Democratic Central Committee of the District of Columbia v. Washington Metropolitan Area Transit Commission, D.C. Transit System, Inc., Intervenor

842 F.2d 402, 268 U.S. App. D.C. 406, 1988 WL 20862
CourtCourt of Appeals for the D.C. Circuit
DecidedJune 6, 1988
Docket21865, 24398, 24415, 24428 and 75-1632
StatusPublished
Cited by13 cases

This text of 842 F.2d 402 (Democratic Central Committee of the District of Columbia v. Washington Metropolitan Area Transit Commission, D.C. Transit System, Inc., Intervenor) is published on Counsel Stack Legal Research, covering Court of Appeals for the D.C. Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Democratic Central Committee of the District of Columbia v. Washington Metropolitan Area Transit Commission, D.C. Transit System, Inc., Intervenor, 842 F.2d 402, 268 U.S. App. D.C. 406, 1988 WL 20862 (D.C. Cir. 1988).

Opinions

Opinion for the Court filed by Circuit Judge SPOTTSWOOD W. ROBINSON, III.

Dissenting and Concurring Opinion filed by Senior Circuit Judge MacKINNON.

SPOTTSWOOD W. ROBINSON, III, Circuit Judge:

Today we conclude yet another chapter in the protracted dispute between D.C. Transit, Inc. (Transit), formerly the franchiser of mass transportation services in the Washington metropolitan area,1 and its patrons. The specifics of the controversy have been detailed in our prior decisions,2 and need only be briefly recounted from time to time. In Democratic Central Committee v. Washington Metropolitan Area Transit Commission (DCC I)3 and Democratic Central Committee v. Washington Metropolitan Area Transit Commission (DCC II)4 we reviewed Orders Nos. 7735 and 10526 of the Washington Metropolitan Area Transit Commission, which authorized, respectively, fare raises for Transit in 1968 and 1970. In those cases, we invalidated the increases and held that Transit’s riders were entitled to restitution for the overcharges.7 We remanded to the Commission for computation of the amount of restitution, and retained jurisdiction in full.

Our task now is to evaluate the Commission’s calculation of the restitution award [405]*405and to resolve related issues raised by the parties. In Part I of this opinion, we consider the Commission’s holding that Transit was sufficiently viable and efficient in 1970 to reap the benefit of a fare increase, and conclude that substantial evidence supports the Commission’s findings in this regard. In Part II, we examine the Commission’s identification of properties converted by Transit from operating to nonoperating status, the Commission’s computation of the amount of value appreciation on those properties, and the extent to which that amount should be shared by Transit’s fare-payers. In Part III, we allow the Commission reimbursement from the restitutionary fund for the expenses it incurred in connection with the remand, but hold that all other parties should bear their own costs. We decline to rule on the request for attorneys’ fees at this time, and instead remand to the Commission for additional findings pertinent thereto.8

I. Efficiency and Viability

The Washington Metropolitan Area Transit Regulation Compact, under which Transit operated, stipulated that the Commission could not call upon farepayers to bear the cost of inefficient management,9 and thus required the Commission to consider Transit’s operating efficiency before authorizing any fare increase. We ourselves held that Transit’s patrons could not be compelled to furnish a reasonable rate of return to investors if its operations were inherently unprofitable, and that therefore the Commission must satisfy itself that Transit was economically viable before allowing a higher fare.10

In DCC II, we concluded that the Commission did not discharge its duty to consider efficiency and viability when in 1970 it set a new fare in Order No. 1052.11 We noted that the gravity of this omission was underscored by the Commission’s denial of a 1972 fare increase because Transit did not meet the efficiency and viability criteria.12 We directed the Commission to examine these factors on remand and tell us whether there was a lack of efficiency or viability in 1970.

In compliance, the Commission sponsored a study by Pasquale A. Loconto exploring Transit’s efficiency and viability at the time of the 1970 fare increase.13 Loconto had previously reported on Transit’s 1972 operating condition, and that report had played a dispositive role in the Commission’s decision to deny Transit’s request for a fare increase that year.14 In addition, a Commission hearing examiner conducted 96 days of testimony on Transit’s 1970 financial status, which culminated in the issuance of a 448-page report on efficiency [406]*406and viability issues.15 The Commission, relying on the 1970 Loconto report and other evidence, upheld the hearing officer’s finding that Transit was both efficient and viable in 1970.16 Petitioner Black United Front (BUF) disputes this determination on several grounds.

BUF first contends that the Commission’s holding that Transit was managed efficiently in 1970 is not supported by the record evidence. In this regard, BUF asserts that a comparison of the two Loconto reports reveals that the same features that led to the Commission’s finding of managerial inefficiency in 1972 also appeared in the 1970 Loconto Report.17 Our review of those two reports, as well as the reports of the hearing officer and the Commission, leaves us in disagreement with BUF’s contention. There is ample evidence in the record to underpin the Commission's conclusion that Transit’s 1970 financial woes were caused, not by managerial inefficiencies, but by social factors beyond its control.18 Accordingly, we affirm the Commission’s ruling that Transit was efficiently managed at the time of the 1970 fare elevation.

BUF also argues that the Commission misconstrued the test of viability we articulated in DCCII.19 Therein we stated that, in order to determine whether Transit was viable in 1970, the Commission should investigate and determine

(a) if and to what extent the company would have been able to make a profit if there were no regulation at all, and (b) if and to what extent Transit could then earn a sufficient return so as to make it an attractive investment at any level of fares which could have been deemed “reasonable.”20

In phrasing our test that way, we asked the Commission to assume that Transit was operating in a hypothetical unregulated environment, and to disregard the knowledge gained from hindsight of Transit’s condition after 1970. The Commission found, on the basis of conservative financial estimates, that in 1970 Transit had the potential to continue to generate modest profits and thus it retained the interest of its shareholders and creditors.21 We find that the Commission’s determination of viability is based on substantial evidence, and that the Commission properly carried out our instructions.22

[407]*407The Commission thus has cured its neglect of Transit’s efficiency and viability when it promulgated Order No. 1052 by investigating and determining those matters on remand. It follows that Transit’s farepayers are not entitled to any restitution on the now-refuted theory of a lack of efficiency or viability on Transit’s part in 1970.

II. Property Issues

In DCC I and DCC II, we found that Orders Nos. 773 and 1052 were defective because the Commission had not considered the extent to which appreciation in the value of Transit’s properties might have obviated the need to generate additional revenue through fare increases.23

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Bluebook (online)
842 F.2d 402, 268 U.S. App. D.C. 406, 1988 WL 20862, Counsel Stack Legal Research, https://law.counselstack.com/opinion/democratic-central-committee-of-the-district-of-columbia-v-washington-cadc-1988.