Opinion ID: 393013
Heading Depth: 1
Heading Rank: 4

Heading: Rehabilitation Costs

Text: 31 The ICC concluded that both lines are in need of rehabilitation, and that this added expenditure would make continued operation of the branches unfeasible. Rehabilitation is a one-time activity, so it is considered as a short-term expenditure, unlike the recurring cost of normalized maintenance. An ICC regulation, promulgated for use in computing subsidies, specifies that rehabilitation costs are not be to included in calculations unless the line does not presently operate at minimum safety standards. 49 C.F.R. 1121.42(m). IMC challenges the use of rehabilitation figures in this case because the Rushville branch presently operates at the minimum safety standard. 6 32 Evidence before the administrative law judge indicated that the eighty-year-old, lightweight rail in use on the Rushville branch required extensive work in order to be assured of future operation at minimum safety levels. The evidence suggested that the ties on which the rails rest need to be more closely spaced in order to avoid eventually stressing the rail beyond its yield point. 33 As the petitioners point out, there is an ICC regulation limiting use of rehabilitation costs when a line presently operates at the minimum safety level. That regulation, however, applies to computations for railroad subsidies. A rule limiting the use of rehabilitation costs makes sense in that context since a subsidy involves a commitment of cash in the nature of a short-term expenditure that may be terminated upon short notice. 7 Continuation of the Rushville branch, in contrast, represents a financial commitment for a far longer term, and it is not unreasonable for the ICC to weigh the costs of rehabilitation in determining what the actual expense of maintaining the branch will be. This is in keeping with ICC precedent approving abandonment applications in such cases where, despite the fact that minimal maintenance for presently 'safe' operations was being performed, a proven need for rehabilitation existed to insure such operations in the future. Baltimore and Ohio Railroad Company, 342 I.C.C. 751, 754 (1973). 34 Moreover, rehabilitation costs need not be figured with exactness. Id. at 755. Even eliminating the necessity for closing the space between ties, estimated rehabilitation costs are extensive in this case, rising well above a quarter million dollars on each branch. The ICC was entitled to take into account the generally large rehabilitation figures reflected in the record as necessary for long term operation at a reasonable level of safety. 8