Opinion ID: 413436
Heading Depth: 1
Heading Rank: 5

Heading: opportunity costs

Text: 43 Petitioners object to the Commission's calculation of B & O's opportunity cost incurred in the operation of the Flora line. The Commission stated that the abandonment was justified on the basis of the other evidence, but said that opportunity cost was an additional reason to grant the abandonment. The ICC calculated the opportunity cost by comparing the cost of keeping the assets tied up on the line as opposed to more profitable uses elsewhere. The other uses included a consideration of the return on investment of the net salvage value of the line. The calculation was not limited to the value of the use of the actual track on other B & O lines. The Commission concluded that B & O was incurring an opportunity cost of $138,681. 44 We agree with the Commission that abandonment is justified regardless of opportunity cost. Nevertheless, we find it appropriate to discuss the issue here. 45 Petitioners claim that the Commission should have limited its calculation of opportunity cost to the value of the use of the physical assets of the line on other B & O lines and assert that it was error to consider nonrail uses of the assets. Petitioners urge that this court rejected that calculation in our decision in Illinois v. United States, 666 F.2d 1066, 1081 & n. 24 (7th Cir.1981). There we held that B & O's opportunity cost argument must be rejected. 46 We disagree with petitioners that Illinois precluded the Commission from considering nonrail uses of the assets in calculating opportunity cost. What we said was that we could not accept B & O's opportunity cost argument on appeal because the Commission never reached the issue of opportunity cost; to accept it would have been to uphold the ICC's decision on a basis not articulated by the agency. Id. at 1081. In a footnote, we rejected B & O's salvage value calculation not as a matter of law, but rather because of the railroad's misplaced reliance on Missouri Pacific Railroad v. United States, 625 F.2d 178 (8th Cir.1980), a case we found distinguishable. We suggested, however, that B & O could make a more developed opportunity cost argument on remand: We do not decide, however, whether an opportunity cost argument, perhaps based on more fully developed facts, might prevail in possible subsequent ICC proceedings or appeals. 666 F.2d at 1081 n. 24. 47 As to the propriety of considering nonrail uses in calculating opportunity costs, we have already upheld the Commission's adoption of a policy statement announcing that the agency would consider opportunity costs in the balancing of interests in abandonment cases and defining opportunity costs to include nonrail uses. Farmland Industries, Inc. v. United States, 642 F.2d 208 (7th Cir.1981), denying petition to review Abandonment of Rail Lines--Use of Opportunity Costs, 360 I.C.C. 571 (1979). See International Minerals & Chemical Corp. v. ICC, 656 F.2d 251, 259-60 (7th Cir.1981) (holding that the ICC erred in calculating opportunity costs but not criticizing the use of the line's salvage value). We find no reason to withdraw our approval of that policy. As we noted in the Farmland Industries decision, 48 [t]he Act does not define public convenience and necessity nor does it specify any criteria that the ICC must or should consider in deciding what is consistent with public convenience and necessity. Rather, the Act authorizes the ICC to use its discretion and expertise to determine, in each instance, whether abandonment should be permitted. 49 642 F.2d at 210-11.