Court Opinion

ID: 8912845
Source: CourtListenerOpinion
Date Created: 2022-11-27 03:44:44.761876+00
Date Added: 2024-06-11T17:08:41.642539
License: Public Domain

ADAMS, Circuit Judge,
dissenting.
Although I share the majority’s concern for the Iowa-South Dakota region whose economic future is clouded by proposed railroad abandonments, I nevertheless find myself compelled to dissent. For today’s opinion rests on what I perceive to be an intrusion by the judiciary into an administrative agency’s realm of expertise and policymaking, as well as a misunderstanding of the agency’s economic analysis of the proposed abandonments.
I part company from three aspects of the majority opinion: (1) the scope of review, not as articulated, but as actually engaged in; (2) the definition and application of the statutory term “avoidable costs”; (3) and the propriety of our addressing an issue that was not raised by the parties.
While I agree with the majority’s statement that the scope of our review of an order of the Interstate Commerce Commission (the Commission), is limited- to a determination whether the Commission’s findings and conclusions are supported by substantial evidence on the record as a whole, Illinois Central R.R. Co. v. Norfolk & Western Ry. Co., 385 U.S. 57, 87 S.Ct. 255, 17 L.Ed.2d 162 (1966); 5 U.S.C. § 706(2)(E) (1976), the majority appears to have transgressed this acknowledged restriction. As this Court recognized in one of the first cases to be reviewed under the recent legislation permitting petitions from agency orders to the court of appeals:1
In this circuit a petition for review of a Commission’s order will be denied on a summary basis when the order is based on the evidence and supported by a rational judgment of the Commission .... It is rare that a Commission order is not based on relevant factors or that the exercise of its expertise can be termed such an abuse of discretion as to require reversal by the courts. That such limited review was the intent of Congress is clear.
*1231Warren Transport Inc. v. United States, 525 F.2d 148, 151 (8th Cir. 1975).
Such a posture balances the responsibility to avoid judicial overreaching into areas of discretion and of policy choices that are vested by Congress in the Commission, with our primary duty to review agency decisions so as to ensure conformity with pertinent legal requirements.
It is not, however, within our province to choose between discrepant decisions by the ALJ and the Commission, nor, as the majority seems to suggest, to alter our level of review because the two decisions are contradictory. See maj. op. at n.4. The Commission is in no sense bound by the ALJ’s decision. In fact, scrutiny of the ALJ’s actions is only incidental to our review of the Commission’s decisions, see 28 U.S.C. §§ 2821, 2342, 2344. Except on matters of credibility, which are not in issue here, the ALJ’s conclusion is to be accorded little deference provided the Commission has made an independent evaluation supported by substantial evidence. Thus, as the First Circuit noted in an analogous context, “the question before us is not whether the ALJ’s approach was, in our view, better, but simply whether the Commission’s method of computing the extent of the carriers’ injury was rational.” Bangor & A. R. Co. v. I. C. C., 574 F.2d 1096, 1110 (1st Cir. 1978), cert. denied, 439 U.S. 837, 99 S.Ct. 121, 58 L.Ed.2d 133.2 The majority’s proclivity to weigh the desirability or correctness of the ALJ’s decision against that of the full Commission, accordingly, would appear to be unauthorized.
Secondly, I differ from the conception of avoidable costs that is developed in the majority opinion. Contrary to the majority’s belief that “[t]he Commission further stated that the concept of an avoidable cost is appropriate only when the carriers’ costs are shared between two or more revenue-producing operations,” ante at 1229, I read the full Commission’s decision to state exactly the opposite — that it is precisely when no shared or joint costs exist that avoidable costs are present. Conversely, when joint costs do exist many costs are not avoidable, for the elimination of one operation would leave unaffected the need to continue those costs to support the remaining operation. As the Commission declared, “every ongoing-out-of-pocket cost of a particular rail operation, that cannot be properly reallocated to any other revenue-producing operation [i. e. is not a shared or joint cost] must be considered as part of the cost of the operation proposed for abandonment.” 363 I.C.C. at 96. Rather than being synonymous with joint costs, as the majority contends, ante at 1229, avoidable costs are defined in opposition to joint costs.
The consequences of my disagreement with the majority on this issue are twofold. Initially, I do not believe that the Commission deviated from the statutory definition of avoidable cost. Cf. maj. op. at 1229. As the majority indicates, the recent Railroad Revitalization and Regulatory Reform Act (4-R Act) Pub.L. No. 94-210, 90 Stat. 31 (1976), now codified at 49 U.S.C. § 10903-10905 (Supp. II 1978), provides the governing law for abandonment of rail lines. Section 10905(a) defines “avoidable cost”:
(1) “avoidable cost” means all expenses that would be incurred by a rail carrier in providing transportation that would not be incurred if the railroad line over which the transportation was provided were abandoned or if the transportation were discontinued. Expenses include cash inflows foregone and cash outflows incurred by the rail carrier as a result of not abandoning or discontinuing the transportation. Cash inflows foregone and cash outflows incurred include—
(A) working capital and required capital expenditure;
(B) expenditures to eliminate deferred maintenance;
(C) the current cost of freight cars, locomotives, and other equipment; and
*1232(D) the foregone tax benefits from not retiring properties from rail service and other effects of applicable Federal and State income taxes.
The Commission’s definition of avoidable costs properly reflects the congressional meaning. Instead of parroting the statutory language the Commission, admittedly, spoke of ongoing out-of-pocket costs rather than “outflow incurred.” But this did not distort the statutory definition. Nor did the illustration of joint costs do more than illuminate why avoidable costs become problematic in areas of overlapping operations. In fact, the Commission’s finding that it “would allow as an avoidable cost . .. only those costs which it was shown would not have to be continued [to support some other service],” 363 I.C.C. at 96, is clearly consonant with the statutory language.
Further, based on the record before us and in light of my view that the Commission rationally interpreted the meaning of the term avoidable costs, I conclude that the Commission did not err in holding the crew’s wages avoidable upon abandonment. Cf. maj. op. at 1229. All the parties concede that Commission regulation 49 C.F.R. 1121.42 expressly contemplates engine and train crew wages to be avoidable costs so long as they “are incurred solely as a result of the continuation of rail freight service on the branch.” The union and petitioners, however, maintain that their wages are not incurred solely on account of continued service. They argue that under the collective bargaining agreement — the “tabulated local rule” — the ICG is compelled to pay their wages indefinitely, regardless of whether the rail line exists or is abandoned.
Bearing in mind that our review focuses on whether there is a rational basis for the Commission’s conclusion, not whether petitioners and the ALJ’s position might also be plausible, I do not find the Commission’s analysis of the situation unsupported by the record. The Commission reasoned that the wages were an existing cost:
Thus, even if it were clearly established that ICG would have to continue the wages of these two train crews for some period of time after shutting down operations ... it still would not follow that their wages and fringe benefits should be left out of account in assessing the burden on ICG and on interstate commerce of requiring ICG to continue operations on the line.
363 I.C.C. at 97.
Next, the Commission noted that although the wages might have to be treated temporarily as deferred costs of the abandoned operation, such costs gradually would be eliminated. From the Commission’s perspective, no one could contend “that [trainmen] will continue indefinitely to be paid for doing nothing. At most it will be until the local [labor] agreement is next renegotiated, or in the extreme imaginable case until these workers reach retirement age. Under even the most ironclad attrition agreement, attrition eventually takes place.” 363 I.C.C. at 98 n.5. The final element in the Commission’s determination that the wages were avoidable costs involved a policy choice. Underlying its assessment “that it would be improper to use the prospective imposition of labor protective provisions as an argument for ignoring present labor costs when considering the abandonment of a branch line,” as the ALJ did, was the recognition that the consequent contorting of the profitability calculation would ultimately discourage such private agreements. That is, if attrition agreements or “tabulated local rules” were viewed as immutable and eternal, they would function to prevent adjustments in rail operations needed to reflect changed public demand as well as to keep railroads out of reorganization proceedings. The public interest would suffer and the objective of protecting labor would eventually boomerang — for carriers would refuse to enter such unrealistic arrangements.
On the record, the Commission’s decision to treat crew costs as avoidable is supported by substantial evidence. The regulations define such costs as avoidable; the effect of *1233the collective agreement was in question;3 and the Commission’s policy choice — seeking to balance the goal of stable employment with that of viable railroads, rather than sacrifice the latter to the former — was clearly within the realm of its expertise. There would appear to be nothing arbitrary in the Commission’s reasoning that the possible existence of deferred wage costs is neither a valid basis for denying abandonment nor a ground for defining an otherwise unprofitable operation as profitable.
Moreover, I have difficulty understanding how the decision by the majority to uphold the Commission’s determination that property taxes are avoidable costs, see maj. op. at 1227 n.5, may be reconciled with its decision to reject the Commission’s complementary finding that wage costs are avoidable. As with crewmen’s wages, the abandonment regulations specifically recognize real property taxes as avoidable costs. Again, the Commission adhered to the congressional definition of avoidable cost: “A cost is avoidable if it can with reasonable certainty be avoided within a reasonable time following abandonment.” 363 I.C.C. at 100. And the Commission made explicit that “[t]he principles underlying our earlier discussion of avoidable wage costs are applicable here as well.” 363 I.C.C. at 100. It is unclear how the Court can find identical principles and analysis permissible at another point, with respects to taxes and irrational at another, with respects to wages. Insofar as the Court has failed to distinguish why the Commission’s reasoning is appropriate for property taxes but not for wage costs, the agency will, in the absence of further explication, have difficulty on remand fulfilling the mandate “to articulate, with precision the analysis underpinning its next determination.
As indicated above, I diverge from the majority on a third matter: the propriety of raising sua sponte an issue not addressed by the parties. My reluctance to expand judicial oversight is in this instance both informed by the statutory limitations on our scope of review and enhanced by the prospect of penalizing the Commission for properly limiting its response to the sole issue raised by petitioners. As the Commission itself noted, “although [our] determination that the public convenience and necessity permit the abandonment was based upon weighing and valuing a number of factors, petitioners have limited their challenge to the Commission’s decision to a single item with respect to the cost side of the equation. Accordingly, we shall limit our defense of the Commission decision to that issue.” (R. Brief at 12). Thus, concerns of both an institutional and of a due process nature heighten my disagreement, at the factual level, with the majority’s holding that “the Commission failed to properly weigh the competing burdens/benefits of both the carrier and the affected communities.” Ante at 1229.
Insofar as fulfillment of our obligation to review thoroughly the record as a whole,4 has led the Court to hold that the Commission did not adequately consider the benefits and burdens of abandonment to the community, an objective perusal of the entire record indicates that the Commission properly performed the statutory balancing act. It is undisputed that “whether the abandonment or discontinuance will have a serious, adverse impact on rural and community development” is an essential ingre*1234dient of the statutory touchstone — -whether “the present or future public convenience and necessity require or permit abandonment.” 49 U.S.C. § 10903(a)(2). At a minimum, the Commission considered the impact on the community at two points in its order.
With respect , to the future need for refrigerated meat service, the Commission affirmed the panel’s conclusion that the ALJ’s assumption about the recoverability of meat traffic was speculative and unrealistic. In doing so, the Commission relied on the inference that the present decline in demand for refrigerated services is likely to continue, and further noted that no testimony of need was offered by a shipper or prospective shipper. The Commission acknowledged that testimony of a demand for services would be highly probative but regarded the silence in the present proceeding as a reflection of minimal local need. Clearly, the impact on the community was an element in the determination. 363 I.C.C. at 102-03.
The Commission then stated that, “we see no basis for disturbing the panel’s ultimate weighing of the factors of public convenience and necessity, which led it to conclude that abandonment should be permitted.” This indicates an adoption of the panel’s calculus which found that the adverse environmental factors enumerated by the ALJ (small increase in fuel consumption, noise and air pollution) and the economic burdens which abandonment would impose upon shippers and community development were collectively insufficient to offset the economic advantages to ICG and to interstate commerce which would result from an authorization of abandonment. When the panel’s determination is combined with the environmental threshold assessment survey5 adopted by the panel (and which found no negative impact on industrial development), the record evinces substantial evidence, notwithstanding the ALJ’s conclusion that abandonment seems more likely than not to have an adverse impact on rural development, to support the Commission.
Admittedly, the Commission’s decision is grounded heavily on the effect that the abandonment or continuance would have on the economic well-being of the railroad. But this is not, as the majority hypothesizes, because the Commission believed “in substance that if the carrier could not operate the branch as a going concern ... then abandonment would be permissible.” Ante at 1229. As the Commission explicitly stated, this assessment was only one of the concerns of the abandonment regulations. 363 I.C.C. at 96. The economic burden on the rail carrier was addressed extensively simply because the salient question — whether crew wages were avoidable costs — was inextricably linked to the economic balance sheet of the railroad. Once the Commission agreed with the panel that the ALJ’s mischaracterization of wages and property taxes improperly transformed the 1976 and 1977 years’ operating losses of $53,000 and $117,000 into profit contributions of $184,-000 and $73,000, it had no need to go further. Rather than duplicate the panel’s cost-benefit balancing it was permissible for the Commission to adopt the panel’s weighing of the relevant statutory factors. Only if the Commission had disagreed with the panel would there have been a need for a reworking of the benefit/burden calculation. In the present proceeding, there is no justification for a remand.
While either a wholehearted commitment to the economic viability of railroads or a more integrated approach to areas threatened by multiple abandonments might be preferable, and might eliminate many of the problems implicit in this appeal, at present it is necessary to work within existing statutory definitions and a circumscribed scope of review that have been or*1235dained by the Congress. Because I believe the majority trenches upon agency discretion and fails to grasp the appropriate relationship between avoidable and joint costs, and because I find substantial evidence to support both the panel’s and the full Commission’s assessment of avoidable costs and public convenience, I respectfully dissent.

. Pub.L.No. 93-584 §§ 5 and 7 (Jan. 2, 1975) (eliminating three-judge district court procedure for review of orders of the Interstate Commerce Commission). See also 28 U.S.C. § 2342.

. This portion of the Bangor decision involved the calculation of a damage award against a carrier whose solicitation campaign on behalf of one line unduly prejudiced other connecting lines in the distribution of traffic.

. The old award decisions cited by petitioners, dating from 1955, 1941 and 1937 concededly guarantee pay for two crews on the line for every working day, regardless of whether the crews are actually used each day, but they do not begin to address any assertion that wages will be paid indefinitely despite cessation of service and abandonment of the line. See National Railroad Adjustment Board-First Division, Award 17194 (Docket No. 27306) (October 26, 1955) and National Railroad Adjustment Board-First Division, Award No. 5523 (Docket No. 11522) (March 19, 1941). The union admitted that the agreement did not contemplate abandonment. At most then, the union’s testimony amounted to a claim that, given an abandonment, no immediate savings would be realized because the Sioux Line employees have the right to replace lesser-paid junior employees in other areas, or would fill existing vacancies. (P.Br. la-16a)

. See Hilt Truck Line, Inc. v. United States, 532 F.2d 1199 (8th Cir. 1976).

. In conjunction with an application for abandonment the Commission’s section of Energy and Environment prepares an Environmental Threshold Assessment Survey (TAS) which can provide the basis for modifications or conditions on approval of an application. The TAS for the ICG’s application concluded that this “abandonment proposal would not significantly affect the quality of the human environment.”