Opinion ID: 421082
Heading Depth: 2
Heading Rank: 1

Heading: Must Mr. Mellon Join the Merger Application?

Text: 158 Guilford sought ICC permission to acquire the Boston & Maine under 49 U.S.C. § 11,343(a)(5), which requires ICC approval for: 159 acquisition of control of a carrier by a person that is not a carrier but that controls any number of carriers. Id. § 11,343(b), in turn, provides: 160 A person may carry out a transaction referred to in subsection (a) ... only [229 U.S.App.D.C. 47] with the approval and authorization of the Commission. 161 Section 11,343(a)(5) certainly covers Guilford, as a person who controls any number of carriers (Guilford already controlled the Maine Central) and seeks control of another carrier (the Boston & Maine). It also covers Timothy Mellon, the sole owner of Guilford, who also controls the Maine Central (through Guilford) and seeks to control the Boston & Maine. 63 162 The ICC, however, did not require Mr. Mellon to join the control application. The Commission explained that joinder would serve no useful purpose because it already had all the information it needed: 163 [T]he only issue raised by any of the parties over Mr. Mellon's presence as an applicant concerns an asserted need for disclosure of his personal finances. We agree with the Administrative Law Judge, however, that Mr. Mellon's personal finances have nothing to do with this transaction. Nor has there been any suggestions of past impropriety on Mr. Mellon's part or the hint of any likelihood of future abuses. Thus, requiring Mr. Mellon to join as an applicant would be a meaningless gesture that would not advance the statute's purpose of assuring that the Commission has available to it all information relevant to its determination of the consistency of the proposed transaction with the public interest .... 164 Boston & Maine Merger, 366 I.C.C. at 325. The Commission conceded that a literal reading of 49 U.S.C. 11343 and some precedent suggested that joinder was mandatory, id. at 324, but the Commission believed the statute gave it discretion not to insist on pointless joinder. 64 165 Lamoille Valley and Providence & Worcester assert that the joinder provisions are mandatory, not discretionary, and that unless Mr. Mellon joins the control application, the ICC has no authority to approve the merger. 166 We are not convinced that the ICC has correctly interpreted § 11,343. The section speaks in mandatory language--a person may acquire control of two or more carriers only with the ICC's approval. 65 Moreover, the Commission has for 40 years, until its sudden reversal of position in this case, consistently construed § 11,343 as mandatory. The Commission's interpretation was early upheld in United States v. Marshall Transport Co., 322 U.S. 31, 64 S.Ct. 899, 88 L.Ed. 1110 (1944). In Marshall Transport, a division of the ICC had approved the purchase of one carrier by a second carrier that was controlled, in turn, by a non-carrier. The full Commission reversed for failure of the non-carrier to join the application. The Supreme Court affirmed the ICC's view that the Commission was without authority to approve the transaction. Id. at 42, 64 S.Ct. at 904. Similar reasoning would suggest that Mr. Mellon must join Guilford's application here. 66 167 As a policy matter, the Commission's distaste for pointless joinder has obvious appeal. [229 U.S.App.D.C. 48] On the other hand, it is hard to see why joinder would cause much harm. 67 Also, mandatory joinder would ensure that the parties fully inform the ICC of the actual chain of control of a carrier. Moreover, the financial status of the ultimate owner will often be relevant to a control application. A financially weak owner may drain funds from a carrier to pay other bills or lack the capital needed to expand to serve new areas. 168 A full resolution of this question would require close scrutiny of the legislative history plus consideration of the troublesome question of how much deference, if any, courts should give to an agency's interpretation of its governing statute when that interpretation overrules a longstanding contrary interpretation. Fortunately, we need not attempt that task here. Had the ICC required Mr. Mellon to join Guilford's control application, he presumably would have applied for waiver under 49 U.S.C. § 10,505(a), which provides: 169 In a matter related to a rail carrier ... subject to ... this [Act], the Commission shall exempt a person ... when the Commission finds that the application of a provision of this [Act]-- 170 (1) is not necessary to carry out the transportation policy of [49 U.S.C. § 10,101a]; and 171 (2) ... is not needed to protect shippers from the abuse of market power. 172 (Emphasis added.) 173 In light of the ICC's findings that it had no questions to ask of Mr. Mellon and that joinder would be a meaningless gesture, the Commission would have had to grant waiver under § 10,505(a). Thus, the Commission's failure to require joinder, if error, is not prejudicial error, see 5 U.S.C. § 706 (last clause), and is not grounds for reversing the Commission's decision. Accord Delaware & Hudson Merger, supra note 1, 366 I.C.C. at 424-25 (Simmons, Comm'r, concurring). 68