Legal Document

408 U.S. 811 92 Supreme Court Reporter 2513 33 United States Reports Lawyer’s Edition 2d Series KF101.8 U54 723 PORT OF PORTLAND et al., Appellants,v.UNITED STATES al. Number 70—31. Argued Oct. 20, 1971. Decided June 29, 1972. Syllabus The Spokane, Portland & Seattle Railway company (SP&S), a subsidiary of Burlington Northern, and the Union Pacific (UP), sought Interstate Commerce Commission (ICC) approval under § 5(2) Act joint acquisition control Peninsula Terminal (Peninsula), whose tracks provide an access route to Rivergate, industrial complex being developed by Port Portland, Oregon. would continue operate as separate carrier. Milwaukee Southern (SP), two other line-haul carriers serving inclusion purchasers Peninsula, trackage rights linking their lines with (b), (c), (d) Act. SP, proceeding, also its 3(5). ICC (subject conditions protect traffic railroads) approved purchase Northern UP, but denied SP petitions. It concluded that adverse effects on SP&S UP proposed four-railroad ownership accompanying outweigh advantages Milwaukee, Rivergate industries. contends Condition 24(a) Lines merger, which gave area over Northern-SP&S tracks, required be included in Peninsula. Held: 1. On record this case (which is ambiguous regard many factual procedural issues) it has not been shown ICC's order authorizing alone acquire met 'public interest' standard 5(2). Pp. 834—842. (a) In stressing small share Peninsula's had before ignored any possible increase after took effect. 839—840. (b) announcing principle preserving market shares railroads currently connecting failed explain why was taking into account potentially enormous should become northern Rivergate. 840—841. (c) denial because gain work corresponding loss proper approach 5(2), given anticompetitive transaction must explicitly considered. McLean Trucking versus States, 321 67, 83—87, 64 370, 378—381, 88 L.Ed. 544. 841—842. view uncertainties about Rivergate—given physical limitations present facilities—and apparent fact operation at issue here, order, protective conditions, may still public interest, announced grounds for decision do comport applicable legal principles. See SEC Chenery Corp., 318 80, 87—88, 63 454, 459—460, 87 626. KF135 P2 842. 2. (on ground 'not entitled serve or Rivergate') reconsidered conjunction reappraisal issues. 834—844. Reversed remanded. Lofton L. Tatum, Or., appellants. Fritz R. Kahn, Washington, D.C., appellees. Mr. Justice BLACKMUN delivered opinion Court. 1 This involves Commission, issued Act, amended, 54 Statutes-at-Large 905, 49 Code KF62 heretofore independent switching railroad Oregon, four city. S.R. Co., 334 I.C.C. 419 (1969). railroad, current interest provides entrance Industrial District, modern port appellant, Portland. 2 authorized are (UP) Great Lines, Incorporated (Burlington Northern), through subsidiary, (SP&S).1 linehaul now Portland—the Chicago, St. Paul Railroad (Milwaukee) Transportation (SP)—sought 5(2)(b), (d), appeal arises out Commission's denial—in disagreement hearing examiner's recommendations petitions SP. Together these railroads, Public Utility Commissioner Oregon from three-judge District affirming, without opinion, order. joins appellants urging judgment below reversed, while affirmance. Probable jurisdiction noted. 401 906, 91 865, 27 804 (1971). 3 question whether applied correct standards presented against background situation—though unusual railway mergers acquisitions—and we find necessary go detail concerning facts proceedings prior submission here. 4 * Atlantic Area Relation 5 developing occupies nearly 3,000 acres tip peninsula formed confluence Columbia Williamette Rivers. Rivergate's six miles waterfront will docksites direct deepwater Ocean. expended more than five million dollars funds planning, construction, development, estimated ultimate private investment facilities exceed 500 dollars. 6 As conceived developers, served domestic transportation network capable providing efficient economical service points throughout Nation. To achieve goal, Port's consultants recommended construction internal rail loop connect existing southwestern eastern corners thus industries all line haul At full development—estimated 15 years future—rail generated expected reach between 600 cars per day, projected annual volume tons freight. 7 eight industries2 occupy one-tenth area. Seven located west, Willamette River, side owned Outside part provided extending UP's Barnes Yard (point 9 schematic map appended opinion) tracks. Over external jointly remain southwest 8 one industry—the poleyard Crown Zellerbach Corporation (Point E map)—is easternmost edge River. presently serves, addition, 13 just southeast boundary. organized 1918 packinghouse facility long since closed, main track only 8,000 feet along end North interchange map), where connects UP. Since directly area, is, present, solely Whether sole no means certain. suffers certain limitations—its laid upon sand, clearances limited, impeded heavy curvature. Furthermore, have insufficient capacity traffic. Accordingly, alternate consideration, new spur leading north-south tracks.3 10 All outstanding capital stock Stockyards Corporation. Control, 254 207 (1943). itself carrier continuing stockyard operation. willing sell appraised value stock, preference purchaser. February 28, 1967, entered agreement UP.4 11 By application filed July 25, approval, Act,5 contracted Stockyards. pointed enable applicants adjacent however, No major changes revenues were anticipated immediate future, though 'within foreseeable future substantial revenues' derived 12 response above application, seeking equal owners, pursuant 5(2)(b)(c), Act; they right use own action subject appeal. competing contentions closely related interconnections near turn. C. Carrier Interconnections Switching Arrangements (1) Interchange 14 Two UP; remaining half Only tracks—one UP—connects double main-line running north across single track, extends south mile-long tunnel Albina distance 5.2 miles.6 time case, 30 handled daily interchange. About 61% involved predecessors hand subsidiaries other. 39% designated Peninsula.7 reciprocal card Peninsula.8 16 Although tracts terminate East 5) Hoyt Street River 3). generally switched trains latter's 6) moved thence interchange, destination. Alternatively, main-line. either pay charge (whichever carrier), then 'rate division' service.9 rate division absorbed passed shipper. charges if minimum revenue car exceeded, done so, except low-rated noncompetitive shared 20% 1966, 17% 1967. 17 Throughout below, Its Longview, 46 arrangements percent 1966 However, basic condition merger Company, affiliates, including SP&S, made effectively competitive transcontinental permitted enter company, Northern.10 18 'shall grant such fair reasonable terms parties agree determined event inability agree, freight Northern) Longview Junction basis intermediate shall maintain open gateway same extent carriers. . .' 331 228, 357. 19 Pursuant 24(a), commenced March 22, 1971.11 date, published rates reflecting single-line industries, those absorbing relevant charges. operated locomotives far western If allowed switch Vancouver, 8), 3), Guild's Lake 2), Peninsula.12 20 petition August 23, (then SP&S) Section authorizes require prerequisite 'upon finding consistent interest.' After first setting impending alleged: 21 'The instant transaction, stated effect foreclosing Company. With fifty cent Company hands party contract referred above, similar herein obtain Industries (various midwestern centers Milwaukee), contrary interest.'13 App. 165. 22 and, asked 23 '(t)hat granted intervening applicants, Company's considerations, negotiate, or, failing negotiations, consideration reasonable.'14 166. 24 December replies, arguing, inter alia: even implemented, could proceeding; (2) 'lead cumbersome, confused divided management resulting policy stalemates serious deterioration service.' 25 thereupon supplement inclusion, stating 26 'in light replies Milwaukee's alleges purpose bottling up impair (sic) ability plain intent (report Merger case).' 182. added earlier requesting: 28 'That yards both participation 3(5) Act.' 183. (Emphasis added.) 29 intentionally not, requesting 3(5), text appears margin,15 divorced Any connection contingent SP&S' deciding consummate purchase; purchase. meantime, amended November joined 5(2)(d) owner further requested 31 'be petitioner bridge (the Pacific) terminal Pacific-Union Ore.'16 168. 32 unlike initiated (Dec. 19, 1967). orders requiring allow 'common Company,' together Portland; additionally (or, presumably, alternatively), Oregon.'17 E. Proceedings Before Hearing Examiner applications, petitions, examiner consolidated record. Docks, intervened favor SP.18 hearings 1968, evidence taken shippers addition Zellerbach, well officers intervenors. 34 September 9, year his report. he consummation commencing operations Portland.19 consummated 35 'the Oreg., individually (Peninsula, Pacific, UP), compensation mutually agreeable interested carriers, failure fix reasonable, ascertained accordance provisions section ..' 128—129. 36 found 'is practicable substantially owning handle business.'20 129. 37 ordered common conditioned, again, agreed 'just reasonable' fixed Commission. 38 discussion issues, treat entire 'one entity.' announced: 39 'Existing disparity treatment within convincing greatest economic advantage equality can accomplished best ownership. most functionally essential development Limitation there barring on-line solicitation interests environment unencumbered establishment sound system. (D)irect deal originating areas initial applicants. Shippers benefit elimination assessed non-competitive acts carrier.' 120—121. 40 SP's warranted conclusion practicable, business.' He noted 'almost incredible 30-hour average transit movements round-trip 10.4 miles, engine changes, inspection, classification Yard.' respect complex, convinced 41 'that thereto create greater incentive improvement unsatisfactory area.' 124. 42 Nor did think curtail competition. 43 'To contrary, afforded free carriers' services. Among things, place hand, other, California east thereof, (Burington .. Also, connections authorizations, generally, result improved fostering 125. 44 Finally, itself. words: 45 'In elect (of Peninsula) filed. Jurisdiction retained purpose.'21 127. exceptions recommendations. They contended, alia, undue emphasis placed erroneously held constitute entity, (3) does support four-way general shipper standpoint, (4) (5) neither nor interest.22 47 6, 1969, Division opinion. 419. Though otherwise rejected applications following imposed acquisition, 'to routings interchanges' Peninsula: 48 '1. Under keep routes channels trade via junctions gateways, unless until Commission; '2. neutrality handling inbound outbound continued so permit opportunity reaching discrimination routing movement traffic, schedules otherwise; 50 '3. operating relationships insofar matters 51 '4. and/or accept, handle, deliver inbound, loaded empty, promptness frequency irrespective destination movement; 52 '5. anything restrain gateways; '6. refrain closing channel (authorized Peninsula), 53 '7. Consummation assent corporate parents members respective systems, bound conditions; '8. person having matter make modification above-stated them, reopen proceeding our motion purpose.' I.C.C., 436—437. II 55 'Direct Access' 56 reading Part N Dec. Immigration Nationality Decisions reveals, seems amount confusion actual case. Early merits, example, said: 57 '(W)e never connected past, direc objections invasion applicant's territory' 433 (emphasis added). 58 Laying aside substantive statement, see how italicized words refer wholly Yet, already seen supra, 828—829, n. 832 21, recommend granting SP; report rights. third (quoted 833) acknowledge 59 resolved briefs contain references 'direct access' again strongly suggesting argues issue, alone—all seek—gives purchased railroad. Brief 15; Tr. Oral Arg. 30. denies ever engines crews,' Supplemental Appellant 34, similarly statement forthcoming 60 We set forth confusions—factual procedural—that plague Such confusions might reached us court initially reviewed written baron Petitions Inclusion 61 62 argued length requires considered point very start merits viewed 'as realignment competition merger. territory. silent territory to, by, contemplation imposed. consider criteria rather carry 24.10' 432. footnote 10, 65 'Upon completion litigation wish seek relief determine relationship 24, any, partially Lines.' Ibid. 66 suggestion anew leaves doubt final determination applicability condition, simply raised different proceeding. necessary, resolve rule narrow disputes clear meaning—that run starting went discuss inclusion. find, reasons appear too 67 Evaluating Interest 68 matter, limited attention alone, considering 'entire area' entity,' had. Appellants contend step error, wiser evaluate whole. 69 A summary analysis last paragraph There concludes: 70 dependent them service, admitting accruing cannot therefore, title term, authority applicants.' 435. 71 preceding paragraphs, summarized three supported application; establish benefits accrue mention tended 'shippers upon' suffer apparent, dominant factor analysis, outweighing ownership, 'adverse UP'; examine manner characterized effect.' First, 72 applicant(s') territory.' Id., 433. 73 observed passage suggests But purchase, relevant: 74 usually industry particular normally accorded transport therein adequately, efficiently, economically, authorized. potential Minneapolis, S.S.M.R. Acquisition, 295 787, 802 (1958), cases cited therein.' 75 announce purchases rights, preservation location question, reasonably adequate Whatever doubts have, removed critical immediately follows sentences quoted: 76 'As appendix, shared, routes, during share, amounted years. Permitting of, therefore participate will, course, declining (3,640 2,748 These increased expense employees jobs eliminated planned Milwaukee.' 77 strikes misdirected ignores prospective presence closer away. proceedings, assumed concerned soon today. Granted 1% affirmance 78 next difficulty relates growth raison d'e tre possibility noted, remote, facilities. nowhere states speculative litigation. quoted, then, reads strangely indeed; becomes estimates indicate 1967 day 300 assuming roughly number each southern Yet according Northern's 80% protected. 79 fly face well-settled obligated transaction. 544 (1944); Cases, 396 491, 511—516, 90 708, 717—720, 700 (1970). invoke precise decide take cognizance weak Tier States. U.S., 504, 514—516, S.Ct., 714, 719—720, 700. intended foreclose position vis-a -vis Both explicit positions compared least, inquiry appropriate. 80 Even principle, undercuts reasoning. There, permission undertake traditionally Chicago Western Co.; vulnerability exclusive important interest. 81 indication economically vulnerable, way need confronted (via Yard) (any off Northern-SP& tracks), acquire, themselves route. aspects summed follows: lose; denied. approve 82 Despite what said reasoning, necessarily follow incorrect. Given uncertainty attached time. note proceedings. 83 role arrive Our appellate function administrative agency 626 proceeding—where ambiguities thought issue—we say reverse remand Pacific's Applications 84 turn According Commission: 85 Congress enacting method avoiding necessity incurring unnecessary duplicating 86 Rivergate,' on, 'we questions 436. 'entitled serve' territory, conclusively presumes se permissible statutory construction. For reasons, decline include 89 rule, Use Tracks 161 699 (1930), Seaboard Air Line Co.—Use Facilities Florida Coast 327 (1965), decided applying Second, brief defends ruling broader announced. leads settled law. Third, moot reverses consummated. Fourth, close examiner. assurance reconsidering Parts II(A) (B) 93 reversed. remanded instructions 94 POWELL REHNQUIST APPENDIX 95 [NOTE: MATERIAL SET AT THIS POINT IS NOT DISPLAYABLE (GRAPHIC OR TABULAR MATERIAL)] formerly roads merged Northern. Cases (United Commission), operates integral Reference operation, often named party. When closed five, 81. another side. Page 38, contradicted, additional May 26, Article XI agreement, 313. Proposed Purchase price $299,405 plus sum $70,000 reimburse sold representing unsecured payable United. properties consist 13.17 land, none suitable total 3.79 secondary treated ties sand rock ballast. Besides above-noted locomotives, tools parts maintenance, owns conveyance workmen, heated house yard office, house. pertinent part: '(a) lawful, authorization subdivision paragraph— '(i) jointly, '(b) Whenever paragraph, therefor afford heard. (A) determines finds that, modifications scope approving modifications, '(c) passing give weight among others: ; include, transaction; affected. '(d) involving require, equitable terms, involved, reproduced Appendix clear, coming percentages based figures partly interchanged 1967: industries; 4,300 figure 7,048 translated day—perhaps empty included—but disputed figures. Charges Absorption Thereof Shreveport, La., 339 65, (1971), explained 'reciprocal switching' 'It practice commonly called switching. act placing loading unloading, incident extend serviced industry. reciprocate roles flow trackage. theory exchange services areas, other's industries—even defined tariffs, definition specific trackage, identification siwtching out. Frequently, constructed cost incurred costs balance instances absorbs charge, off-line identical Connection words, compensated flat rates. $29.25 when exceeded $60. 79. Presence 30, Line, Inc.—Merger, etc.—Great modified Apr. 11, 869. ultimately affirmed. Why quotation became Cases: 'Neither (at Washington) circumstances longest roads. privilege 'shorthaul' Twin Cities destined turned merging Cities. consequence, precluded true competitor unable extensive ending few short Moreover, completely North-South West Coast.' 296 F.Supp. 853, 865 (DC 1968). litigated express assumption affirmed, 'change circumstances' much realization assumption. clearly reflect 1971, moving D. Pleadings here incorporated large particular, Yard, Vancouver performed vaguer quoted above. source various possess (as opposed Portland), reader alerted tread carefully descriptions pleadings opinions below. 'If impairing enjoyment business, power facilities, mainline outside terminal, affected upon, required, controlling condemnation told 'bridge rights,' permitting contrasted 'full user rights' use,' track. Appellees 27. Like mentioned asking 'trackage ., independently request ownership.' 169. superseded which, anything, relief. likewise. Eight employee organizations None now. return contribution locomotive equipment contingent, filing 1(18) 'certificate convenience Junction, Wash., Oreg.' proposition certificate begin Did Yard? contended did, arguing seem mind point, exception recommendations, effort claim Supplement Petition Inclusion, ambiguously explanation deemed file pressed Cf. 34. sought, strenuous dispute Counsel meaning perfectly counsel appeared concede client (in owenrship Peninsula). event, matter. Federal KF105 F3 Decision 'railroads involved' 5(2)(d), accordingly, squarely contention, raise assume correctly further.

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