Court Opinion

ID: 4120001
Source: CourtListenerOpinion
Date Created: 2017-01-27 22:44:25.5565+00
Date Added: 2024-06-11T14:19:48.079254
License: Public Domain

The Secretary of Transportation’s Continued Authority
     to Sell the Consolidated Rail Corporation Under the
         Regional Rail Reorganization Act in Light of
               INS v. Chadha, 462 U.S. 919 (1983)

The legislative veto provisions o f the Regional Rail Reorganization Act, 45 U.S.C. §§ 761(a)(3),
  767(d), which purport to condition the Secretary of Transportation’s authority to sell Consoli­
  dated Rail Corporation (Conrail) as an entity or by sale o f assets, are unconstitutional under
  the Supreme C ourt’s decision in INS v. Chadha, 462 U.S. 919 (1983). Nonetheless, the
  Secretary of Transportation continues to have authority to sell Conrail, either as an entity or
  by sale o f assets, because the unconstitutional veto provisions are severable from the rest o f
  the statute.

The severability o f an unconstitutional provision from the remainder o f the statute is determined
  by analyzing w hether Congress would have enacted the remainder of the statute had it
  recognized that the questioned provisions were unconstitutional.

The presence o f a severability clause in the Regional Rail Reorganization Act creates a strong
  presumption that Congress intended that any unconstitutional provisions be severable from
  the rem ainder o f the statute. The legislative veto provisions are further presum ed severable
  because the Secretary's sale authority remains “fully operative as a law ” w ithout the legisla­
  tive veto provisions. The legislative history, taken as a whole, also suggests that Congress
  would have wanted the Secretary of Transportation to exercise the sale authority even w ithout
  the legislative vetoes, and thus provides insufficient evidence to rebut the presum ption o f
  severability created by the severability clause and the otherwise “fully operative” statutory
  scheme.

                                                                          September 16, 1983

      M   em orandum      O p in io n   for t h e   Secretary    of   T r a n s p o r t a t io n

   This memorandum responds to your request for our view whether the Secre­
tary of Transportation (Secretary) continues to have authority to sell the Con­
solidated Rail Corporation (Conrail) under the Regional Rail Reorganization
Act of 1973, as amended, 45 U.S.C. §§ 701 er seq. (3R Act), either as an entity,
see 45 U.S.C. § 761, or by sale of assets (“freight transfer agreements”), see 45
U.S.C. § 765, in light of the recent Supreme Court decision in INS v. Chadha,
462 U.S. 919 (1983). Because the Secretary’s authority to sell Conrail as an
entity is subject to a two-House veto provision, see 45 U.S.C. § 761(d)(3), that
is unconstitutional under United States Senate v. FTC, 463 U.S. 1216 (1983)
(summary affirmance), and the authority to sell Conrail by freight transfer
agreements is subject to a one-House veto that is unconstitutional under the
analysis set forth in Chadha, you have asked us to determine whether the
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 Secretary’s underlying sale authority remains valid. You have also noted that,
 in light of the Chadha decision, the leadership of the House Committee on
 Energy and Commerce and its Subcommittee on Transportation has initiated
 legislation that would replace both legislative veto provisions with the require­
 ment that Congress affirmatively enact into law any sale plan arranged by the
 Secretary. For the reasons set forth below, we conclude that the legislative veto
 provisions are severable and that there is no constitutional impediment to the
 Secretary’s continued authority to sell Conrail either as an entity or by sale of
 assets.

                                             I. Background

     In 1981, Congress enacted the Northeast Rail Service Act of 1981, a subtitle
 of Title XI of the Omnibus Budget Reconciliation Act of 1981. See Pub. L. No.
 97-35, 95 Stat. 357, 643 (1981). Section 1142 of the subtitle amended the 3R
 Act of 1973 by inserting a new Title IV that authorizes the Secretary to arrange
 for the sale of the common stock of Conrail or to engage in freight transfer
 agreements. Pursuant to the legislative scheme, the Secretary shall, as soon as
 practicable, engage the services of an investment banking firm to arrange for
 the sale of the interest of the United States in the common stock of Conrail. See
 45 U.S.C. § 761(a)(1). The Secretary may submit a stock sale plan to Congress
 if that plan ensures continued rail service, promotes competitive bidding for the
common stock, and maximizes the return to the United States on its investment.
See id. § 761(a)(2). A plan that meets these requirements is deemed approved
 sixty days after its submission to Congress, unless both Houses pass a concur­
rent resolution disapproving the plan. See id. § 761(a)(3).
    Congress also required the Board of Directors of the United States Railway
Association (USRA Board) to make a prospective determination on June 1,
 1983 whether Conrail will be a profitable carrier. See id. § 763.1 If the USRA
Board determines that Conrail will be profitable, the Secretary is to continue
pursuit of the stock sale plan. If the USRA Board determines that Conrail will
not be a profitable carrier, the Secretary is authorized to initiate negotiations
for the transfer of Conrail’s properties and service responsibilities. See id.
§ 763(a)(3)(A), (B). Because the USRA Board found Conrail profitable on
June 1,1983, the Secretary is continuing to pursue the sale of Conrail as an entity.
    Once Conrail meets the initial profitability test, the USRA Board is required
to make a historically based determination whether Conrail has been profitable
from June 1 to October 31, 1983. See id. § 763(b)(1). Again, if the USRA
Board finds that Conrail has been a profitable carrier, the Secretary must
continue to pursue the sale of Conrail as an entity at least until June 1, 1984. If
the USRA Board finds that Conrail has not been a profitable carrier, the
Secretary is authorized to negotiate freight transfer agreements to sell Conrail
   1 The U nited States R ailw ay A ssociation (USRA) is a nonprofit association authorized to m onitor the
financial perform ance o f C onrail and to review w hether certain goals, such as the creation through reorgani­
zation o f a fin an cially self- sustaining reg io n al rail system , are met. See 45 U.S.C. §§ 711-719.

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in pieces. See id. § 763(b)(3)(A), (B). After June 1, 1984, the Secretary may
notify the USRA Board that she is unable to sell Conrail as an entity, and if the
USRA Board approves the Secretary’s determination then the employees have
90 days within which to submit a stock purchase plan. Thereafter, if no
employee stock purchase plan is approved, the Secretary is authorized to
negotiate for the transfer of Conrail in pieces. If the USRA Board does not
concur in the Secretary’s June 1, 1984, determination, however, the procedure
for continuing to sell Conrail as an entity and, if unsuccessful, seeking approval
for authority to negotiate freight transfer agreements is repeated every ninety
days. See id. § 764; 127 Cong. Rec. 19505 (1981) (Explanatory Statement of
Conferees on Title XI of Omnibus Budget Reconciliation Bill as provided for
in the House Conference Report).
   The Secretary’s authority to negotiate for the transfer of Conrail’s rail
properties and service responsibilities, once triggered by the requisite prior
conditions, see 45 U.S.C. § 765(a), is carefully circumscribed by congression-
ally defined goals and provisions for consultation and review. The Secretary
must consult, among others, railroads, employee representatives, State and
local government officials, shippers, consumer representatives, and potential
purchasers. See id. § 765(b), (d). The Secretary must ensure that no less than 75
percent of Conrail’s rail service operations are maintained under the aggregate
of the freight transfer agreements and that the agreements provide for the long
term viability of the acquiring private sector railroads and the enhancement of
competition. See id. § 766. After preliminary approval of the freight transfer
agreements the Secretary shall request public comment for at least thirty days;
the Attorney General must then advise the Secretary within ten days whether
the agreements are inconsistent with the antitrust laws, and the Interstate
Commerce Commission (ICC) during the same time period must advise the
Secretary of the effect of the agreements on the adequacy of public transporta­
tion and railroad competition. See id. § 767(a), (b). Finally, after any modifica­
tions in light of the above described comments and advice, the Secretary may
grant final approval to the freight transfer agreements subject to a one-House
resolution of disapproval within sixty days of transmittal of the freight transfer
agreements to Congress. See id. § 767(d).

                                II. Severability

  Whether the Secretary continues to have authority to sell Conrail as an entity
under 45 U.S.C. § 761 in the absence of the two-House veto provision in
§ 761(a)(3) depends on whether that provision of § 761(a)(3) is severable from
the remainder of § 761. Similarly, whether the Secretary has authority to
approve freight transfer agreements for the sale of Conrail’s rail properties
under 45 U.S.C. §§ 765-767 depends on whether the disapproval provision in
§ 767(d) is severable from the rest of these statutory provisions. Determining
the severability of an unconstitutional provision from the remainder of a statute
requires an “elusive inquiry” into legislative intent: whether Congress would
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have enacted the remainder o f the statute had it recognized that the questioned
provisions were unconstitutional and therefore could not have properly been
included in the statute. See United States v. Jackson, 390 U.S. 570 (1968);
D orchy v. Kansas, 264 U.S. 286, 290 (1924); Consumer Energy Council o f
A m erica v. FERC, 673 F.2d 425, 442 (D.C. Cir. 1982), a f f d mem. sub nom.
P rocess G as Consumers Group v. Consumer Energy Council, 463 U.S. 1216
(1983). The invalid portions are to be severed “unless it is evident that the
Legislature would not have enacted those provisions which are within its
power, independently of that which is not.” INS v. Chadha, 462 U.S. at 931-32
(quoting Buckley v. Valeo, 424 U.S. 1, 108 (1976)). In the present case, we
must attempt to determine which of two basic options Congress would have
chosen. Congress could have decided to authorize the Secretary to sell Conrail,
either as an entity or by sale of assets, absent the opportunity for a legislative
veto; alternatively, Congress could have refused to authorize the Secretary to
sell Conrail in the absence of a provision for legislative review.
   In INS v. Chadha, the Court analyzed the severability question by discerning
certain statutory characteristics that create a presumption of severability and by
examining the legislative history to determine whether it was sufficient to rebut
those presumptions. First, the presence of a severability clause “plainly autho­
rized” the presumption that Congress intended that any unconstitutional provi­
sion be severable from the remainder of the statute. See 462 U.S. at 932. In the
present instance, there is a severability clause, which was contained in the
original legislation, the 3R Act of 1973. See 45 U.S.C. § 701 note.2 This clause,
which is virtually identical to the severability provision at issue in Chadha,
provides that: “If any provision of this Ac t . . . or the application thereof to any
person or circumstances is held invalid, the remainder of this Act and the
application of such provision to other persons or circumstances shall not be
affected thereby.” Although the Omnibus Budget Reconciliation Act of 1981,
which enacted the relevant provisions governing the sale of Conrail, does not
contain a severability provision, it is significant that the 1981 statute specifi­
cally provides that the Conrail sale provisions amend the 3R Act of 1973. See
Pub. L. No. 97-35, § 1142,95 Stat. 654 (1981) (“The Regional Rail Reorgani­
zation Act of 1973 is amended by inserting immediately after Title III the
following new title: ‘Title IV Transfer of Freight Service’”). Because Congress
was clearly aware that the 1981 amendments were to become a part of the 3R
Act of 1973, we must presume that Congress understood that the original
severability clause was fully applicable to the more recent statutory additions.
Cf. A lb e m a z v. U nited States, 450 U.S. 333, 342 (1981) (Congress presumed to
be aware of existing law and to legislate with it in mind). We therefore
conclude, as the Supreme Court did in Chadha, that the language of the

  2 W e d eem it irrelevant for purposes o f an aly sis that the severability provision currently is set forth in a note
rather than in an independent provision in the U nited States C ode. The legislation, as originally enacted,
contain ed an independent “Separability Provision.” See Pub. L. No. 93-2 3 6 , § 6 0 4 ,8 7 Stat. 1023 (1974) The
subsequent decision to classify the statutory provision as a note was m ade by the Law Revision Counsel o f the
H ouse o f R epresentatives, as authorized by 2 U.S.C. § 285b, and not by Congress itself as a legislative act.

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severability clause “is unambiguous and gives rise to a presumption that
Congress did not intend the validity of the Act as a whole, or any part of the
Act, to depend upon whether the veto clause . . . was invalid.” 462 U.S. at 932.
   The Supreme Court in Chadha also determined that “a provision is further
presumed severable if what remains after severance ‘is fully operative as a
law.’” 462 U.S. at 934 (quoting ChamplinRefining Co. v. Corporation Com m ’n,
286 U.S. at 234). Similar to the legal situation under the statutory scheme
remaining after severance in Chadha, the Secretary’s sale authority under
§ 761 and §§ 765-767 is fully operative and remains a workable administrative
machinery without the legislative veto provisions in § 761(a)(3) and § 761(d).
The Secretary’s authority to sell Conrail as an entity under § 761 remains,
independent of the two-House veto provision, and that authority is channeled
by the congressionally defined goals of ensuring continued service and of
maximizing the return of the United States on its investment. See 45 U.S.C.
§ 761(a)(2). The Secretary’s authority to sell Conrail as an entity also continues
to be subject to the profitability determinations of the USRA Board: under
certain conditions the Secretary must attempt sale as an entity and has no
discretion to negotiate for transfers of assets. Moreover, Congress’ oversight of
the exercise of this delegated authority is preserved, because pursuant to
§ 761(a)(2) the Secretary is to submit to Congress any plan for the sale of
Conrail’s common stock.3 And as Chadha suggests, although the legislative
veto provision in § 761(a)(3) is invalid, Congress would presumably retain the
power, during the time allotted in § 761(a)(3), to enact a law, in accordance
with the requirements of bicameralism and presentment set forth in Article I of
the Constitution, forbidding the submitted sale plan. See 462 U.S. at 971-72 n.8.
   Likewise, the Secretary’s authority to negotiate freight transfer agreements
under § 765, subject to the congressional goals set forth in § 766(a), remains
fully operative. Independent of the one-House veto provision in § 767(d), the
administrative process adopted by Congress — comprising USRA Board ap­
proval of the Secretary’s determination of inability to sell Conrail as an entity,
negotiations and conferences between the Secretary and parties interested in
developing freight transfer agreements, public comment, and the advice of the
Attorney General and the ICC on the transfer agreements — remains otherwise
intact. Congressional oversight is ensured because § 765(f) requires the Secre­
tary to submit reports to Congress every six months on her activities in
negotiating freight transfer agreements.4 And, as noted above, Congress pre­
sumably retains the power to reject, albeit by plenary legislation, the freight
transfer agreements within the 60-day time period for legislative review estab­
lished by the statute. Unquestionably, both §§ 761 and 767 survive as workable

  3 Although § 761(a)(2) is phrased in terms o f “the Secretary may subm it,” it is unclear what range o f
discretion is thereby granted the Secretary. Presum ably, the Secretary w ould not have to subm it clearly
unviable o r uneconom ical proposals that fail to m eet the congressional goals of continued service and
m aximum return to the U nited States on its investment.
  4 Section 765(f) fu rth er requires concurrent notification o f C ongress and the USRA B oard w henever the
Secretary finds that she is unable to sell Conrail as an entity.

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administrative mechanisms. Accordingly, we conclude that the second indica­
tor relied on in Chadha, that a court may presume a provision severable if what
remains after severance is fully operative as law, is fulfilled in the present instance.5

                                        III. Legislative History

   Because the statutory mechanism in §§ 761-767 is operable absent the
legislative review provisions in § 761(a)(3) and § 767(d), and because the
statute contains a severability clause, the Secretary is presumed to have author­
ity under §§761 and 765-767 to sell Conrail as an entity or by sale of assets
unless the legislative history rebuts the presumption that Congress would have
wished the Secretary to exercise this authority without the opportunity for
congressional veto. Although nothing in the legislative history definitively
indicates what Congress would have done had it known it could not rely on the
legislative veto provisions, we believe that the legislative history, taken as a
whole, suggests that Congress would have wanted the Secretary to exercise the
sale authority even without the legislative vetoes. More significantly, similar to
the situation in Chadha, the legislative history is not sufficient to rebut the
presumption of severability because there is no compelling evidence that
Congress would have refused to grant the sale authority to the Secretary. See
462 U.S. at 932.
   Prior to the Omnibus Budget Reconciliation Act, legislation was introduced
in both the House and Senate to improve rail service in the Northeast, to
restructure and render profitable Conrail’s operations, and to provide for the
sale of Conrail to the private sector. See S. Rep. No. 101, 97th Cong., 1st Sess.
(1981) (S. 1100, providing for transfer of Conrail by sale of assets to private
sector railroads); H.R. Rep. No. 153, 97th Cong., 1st Sess. (1981) (H.R. 3559,
providing for sale of common stock of Conrail if profitable and sale of assets if
not profitable). H.R. 3559 and the report thereon were incorporated in the
House Report on the Omnibus Budget Reconciliation Act of 1981. See H.R.
Rep. No. 158, Vol. II, 97th Cong., 2d Sess.~438 (1981). S. 1100, to the extent it
is reflected in the Senate amendments to the House Report, was considerably
altered during consideration of the Omnibus Budget Reconciliation bill, largely
to express congressional intent “that to the extent practicable, the Secretary
shall make every effort to transfer Conrail as a single entity.” S. Rep. No. 139,
97th Cong., 2d Sess. 328 (1981). At all stages, however, the legislative history
reveals a strong, indeed urgent, congressional intent to achieve fundamental
changes in the efficiency and cost structure of Conrail and, most importantly,
to provide for the orderly sale o f Conrail either as an entity, if feasible, or by
  5 In treating the operability o f a statute a fte r excision o f an unconstitutional provision from it as creating a
“presum ption" o f severability, the Court in Chadha w ent beyond its decision in Champlin, 286 U.S. 210
(1932), in w hich a “presum ption” was c re ated only by the existence o f a severability clause in the statute
before it. In B uckley v. Valeo, 424 U.S. 1, 1 0 8 -0 9 (1976), the Supreme C ourt dealt w ith a statute that did not
contain a sev erab ility clause and found an unconstitutional provision in that statute to be severable by relying
on the fact th at the statutory scheme w as fully functional; the C ourt did not, however, use the word
“presu m p tio n ” in Buckley.

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sale of assets. See S. Rep. No. 101,97th Cong., 1st Sess. 2-3 (1981); H.R. Rep.
No. 153, 97th Cong., 1st Sess. 205 (1981). Congress made clear that “the
purpose of the legislation is to remove the federal government from the rail
freight business.” Id. at 2. If the legislative veto is regarded as inseverable,
however, the Secretary’s authority to sell Conrail is invalid and the major
objective of the legislation would be frustrated. Given the choice between
continuing the Secretary’s authority to sell Conrail or denying the Secretary
authority to undertake any sale plans, it is probable that Congress would have
opted for continuation of the existing method for eliminating federal involve­
ment with rail freight service.
   More important, nothing in the legislative history indicates that Congress
would not have delegated the sale authority to the Secretary but for the
existence of the invalid legislative veto device. The House bill delegated
“broad authority,” 127 Cong. Rec. 19503 (1981), “much latitude,” H.R. Rep.
No. 153, 97th Cong., 1st Sess. 8 (1981), to the Secretary to sell the common
stock of Conrail and to transfer Conrail assets, without linking that broad
authority to the existence of the legislative vetoes.6 Indeed, the Secretary’s
authority to sell the common stock of Conrail was not subject to any congres­
sional review. See id. at 61. Although the House bill qualified the Secretary’s
authority to sell Conrail by sale of assets with a provision for a one-House veto
within 90 days of submission of the transfer plan, neither the House Report nor
the additional comments on the House bill in the House Conference Report in
any way indicate that such authority was granted only in light of the veto
provision. To the contrary, the Reports simply describe the working of the
congressional review provision, but fail to mention, much less emphasize, the
significance of the legislative veto device. See Consumer Energy Council v.
FERC, 673 F.2d at 442 (severability argument aided insofar as Conference
Report fails to stress importance of legislative veto provision).
   The Senate Amendment set forth more elaborate procedures for public
comment and notification of Congress with respect to freight transfer agree­
ments. Congress had 120 days within which to disapprove the transfer agree­
ments by concurrent resolution. In addition, the ICC and the Attorney General
were to report to Congress on the aggregate of transfer agreements negotiated
by the Secretary “to provide assistance to Congress in its deliberations.” S.
Rep. No. 139, 97th Cong., 1st Sess. 330 (1981). Although these provisions
suggest that Congress intended to retain the ability to engage in a meaningful
review of the transfer agreements, the Senate Committee Report did not regard
the Secretary’s sale authority as inextricably bound to this invalid legislative
review provision. Moreover, the period for congressional review was reduced
to 60 days in the Conference substitute. See 127 Cong. Rec. 19505 (1981). In
addition, although the final House Conference Report summarily describes the

  6 As explained in the House Conference Report, the provisions o f the subtitle of the Omnibus Budget
Reconciliation A ct that involve C onrail, as they appear in the conference substitute, and the corresponding
provisions o f the H ouse bill and Senate amendment, are discussed in an explanatory statem ent printed in the
Congressional R ecord. See H.R. Conf. Rep. No. 2 0 8 ,97th Cong., 1st Sess. 368-69 (1981).

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shortened 60-day period for congressional review of asset sales, it fails alto­
gether to mention the provision for congressional review of a stock sale. See id.
This lack of emphasis on the importance of the legislative veto provisions
indicates that Congress did not regard the provisions as essential to, or
inseverable from, the statutory scheme for the sale of Conrail. See Consumer
Energy Council v. FERC, 673 F.2d at 442.
   Finally, we note that the leadership of the House Committee on Energy and
Commerce and of the Subcommittee on Transportation has initiated legislation
to replace the legislative veto provisions in §§ 761(a)(3) and 767(d) with a
requirement that any sale plan be enacted into law in conformity with the
Article I procedures governing the exercise of legislative authority. You have
also informed us that the informal view of some Committee staff members is
that the Secretary’s authority to arrange for the sale of Conrail is invalid
because the unconstitutional vetoes in §§ 761(a)(3) and 767(d) are inseverable
from the remaining statutory sale authority. As a general matter, “postenactment
developments cannot be accorded ‘the weight of contemporary legislative
history.’” N orth Haven Bd. o f Education v. Bell, 456 U.S. 512,535 (1982). And
the normal hesitancy of the courts to attach much weight to comments made
after the passage of legislation, see County o f Washington v. Gunther, 452 U.S.
161, 176 n.16 (1981), is necessarily reinforced when those comments are the
informal views of staff members. Similarly, we do not accord such informal
postenactment comments any weight in our assessment of what the 97th
Congress would have intended in the absence of the legislative review provi­
sions. See id. It is significant, however, that the Secretary’s basic authority to
arrange for the sale of Conrail stock or to negotiate for transfers of its assets
would be preserved under the proposed amendment. To the extent the proposed
amendment indicates anything about Congress’ choice between refusing to
grant the Secretary any authority to engage in the sale of Conrail or authorizing
the Secretary to continue to pursue the effort to remove the federal government
from subsidizing and running rail freight service, it is supportive of our conclu­
sion that Congress would have desired that the Secretary retain the authority to
sell Conrail.

                                IV. Comclnisnoini

   In sum, the legislative history provides insufficient evidence to rebut the
presumption of severability created by the presence of a severability clause and
the existence, after severance, o f a “fully operative” law and workable adminis­
trative machinery. We therefore conclude that although the two-House disap­
proval mechanism contained in § 761(a)(3) and the one-House disapproval
device set forth in § 767(d) are unconstitutional, the Secretary retains authority
under the remaining provisions in §§ 761-767 to sell Conrail as an entity or by
sale of assets. The Secretary is still required, under § 761(a)(2), to submit to
Congress, 60 days prior to its effective date, a plan for the sale of the United
States’s stock interest in Conrail; we would also, under the reasoning in
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Chadha, read the remaining, valid portion of § 767(d) to require the Secretary
to transmit copies of any freight transfer agreements to Congress within ten
days of their approval. Congress would then have the opportunity to overrule
the Secretary’s actions, but only by legislative action that conforms with the
bicameralism and presentment to the President requirements of Article I, § 7,
els. 2 & 3 of the Constitution.

                                                 R alph W . T arr
                                       Deputy Assistant Attorney General
                                           Office o f Legal Counsel

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