Court Opinion

ID: 9481657
Source: CourtListenerOpinion
Date Created: 2023-08-05 08:27:35.909744+00
Date Added: 2024-06-11T17:48:29.561501
License: Public Domain

WALD, Circuit Judge,
dissenting in part:
In this case, the Commission granted CMC Real Estate Corporation’s (“CMC”) petition to exempt from regulation the abandonment of service over a 2.27-mile rail line in Rockford, Illinois. CMC Real Estate Corporation — Abandonment and Exemption — In Rockford, IL, No. AB-7 (Sub-No. 115X) (Feb. 2,1990) (not reported) [hereinafter ICC Decision ], recon. denied, CMC Real Estate Corporation — Abandonment Exemption in Rockford, IL, No. AB-7 (Sub-No. 115X) (July 6, 1990) (not reported) [hereinafter Reconsideration Decision]. Petitioner Patrick Simmons, Illinois Legislative Director for the United Transportation Union (“UTU”), challenges the exemption on the ground that the transaction involved is not really an abandonment at all but a line sale that the parties have restructured as an abandonment and a subsequent sale of an abandoned line. Whether the transaction is really an abandonment or a line sale makes a difference because, as the majority recognizes, the Interstate Commerce Act (“Act”) requires the Commission to impose somewhat less stringent labor protective conditions on abandonments and subsequent sales of abandoned lines than on line sales. The majority concludes that the Commission did not act unreasonably in granting CMC’s abandonment petition because Aet-na Plywood, Inc. (“Aetna”), the only shipper served by the line, supported the abandonment petition. My concern is that the majority’s affirmance of the Commission’s action will allow carriers hereinafter to
*369structure the transfer of an active rail line as an abandonment and subsequent sale of an abandoned line rather than a line sale in order to avoid providing their employees with the labor protection mandated by the Act. Since I believe such a result is in violation of Congress’ directive as to how the Commission must treat a sale of a line between two carriers, I respectfully dissent.1
The Commission’s opinion rests on the formal assertion that only the abandonment of a rail line by CMC and discontinuance of operation on it by Soo Line Railroad Company (“Soo”) are currently before it; “what subsequently occurs to the abandoned right-of-way is not.” ICC Decision at 3. Yet its own subsequent analysis belies that narrow focus because in deciding whether the “abandonment” is in the public interest, the Commission does consider what will subsequently happen to the abandoned right-of-way, i.e., it will be sold to and operated for the benefit of the sole shipper served by the line. We are asked to join in the blinking exercise as well — “a sale by any other name” is not a sale after all.
The Commission’s opinion itself, as well as the record, indicate that Aetna, the shipper served by the line, supported the abandonment petition because Aetna had previously entered a contract to purchase the line contingent upon CMC receiving abandonment authority from the Commission. See, e.g., ICC Decision at 1-2; Verified Statement of N. Keith Weller, Branch Manager for Aetna.2 Although the Commission was more obscure, it found that the abandonment was in the public interest because “the shipper has made satisfactory alternative arrangements.” ICC Decision at 4. Notwithstanding the Commission’s indirect language, those “satisfactory alternative arrangements” were obviously the agreements Aetna had already made to purchase the line and obtain switching service from CCP. Thus, the Commission
found that the abandonment was in the public interest because the abandonment was the first step of a two-step transaction that would leave the rail transportation policy unaffected: after the abandonment, CMC would sell the line so rail service would continue to be provided to the only shipper using the line.
Perhaps that way of doing the deal would normally produce only a ho-hum if it were not for two other considerations: statutory compliance and labor protection. As UTU points out, by allowing CMC to abandon and Soo to discontinue service over the line when there was undisputed evidence that Aetna would subsequently purchase and CCP would provide service over the abandoned line, the Commission may have allowed the parties to do an end-run around the line sale provisions of the Act. As the majority recognizes, the sale of an active line from one carrier to another is governed by 49 U.S.C. § 11343, and 49 U.S.C. § 11347 mandates that the Commission require both the selling and purchasing carriers to provide New York Dock protection to their employees who may be adversely affected by the line sale. See Wilmington Terminal Railroad, Inc. —Purchase and Lease — CSX Transportation, Inc., 6 I.C.C.2d 799, 815 (1990), affd sub nom. Railway Labor Executives’ Association, 930 F.2d 511 (6th Cir.1991). On the other hand, the sale of an abandoned line is governed by 49 U.S.C. § 10901, and in approving such sales, the Commission has the discretion to impose or not to impose labor protective conditions on the parties involved. See Black v. ICC, 762 F.2d 106, 116 (D.C.Cir.1985). Indeed, the Commission has decided that it generally will not exercise its discretion to impose labor protection in § 10901 transactions. See Class Exemption for the Acquisition and Operation of Rail Lines Under 49 U.S.C. § 10901, 11.C.C.2d 810, 813-14 (1985), affd sub nom. Illinois Commerce Commission *370v. ICC, 817 F.2d 145 (D.C.Cir.1987). Consequently, if what would ordinarily be conducted as a line sale is instead structured as an abandonment and subsequent sale of an abandoned line, the abandoning carrier will have to provide Oregon Short Line protection only to its own employees at the time of the abandonment; later when the abandoning carrier sells the line, neither the purchasing carrier nor the selling carrier will have to protect their employees as they would if the purchase were an inter-carrier line sale and New York Dock applied.
Although the Commission has broad discretion to approve abandonments and sales that it finds to be in the public interest,3 it does not follow that the Commission has the authority to approve as an abandonment what everyone knows is a sale by the abandoning carrier to another carrier who will continue to provide service. Such cases actually involve the transfer of active rail lines from one carrier to another, which the Commission is required to evaluate under 49 U.S.C. § 11343,4 and as to which it is required to impose labor protection under 49 U.S.C. § 11347.5 To hold otherwise is to allow carriers to effect a sale of an active line without protecting the employees adversely affected by the sale as mandated by Congress.
In its brief before this court, the Commission argues that even if it were to look beyond the abandonment petition to the subsequent sale, the transaction would not be a line sale subject to 49 U.S.C. § 11343, and the New York Dock labor protection mandated by 49 U.S.C. § 11347, because the purchaser, Aetna, is not a carrier. Thus, the Commission’s brief concludes that the Commission acted reasonably in rejecting UTU’s claim that the transaction at issue in this case was really a line transfer. The problem with this argument is that the Commission’s opinion did not rest on this justification, so we cannot rely on it here; it is post-hoc rationalization pure and simple.
In fact, the Commission’s opinion never addressed the merits of UTU’s contention that the multi-party transaction between CMC, Soo, Aetna and CCP is a line sale subject to 49 U.S.C. § 11343. Instead, the Commission stated that it would look only at the abandonment petition currently pending, and would save any evaluation of the status of a subsequent sale until the *371next go-round if and when the parties petitioned for review of that transaction. ICC Decision at 3; Reconsideration Decision at 2. But in reality the petition for review of the subsequent sale will not provide the Commission with an opportunity to address UTU’s claim that the sale is an inter-carrier line transfer subject to 49 U.S.C. § 11343 because the Commission will have already approved CMC’s petition to abandon the line. Consequently, CMC will be seeking approval to sell an abandoned line, which, as discussed above, is governed by 49 U.S.C. § 10901, not 49 U.S.C. § 11343. Thus the prospect of any meaningful Commission review at the subsequent sale stage as to the nature or status of the entire transaction is problematical, at best.
I would, therefore, grant the petition for review and remand for the Commission to determine whether the transaction to which the parties have agreed is actually a line sale that has been structured as an abandonment and subsequent sale. If the Commission finds that it is, it should deny the abandonment petition and inform the parties that they must file a petition for permission to transfer the line under 49 U.S.C. § 11343.

. I agree that UTU has standing, and I join the majority’s standing analysis.

. The State of Illinois had also agreed to support Aetna by paying for rehabilitation of the line and construction of a switch. And Aetna had reached an agreement with Chicago, Central & Pacific Railroad Company ("CCP”) to provide switching service to Aetna. ICC Decision at 2; Weller Verified Statement at 2.

.Section 10903 provides in relevant part:
(a) A rail carrier providing transportation subject to the jurisdiction of the Interstate Commerce Commission ... may—
(1) abandon any part of its railroad lines; or
(2) discontinue the operation of all rail transportation over any part of its railroad lines;
only if the Commission finds that the present or future public convenience and necessity require or permit the abandonment or discontinuance. ...
(b)(1) ... if the Commission—
(A) finds public convenience and necessity, it shall—
(1) approve the application as filed; or
(ii) approve the application with modifications and require compliance with conditions that the Commission finds are required by public convenience and necessity; or
(B) fails to find public convenience and necessity, it shall deny the application.
(2) On approval, the Commission shall issue to the rail carrier a certificate describing the abandonment or discontinuance approved by the Commission. Each certificate shall also contain provisions to protect the interests of employees....
49 U.S.C. § 10903.

. Section 11343 provides in relevant part:
(a) The following transactions involving carriers providing transportation subject to the jurisdiction of the Interstate Commerce Commission ... may be carried out only with the approval and authorization of the Commission:
(2) a purchase, lease, or contract to operate property of another carrier by any number of carriers.
49 U.S.C. § 11343.

. Section 11347 provides in relevant part:
When a rail carrier is involved in a transaction for which approval is sought under sections [relating to § 11343 transactions], the Interstate Commerce Commission shall require the carrier to provide a fair arrangement at least as protective of the interest of employees who are affected by the transaction as the terms imposed under this section before February 5, 1976, and the terms established under section 405 of the Rail Passenger
Service Act (45 U.S.C. § 565)_
49 U.S.C. § 11347.