Opinion ID: 107292
Heading Depth: 1
Heading Rank: 4

Heading: applicable standard on review.

Text: At the outset the Commission and the appellant railroads contend that the court did not apply the correct standards in reviewing the Commission's action. As we have noted, the court did reject certain conclusions of the Commission, as above indicated, with respect to the public convenience and necessity for additional rail service to Lake Calumet port on the ground that they did not have ample support in the record. The test on judicial review is, of course, whether the action of the Commission is supported by substantial evidence on the record viewed as a whole, 5 U. S. C. § 1009 (e) (5). Substantial evidence is enough to justify, if the trial were to a jury, a refusal to direct a verdict when the conclusion sought to be drawn from it is one of fact for the jury. Labor Board v. Columbian Enameling & Stamping Co., 306 U. S. 292, 300 (1939). A careful reading of the opinion leads us to conclude that the court was applying the test of substantiality. Indeed, at four separate places in the opinion it uses the term substantial evidence as being the necessary requirement. As unfortunate as it is that the ample support language crept into the decision, we do not believe that the court was creating a novel formulation but rather inadvertently used the ample support terminology merely to meet the same language in the dissent referring to the conclusions of the Commission. We have concluded that the court erred in setting aside the conclusions of the Commission. The Act authorizes the issuance of certificates such as the ones sought here when the Commission finds that the future public convenience and necessity will require additional railroad service. 49 U. S. C. § 1 (18). This Court has repeatedly held that if a railroad, voluntarily proposing the extension of its lines, can show that its proposal either presently or in the reasonably near future will be self-sustaining, or so nearly so as not unduly to burden interstate commerce, the Commission may issue a certificate authorizing the proposed line, Interstate Commerce Commission v. Oregon-Wash. R. & Nav. Co., 288 U. S. 14, 37 (1933). The Commission, however, must be convinced that the proposed venture will not drain the railroad's resources and disable it from performing those duties of public service under which it then rested, with consequent detriment to the public in the matter of service and rates. Ibid. Also see Texas & P. R. Co. v. Gulf, C. & S. F. R. Co., 270 U. S. 266, 277 (1926); Chesapeake & O. R. Co. v. United States, 283 U. S. 35, 42 (1931). Rock Island and Nickel Plate contend that the evidence [of appellants] adduced before the Commission was so totally devoid of factual possibility as to be no evidence at all. As we read it, the evidence as to the future possibilities of the port was somewhat conflicting. The Commission, in keeping with its duty, resolved this conflict. Indeed, the findings of the Commission, which were upheld by the District Court, completely refute the Rock Island and Nickel Plate claims. Among the findings approved by the court [5] are the following: The port was the major deepwater port facility of the port of Chicago, with unparalleled access to barge, rail, lake steamer and motor transportation and complete access to ocean transportation in the immediate future, with 71,490,510 tons of water-borne traffic in 1955 and with material increases [6] in tonnages predicted for the future from among an estimated 600 to 900 vessels coming to the Chicago port each season, that will necessitate a substantially broadened railroad service into and out of the Lake Calumet port; appellants' combined yard capacity was 61,601 cars, more than 12 times that presently available at the port; appellants' routing would be more direct, entail less handling, expedite shipments and be less expensive than the present operation of Rock Island; and, finally, it was imperative . . . that at the very beginning of this new era of development a plan and system for handling the transportation needs of the port be established which will assure the type of service that is expected and will provide for steady progress and expansion. We believe that these findings, in the light of others not overturned by the District Court, are sufficient to sustain the Commission's action in issuing the certificates. Moreover, we believe that the District Court erred in striking down the conclusions of the Commission. These conclusions [7] included: Consideration of the whole record warranted the finding that the applications should be granted; granting them would result in greater rail competition, better service, greater car supply and lower rates for the industries served by the port; appellants would be on a par with the Rock Island in solicitation of grain traffic, and by having control of their cars they could return empties in a fast shuttle service to country elevators without interchange with Rock Island; the time has come when additional freight service is required for the future development of the Port District; better service can be given through elimination of delays, by single-line hauls or more direct hauls; a single trunkline railroad service would be detrimental and a hindrance to the development of the harbor, and, although the port is served by some 100 common carrier trucklines, the Rock Island is the only railroad presently serving the port; the future convenience and necessity must be given a higher value than the present convenience and necessity; the proposed construction either presently or in the reasonably near future is necessary to meet a public need and will be reasonably profitable; and, finally, considering the expansion program at the port and the increased rail traffic to be made available the Commission is of the opinion that the additional service . . . is warranted. As we have said, these conclusions were largely based upon previous Commission findings which the District Court approved. The Commission's function is to draw such reasonable conclusions from its findings as in its discretion are appropriate. As we said in Consolo v. Federal Maritime Comm'n, 383 U. S. 607, 620 (1966), the possibility of drawing two inconsistent conclusions from the evidence does not prevent an administrative agency's finding from being supported by substantial evidence. It is not for the court to strike down conclusions that are reasonably drawn from the evidence and findings in the case. Its duty is to determine whether the evidence supporting the Commission's findings is substantial, Universal Camera Corp. v. Labor Board, 340 U. S. 474 (1951). Having found that there was substantial support in the record for the Commission's findings as to the port's future potential and the necessity of providing competitive rail service at the outset of the port's development, it was not the District Court's function to substitute its own conclusions for those which the Commission had fairly drawn from such findings. Its agreement with the controlling subsidiary findings required the District Court to sustain the Commission's conclusions. The court also erred, we believe, in ordering a new hearing on the issues. It found that the Commission's order issuing a certificate of public convenience and necessity to operate within the Port District was not supported by sufficient evidence and violated due process in that a hearing was not afforded the appellees thereon. As we view the original applications of the appellants they proposed to extend their operations to serve the Lake Calumet Harbor District near Chicago, in Cook County, Illinois . . . future industries, elevators, warehouses, docks and piers in the Calumet Harbor Port area. The prayer was that your Commission issue a certificate of public convenience and necessity authorizing the construction and operation for which authority is herein sought. [8] The proceeding came on for a hearing before the Hearing Examiner on September 30, 1957, and counsel for the Rock Island stated for the record that his understanding was the issue in this case is that all applications are for the purpose of handling import and export business only to and from the Port District Harbor of Chicago . . . . (Emphasis supplied.) And counsel for the appellants stated that the plan was to handle interstate business to and from the area over which the port has jurisdiction. We have no such limitation at all as to import or export trade. Likewise, the Return to Questionnaire executed by appellants stated: The line proposed to be constructed and operated will receive material revenue from freight traffic to be handled to and from industries, elevators, warehouses, docks, and piers presently operating in the Calumet Harbor Port area, in addition to those facilities to be constructed with the further development of the area. [9] To make it crystal clear paragraph 10 of the same answer to the questionnaire stated: The Lake Calumet Port District, which the proposed line will serve is currently served by the Chicago, Rock Island and Pacific Railroad Company by virtue of its acquisition of the Pullman Railroad Company, through purchase of capital stock, and lease by the former of the railroad property of the latter approved and authorized by the Commission in Finance Docket No. 16252, Pullman Railroad Company Control, decided November 17, 1949. The other applications had similar allegations and the other appellants' questionnaire returns contained like statements. Moreover, the answers filed on May 16, 1957, by Rock Island and Pullman to the applications, addressed themselves solely to the proposition that applicant's extension of its line of railroad and operations through trackage rights to serve territory [the Port District] heretofore served exclusively and adequately by petitioners cannot be supported by public convenience and necessity, could mean only a duplication of rail service, and would create unsound and uneconomic conditions in transportation. As we read the record before the Hearing Examiner the case was tried on the theory that the applications included the proposed operations within the Port District. During the presentation of appellants' evidence objection was made to the introduction of the proposed lease between appellants and the Port District on the ground that it was beyond the scope of the application. The Hearing Examiner overruled the objection. The testimony of virtually all of the appellants' witnesses was directed to some phase of the operations of the Port District. It should also be noted that the appellees sought to rebut this testimony in voluminous detail. For example, 40 pages of the record detail the testimony of Mr. R. C. Davidson, a witness for Rock Island. His testimony is devoted to Rock Island's operation in the United States with specific reference to the Port District. It compares Rock Island's operation in the Port District with that proposed by the appellants and answers in detail the statistics of the appellants as to charges, rates, switching problems, etc., involved in operations within the Port District. Page after page of prepared statistics on the costs, profits, etc., of the proposed operation were included in the testimony, together with forecasts as to the impact of the same, if permitted, on Rock Island's operations. Another witness for Rock Island, Professor Marvin L. Fair, testified for some 15 pages on the potential of the Port District. His research was in great depth and included comparisons with other Great Lakes ports; estimated traffic of the Port District, including iron ore, grain, and general cargo; physical conditions of navigation at the port; the effect of tolls; the capacity of the Welland Canal (in the St. Lawrence Seaway) and its impact on the port; the efficiency of the port facilities; established movement of exports and imports; the effect of political, military, and economic conditions at home and abroad and the adequacy of Rock Island's service. The record establishes beyond a doubt that the appellants were in fact seeking Commission approval of the entire project. Their offering of the unexecuted, proposed contract into evidence is one of many indications of this fact. The Hearing Examiner specifically noted, at the time the contract was received in evidence, that its approval by the Commission was necessary in order for the appellants to serve the Port District as they proposed. It would, indeed, have been a futile act for the appellants to seek and attain approval to extend their lines to the Port District but not be able to enter it! It is true that appellees objected to the introduction of the proposed agreement because they felt, and rightly so, that the application which the appellants had submitted was not technically broad enough for the authority they sought. The Hearing Examiner overruled them and they were obliged toand didoffer their evidence on the matter. When the question came before the Commission for decision, it ruled that the applications were technically deficient and permitted the parties to correct the same through the filing of supplemental applications. At no time did the Commission find that the proposal to operate within the Port District had not been adequately explored and examined. Rather, a careful reading of the Commission's entire opinion leads us to the opposite conclusion. At every stage of the proceedings before the Hearing Examiner and also before the Commission, operations of the appellants within the Port District were considered an integral part of the overall plan which they submitted. The ruling of the Commission that the supplemental applications should be considered in conjunction with the original application, did not, in our view, deprive appellees of due process of law. When appellees requested a full hearing on the supplemental applications the grounds they alleged were that they were adequately serving the port; that they were prepared to spend further sums of money in the construction of facilities to serve it; that they were entitled to retain the traffic of the Port District; that there was no adequate reason for extension of the railroad lines of appellants into territory heretofore served exclusively by appellees; and that the extension of the railroad lines of appellants was not justified by public convenience and necessity. As the Commission itself found, Examination of the record discloses that these are the same arguments and contentions that were set forth in protestants' original briefs, exceptions to the examiner's proposed report, in their petitions for reconsideration, and in their oral arguments. Illinois Central R. Co. Construction and Trackage, 312 I. C. C. 277, 280. The changes in the proposed lease agreement which the Commission approved without a further hearing involved the removal of the exclusive right to operate within the Port clause, which that document had given the appellants, and the formula for determining the annual rental to be charged by the Port District. As to the former, it can hardly be maintained that this worked a hardship or detriment upon the appellees. The removal of the clause, in fact, made certain that appellees were not precluded from continuing their present operations. As to the rental clause, it will be remembered that the original proposed agreement provided for 5% annual rental based on the value of the land and tracks, but not to exceed $2 per car. This was changed in the first supplemental application to a charge of not to exceed $2 per revenue car or locomotive. The final contract merely provided for a charge of $2 for each revenue car, which was much more favorable to the appellants than either of the former clauses. Moreover, the final charge compared favorably to other per-car rates previously approved by the Commission. In the light of these considerations, as well as the fact that appellees were invited and refused to sit in on the negotiation of the contract; had ample opportunity and did present their evidence as to the reasonableness of the charge for the use of Port District property; were, and are, in nowise bound by the contract; and, finally, in view of the insignificance of the changes in the final agreement compared with the former ones, we are led to conclude that appellees were not entitled to another hearing. Appellees also insist that a new hearing be held so that evidence of present conditions could be presented to the Commission rather than speculation. It is true that this case has been pending for 10 years but this, rather than being a reason for holding additional hearings, operates to the contrary. We have concluded that the orders of the Commission were proper under the circumstances. We have found substantial support for its actions. Accordingly, it is our view that this matter be concluded. The judgment is therefore reversed and the case is remanded to the District Court with directions to sustain the Commission's orders. It is so ordered.