Opinion ID: 338424
Heading Depth: 2
Heading Rank: 2

Heading: Service Orders 1207 & 1208

Text: 11 L&NE's interest in the Commission's refusal to reimburse a directed carrier, in the usual case, for rent paid the other carrier during the period of directed service can be traced to two orders issued by the ICC, Service Orders 1207 and 1208. A review of events leading up to and surrounding the issuance of these orders, which directed the Reading Company and the Lehigh Valley Railroad Company (LVRR) to operate for a limited period of time over the lines of L&NE, is necessary to an understanding of the instant controversy. 12 12 L&NE is a carrier by railroad whose lines are located solely within the Commonwealth of Pennsylvania. 13 In 1972, L&NE, because of a decrease in coal and cement traffic, experienced a substantial decline in net income and by 1973 it was operating at an annual deficit of over $100,000. 14 Because of these losses, representatives of L&NE and CNJ allegedly approached the ICC in the latter part of December 1974 to determine whether the Commission would be willing to enter an order directing another railroad to provide service over L& NE's lines. 15 L&NE indicated that according to its projections for 1975 operating losses ranging up to as much as $400,000 might be expected for the first six to nine months of 1975. L&NE further indicated its intention to embargo all traffic to, from and over its lines, effective January 24, 1975. Brief for Respondent at 21. 13 During meetings in December and in the early part of January various alternatives to directed service were discussed by the ICC, L&NE and shippers in L&NE's area, but no solution was reached. On January 7, 1975, L&NE issued an embargo covering all traffic moving from, to and over its lines, effective January 24, 1975. To avoid the disruption that would result from implementation of the embargo, the ICC entered Service Orders 1207 and 1208 on January 17, 1975, which directed LVRR and Reading to provide service over L& NE's lines for 60 days (from January 24 to March 24, 1975). The service orders were subsequently extended for an additional 180 days (from March 24 to September 21, 1975) by the Commission after being notified on March 3, 1975 that L&NE would not be able to resume operations upon the expiration of the original service orders. 16 14 The Service Orders required the directed carriers, LVRR and Reading, and L&NE to negotiate . . . agreement(s) . . . on all aspects of the directed operation subject to their determination, and subject to Commission approval. 17 During these negotiations, L&NE sought to be paid rent for the use of its facilities during the period of directed service. Negotiations broke down after the ICC advised the parties that no basis had been shown for allowing rent to L&NE. Shortly thereafter, the instant proceeding was commenced by L& NE. 15 On September 9, 1975, immediately prior to the expiration of Service Orders 1207 and 1208 as extended, L&NE filed for the first time an Application for Authority to Abandon Operations. Thereafter, an agreement was reached between L&NE and LVRR and Reading whereby the two carriers would continue to provide service over L&NE's lines on a 'no-loss guaranty basis.'  The agreement was underwritten by funds provided by the United States Department of Transportation under section 213 of the Regional Rail Reorganization Act of 1973, 45 U.S.C. § 723 (Supp. IV, 1974). 16 In November of 1975, LVRR and Reading submitted claims for reimbursement of costs in excess of revenues that resulted from the directed operations under Service Orders 1207 and 1208. The amounts claimed reflected total operating losses of $325,891.15, of which $120,372.88 consisted of maintenance of way expenses required to permit safe operations over L&NE's properties. 18 Brief for Respondent at 26.