Opinion ID: 471276
Heading Depth: 2
Heading Rank: 2

Heading: Constitutionality of Section 402(a)

Text: 22 Petitioners claim that section 402(a), if it applies to them, is an unconstitutional condemnation act because an administrative agency rather than a court determines the compensation and because the statute ties the agency's hands in determination of that amount. None of the arguments advanced in support of this contention is meritorious. 23 Petitioners cite Monongahela Navigation Co. v. United States, 148 U.S. 312, 327, 13 S.Ct. 622, 626, 37 L.Ed. 463 (1893), for the proposition that in eminent domain law determining what compensation is just is a judicial, not a legislative, function. We need not pause long with this argument. In Conrail I, Judge Friendly put it in a nutshell in denying MTA's motion to enjoin the ICC from proceeding in the instant action when he said that this argument of petitioners does not appear to us to be substantial in light of Thompson v. Texas Mexican Railway Co., 328 U.S. 134, 147-48, 66 S.Ct. 937, 945, 90 L.Ed. 1132 (1946). Conrail I at 4. In Thompson, one carrier sought to terminate the contractually created trackage rights of another carrier that was undergoing reorganization under section 77 of the Bankruptcy Act. The question before the Court was whether the ICC had exclusive jurisdiction to set rates and to determine whether the trackage agreement should be terminated. Answering both questions in the affirmative, the Court found that Congress in section 7 of the Transportation Act of 1940, see 49 U.S.C. Sec. 5(2)(a)(ii), had given the Commission exclusive jurisdiction to determine the terms and conditions by which trackage rights were acquired and that this delegation was appropriate. See Thompson, 328 U.S. at 146-51, 66 S.Ct. at 944-47. The Court stated, 24 [I]t is one of the Commission's high functions to protect the public interest against unfair or oppressive financial practices which in the past led to such great havoc and disaster. That policy would be undermined if the carriers could repair to courts for determination of the conditions under which trackage rights could be secured. 25 Id. at 148, 66 S.Ct. at 945. While, to be sure, Thompson was not dealing with the Commission's power relative to trackage rights under section 402(a), the logic of that opinion is obviously applicable here. Thompson unquestionably stands for the proposition that the delegation of power to the ICC to set trackage rates, subject to ultimate judicial review, is constitutional. 26 Amtrak also claims that section 402(a) unconstitutionally limits awards to avoidable costs. (We note in passing the irony of a transit authority that obtains a sixty-plus year lease of railroad property at a nominal rate and that, as a result of that lease, receives substantial aid from the federal government claiming that a federal agency is taking its leased property improperly because the compensation the authority receives is limited to avoidable costs.) Petitioners' argument fails for two reasons. In the first place, we agree with Amtrak that proceeding by way of section 402(a) is not a taking. Since Munn v. Illinois, 94 U.S. (4 Otto) 113, 24 L.Ed. 77 (1876), railroad companies have been held subject to regulation so that, for example, a Commission order directing one carrier to receive and transport the cars of a second carrier over its terminal is not a taking, Pennsylvania Co. v. United States, 236 U.S. 351, 369-72, 35 S.Ct. 370, 376-77, 59 L.Ed. 616 (1915); requiring railroads to disgorge half of their income in excess of 6% of the value of their property is not a taking, Dayton-Goose Creek Railway Co. v. United States, 263 U.S. 456, 484, 44 S.Ct. 169, 174, 68 L.Ed. 388 (1924); and imposing a ceiling on particular rates is not a taking so long as it does not cause the railroad to lose money on its overall business, Baltimore & Ohio Railroad Co. v. United States, 345 U.S. 146, 148, 73 S.Ct. 592, 593, 97 L.Ed. 912 (1953). While concededly what is a taking is an ad hoc factual inquiry, see Kaiser Aetna v. United States, 444 U.S. 164, 175, 100 S.Ct. 383, 390, 62 L.Ed.2d 332 (1979); Oakes, Property Rights in Constitutional Analysis Today, 56 Wash.L.Rev. 583, 622 (1981), requiring one public utility to give another operative rights over its facilities, subject to an obligation to pay reasonable reimbursement, in order to deliver service to the public--as in the case of wheeling power from one point to another over one power company's transmission lines for another power company's benefit, see Federal Power Act, 16 U.S.C. Secs. 824j, 824k--fits more into the regulatory rather than the taking mode as those terms have traditionally been applied by American courts. Rather than to cite us to Pennsylvania Coal Co. v. Mahon, 260 U.S. 393, 43 S.Ct. 158, 67 L.Ed. 322 (1922), as the Commission has done in its brief, perhaps it should have referred us to Miller v. Schoene, 276 U.S. 272, 48 S.Ct. 246, 72 L.Ed. 568 (1928). Or if we look at the investment backed expectations language of some of the recent Supreme Court cases, e.g., Kaiser Aetna, 444 U.S. at 175, 100 S.Ct. at 390, it is hard to imagine that when MTA, a public authority, leased the Harlem-Hudson Line at a minimal investment it had any expectation that it could preclude its lessor or those holding rights reserved by the lessor from exercising the reserved trackage rights. In other words, MTA's reasonable investment expectations have hardly been so frustrated as to amount to a taking. 27 The second reason that Metro's argument here fails is that, assuming arguendo that there has been a taking, compensation is adequate since MTA, in obtaining avoidable costs, will receive what it would have had but for the taking. Cf. Chicago & North Western Transportation Co. v. United States, 678 F.2d 665, 668 (7th Cir.1982). In other words, the owner, here the lessee, of the railroad facilities will be put into the same position monetarily as it would have occupied if the property had not been taken, and this is precisely the guiding principle of what is just compensation. United States v. Reynolds, 397 U.S. 14, 16, 90 S.Ct. 803, 805, 25 L.Ed.2d 12 (1970); United States v. Virginia Electric & Power Co., 365 U.S. 624, 633, 81 S.Ct. 784, 790, 5 L.Ed.2d 838 (1961). Perhaps the whole taking argument can be dismissed with the comment that MTA and Metro-North really wish to seek to have Amtrak share with them the overhead costs of ownership. If the Fifth Amendment required such a sharing, they would be put in a better position by Amtrak's appearance on the scene. True, Amtrak benefits. But if we know one immutable principle in the law of just compensation it is that value to the taker is not to be considered; only loss to the owner is to be valued. United States v. Miller, 317 U.S. 369, 375, 63 S.Ct. 276, 280, 87 L.Ed. 336 (1943). 28 None of the cases cited by petitioners is on point. In Southeastern Pennsylvania Transportation Authority v. ICC, 644 F.2d 238 (3d Cir.1981), while the court ruled that in certain circumstances (not at issue in this case) there should be an equitable sharing of the costs of ownership, that holding was based on the court's view of the legislative intent behind the 3R Act and the FSP, not on its view of constitutional dictates. See id. at 249-52. In re Penn Central Transportation Co., 440 F.Supp. 1069 (E.D.Pa.1977), holds that a private corporation may not be required to provide a public service without recovering a reasonable rate of return, see id. at 1074, something that is not involved in this case since the ICC is not requiring MTA to operate its commuter services at a loss. In In re Valuation Proceedings, 531 F.Supp. 1191 (Regional Rail Reorg. Ct.1981), the court was merely trying to determine the level of compensation that the parties would have arrived at by arm's-length negotiation. See id. at 1342. The model of negotiation between a willing buyer and a willing seller is inappropriate to the instant case: Amtrak is the only passenger railroad that has or seeks to have access to Metro-North's lines, and it is required by statute to provide service over the Harlem-Hudson Line. The two ICC trackage rights cases, Missouri-Kansas-Texas Railroad Co. v. Kansas City Terminal Railway Co., 198 I.C.C. 4, 11 (1933), and Chicago, Milwaukee, Saint Paul & Pacific Railroad Co. Trackage Rights, 342 I.C.C. 578, 589, aff'd sub nom. Louisville & Nashville Railroad Co. v. United States, 369 F.Supp. 621 (W.D.Ky.), aff'd by order, 414 U.S. 1105, 94 S.Ct. 832, 38 L.Ed.2d 733 (1973), do not hold, as petitioners contend, that the Fifth Amendment requires a usage-based sharing of fully allocated costs. Rather, in each case the Commission was concerned with the level of compensation that would allow common carriers to compete effectively. These decisions stand for the proposition that to foster competition the Commission can order a carrier to give another carrier trackage or terminal rights. Neither opinion interprets the RPSA, under which Congress has determined that, at least as to cases under section 402(a), proper compensation consists only of the payment of avoidable costs. Neither involves the question of how much compensation is constitutionally required. Thus, there is no support for Metro's claim that section 402(a)'s adoption of the avoidable cost methodology is constitutionally infirm.