necessity.
III. An Environmental Threshold Assessment Survey Is Unnecessary.
Proceeding with Two Other B & O Abandonment Proceedings.
"Each of the proceedings is clearly identifiable and separate, the shippers and their interests are different, and the proposed disposition of the applications are different, based upon different facts and circumstances applicable to the respective applications" (J.App. 3).
V. The Burlington Labor Protective Conditions Were Properly Imposed.
Petitioners' final contention is that the Commission was required to impose the more liberal labor protective conditions set forth in its three Oregon Short Line decisions,23 instead of the Burlington conditions established in Chicago B. & Q. R. Co. Abandonment, 257 I.C.C. 700 (1944). However as we held in Part I of this opinion, former Section 1(18) of the Interstate Commerce Act governs these proceedings, and under that provision, the imposition of employee labor protective conditions is within the discretion of the Commission. Interstate Commerce Commission v. Railway Labor Assn.,315 U.S. 373, 62 S. Ct. 717, 86 L. Ed. 904. Under former Section 1(18) the Commission routinely imposed the Burlington conditions where labor protective conditions were warranted. See Cadillac Lake City Ry. Acquisition and Operation, 320 I.C.C. 617 (1964); Oregon Short Line R. Co. Abandonment Goshen, 354 I.C.C. 584, 594 (1978). The only employees affected by the acquisition are four B & O employees who work on this section of track two days a week. Under the Burlington conditions, these employees will receive four years' pay even though they do not work (B & O Br. 15; Prairie Trunk Br. 16).
Former Section 1(18) of the Interstate Commerce Act was amended on February 5, 1976, when the Railroad Revitalization and Reform Act was enacted. Pursuant to the amendment the Commission was required henceforth to impose in Section 1(18) cases employee labor protective conditions no less favorable than those imposed under former Section 5(2) (f) of the Act. 49 U.S.C. § 1a(4) (90 Stat. 128), now 49 U.S.C. § 10903(a) (2). However, a saving clause in the new statute exempted abandonment or discontinuance proceedings filed or pending before the Commission on February 5, 1976. 49 U.S.C. § 1a(8).24 Here B & O's abandonment application, prompting the Commission to impose the Burlington labor conditions on the B & O, was filed on December 22, 1971, so that there was no necessity for the Commission to impose the Oregon Short Line conditions in lieu of the Burlington conditions.
"In this manner we will give prospective application to our decision. At the same time, we will not be required to reopen the abandonment cases which were finally decided before service of the prior report. We will also be able to eliminate inconsistent treatment of parties by applying the protection to all cases pending on August 18, 1977." 354 I.C.C. at 595.
Petitioners have made no argument that the Burlington conditions are inadequate to protect the interests of the affected employees. Therefore, we will not disturb the cut-off date established by the Commission for the imposition of the Oregon Short Line conditions.
The Interstate Commerce Commission's decision is affirmed.
"Notwithstanding applicant's lack of interest in the branch, the record indicates a very substantial traffic potential. The shippers in the area need applicant's services, and an aggressive and positive approach to meeting these needs would appear to assure the traffic gains necessary for profitable operation of the branch". (J.App. 13).
He therefore concluded that the public convenience and necessity would not permit granting the abandonment application.

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