Patrick W. Simmons v. Interstate Commerce Commission and United States of America

934 F.2d 363, 290 U.S. App. D.C. 75

• Court: Court of Appeals for the D.C. Circuit
• Decided: August 9, 1991
• Docket: 90-1365
• Status: Published

Opinions

Opinion for the Court filed by Circuit Judge SENTELLE.

Dissenting Opinion filed by Circuit Judge WALD.

SENTELLE, Circuit Judge:

In the administrative proceeding under review, the Interstate Commerce Commission (“ICC” or “Commission”) granted a petition by CMC Real Estate Corporation (“CMC”) and Soo Line Railroad Company (“Soo”) to exempt from regulation their abandonment and discontinuation of service on a 2.27-mile rail line in Rockford, Illinois. Patrick Simmons, legislative director of the United Transportation Union (“UTU”), challenges the Commission’s decision, arguing that the abandonment and discontinuation is actually a transfer of the line and service, and should be subject to the employee protection measures required for line transfers. Because we find that the ICC’s findings are supported by substantial evidence in the record, we deny Simmons's petition for review.

I. Background

CMC is the successor in interest to the Chicago, Milwaukee, St. Paul and Pacific Railroad Company (“Railroad”). Since the Railroad’s bankruptcy, most of its lines and properties have been transferred or abandoned. At issue in this case is a 2.27-mile track located in Rockford, Illinois. CMC is the present owner of that line, which is being operated by Soo for the benefit of a single shipper, Aetna Plywood, Inc. (“Aet-na”). CMC and Soo filed a petition with the ICC seeking to abandon the line and requesting the ICC to exempt this abandonment from regulation.

Line abandonments are generally governed by 49 U.S.C. § 10903, under which the ICC will allow abandonment “only if the Commission finds that the present or future public convenience and necessity require or permit the abandonment or discontinuance.” The ICC may exempt an abandonment from this provision where continued regulation “(1) is not necessary to carry out the transportation policy of section 10101a of this title; and (2) either (A) the transaction or service is of limited scope, or (B) the application of a provision of this subtitle is not needed to protect shippers from the abuse of market power.” 49 U.S.C. § 10505. CMC and Soo filed a joint petition requesting the ICC to exempt the abandonment under 49 U.S.C. § 10505, arguing that the abandonment met the above-listed conditions.

The sole shipper on the line, Aetna, gave its full support to the petition. Before filing the petition, CMC had agreed to transfer the line to Aetna following abandonment, and Aetna had arranged to have a carrier, Chicago, Central & Pacific (“CCP”), provide service on the line. Thus, Aetna would be assured of continued and adequate rail service. Verified Joint Petition for Exemption, Docket Nos. AB-7 (Sub-No. 115X) and AB-57 (Sub-No. 30X), (Aug. 25, 1989).

The petitioner in this case, Simmons, protested the exemption on behalf of UTU, arguing that the proposed abandonment was actually a line transfer between carriers. If the transaction were a line transfer between carriers, both the transferring carriers and the acquiring carriers would be required to provide protection measures to their employees under New York Dock Ry. — Control—Brooklyn Eastern Dist., 360 I.C.C. 60 (1979). Because CMC and Soo structured their transaction as an abandonment, they provided in their implementing agreement that they would provide the employee protection measures required under Oregon Short Line R. Co.— Abandonment — Goshen, 360 I.C.C. 91 (1979), requirements similar to those in New York Dock, but applicable only to the transferring carriers. Because UTU represents employees of both Soo, the carrier currently operating the line, and CCP, the carrier that will operate the line following Aetna's purchase, UTU argued that this “sham” restructuring of the transaction as an abandonment deprived CCP employees of the protection they would have received were the transaction characterized as a line transfer.

Despite UTU’s objections, the ICC granted CMC’s and Soo’s petition for exemption, finding that the transaction met the conditions set forth in § 10505. The petition requested only an exemption for CMC’s abandonment, but the ICC recognized that Soo also needed permission to discontinue service over the line and, of its own motion, also granted Soo an exemption for its discontinuation. CMC Real Estate Corp.— Abandonment Exemption — In Rockford, IL, Docket No. AB-57 (Sub-No. 30X) at 1 n. 1 (Feb. 12, 1990) {“CMC”). First, the ICC determined that the exemption would further railroad transportation policy by decreasing the administrative expense associated with the line, thereby fostering sound economic conditions and encouraging efficient management. Id. at 4. Second, the ICC found that the transaction was of limited scope because it involved “only 2.27 miles of rail line serving only one shipper.” Id. Finally, the ICC found that, “since that shipper fully supports the relief, regulation is not necessary to protect shippers from an abuse of market power.” Id.

The ICC rejected UTU’s contention that the transaction was actually a line transfer rather than an abandonment. The ICC relied on a previous ICC decision, CSX Transportation, Inc. — Abandonment Exemption — In Grant and Miami Counties, No. AB-55 (Sub-No. 264X) (Nov. 30, 1989) (not printed), for the proposition that the ICC need look only to the transaction before it, “and what subsequently occurs to the abandoned right-of-way is not an issue here.” CMC at 3. According to the ICC, there was no support for UTU’s allegation that the abandonment was a sham, structured merely to avoid the employee protection requirements associated with a line transfer. The ICC went on to note that, under the implementing agreement between CMC and Soo, Soo employees would be entitled to the employee protection measures required by Oregon Short Line, which, it asserted, were substantively identical to those provided under New York Dock. Id. Accordingly, the ICC found no obstruction to approving the exemption for the abandonment and discontinuance.

Following the ICC’s decision, UTU filed a petition for reconsideration. UTU argued that the ICC misapplied its earlier decision in CSX Transportation. UTU argued first that the subsequent sale in this case was more “imminent” than the one following abandonment in CSX Transportation. Petition for Reconsideration, Docket Nos. AB-7 (Sub-No. 115X) and AB-57 (Sub-No. 30X) at 3-4 (Mar. 9, 1990). The ICC rejected this contention,-stating that CSX Transportation was based not on the imminence of the sale, but on “the longstanding principle that carriers may proceed in stages, subject to our review of regulated transactions, and subsequent transactions will take into account any cumulative effects from prior transactions.” CMC Real Estate Corp. — Abandonment Exemption— In Rockford, IL, Docket No. AB-7 (Sub-No. 115X) at 2 (July 6, 1990) (footnote omitted).

UTU also argued that the ICC could not properly rely on CSX Transportation, as the case is currently pending on appeal before this Court. However, the ICC found that CSX Transportation remained good law pending the appeal, and that the ICC was free to act on its own authority provided its actions did not collide directly with the court’s jurisdiction. Id. (citing American Farm Lines v. Black Ball, 397 U.S. 532, 541, 90 S.Ct. 1288, 1293, 25 L.Ed.2d 547 (1970)). Accordingly, the ICC denied UTU’s petition. Simmons now appeals to this Court on behalf of UTU.

II. DISCUSSION

Simmons argues that the parties to the transaction are trying to circumvent employee protection requirements by structuring this transaction as an abandonment subject to Oregon Short Line employee protection requirements, rather than as a line transfer subject to the requirements of New York Dock. Simmons argues first that the employee protection requirements of New York Dock are more stringent than those of Oregon Short Line because New York Dock requires the parties to the transaction to negotiate and enter into an “umbrella” agreement covering the employees of both the selling and acquiring carriers. Although we do not decide the issue at this time, we note that the requirement of an “umbrella” agreement has been rejected both by the ICC, see Wilmington Term R., Inc. — Pur. & Lease — CSX Transp., Inc., 6 I.C.C.2d 799, 815 (1990), and by the Sixth Circuit, Railway Labor Executives’ Ass’n v. ICC, 930 F.2d 511 (6th Cir.1991) (affirming Wilmington). See also Railway Labor Executives’ Ass’n v. Staten Island R. Corp., 792 F.2d 7, 9 n. 4 (2d Cir.1986) (Oregon Short Line employee protection requirements substantively identical to those of New York Dock); Simmons v. ICC, 760 F.2d 126, 129 (7th Cir. 1985) (same), cert. denied, 474 U.S. 1055, 106 S.Ct. 791, 88 L.Ed.2d 769 (1986). For these reasons, the ICC argues that UTU, and therefore Simmons, lacks standing to challenge the ruling on the theory that there is no justiciable injury. While that argument is not without appeal, we disagree.

Even assuming the substantive requirements to be identical, the scope of the employee protection requirements applicable to a line transfer between carriers under New York Dock is more inclusive than of those requirements applying to an abandonment under Oregon Short Line. A line transfer between carriers is governed by 49 U.S.C. § 11343, which requires both the transferring and the acquiring carrier to provide protection to their employees.

[I]n line sale (and leases) cases under § 11343 the seller must: (1) provide full New York Dock protection to its affected employees; (2) arrive at an implementing agreement or agreements with them pri- or to consummation; and (3) impose no penalty for their decision not to take similar jobs under the rates of pay and work rules offered by the buyer.

The buyer must provide full New York Dock protection to its own employees and arrive at an implementing agreement or agreements with them prior to consummation. Unless otherwise provided by contract, the buyer’s only obligation to the seller’s employees will be to inform them of any availability of, and the terms and conditions of, employment.

Wilmington, 6 I.C.C.2d at 814-15. An abandonment is governed by 49 U.S.C. § 10903, rather than § 11343. In contrast to a line transfer, only the abandoning carriers are party to an abandonment, and therefore only those carriers need provide employee protection under Oregon Short Line. Simmons, 760 F.2d at 129. As UTU represents employees of both Soo and CCP, Simmons therefore argues that the alleged restructuring of the transaction as an abandonment and subsequent sale deprives its members of protection they would otherwise receive.

Simmons’s argument assumes that the ICC would otherwise view the transaction as a line transfer between carriers governed by 49 U.S.C. § 11343. However, in this case, the purchaser, Aetna, may well be a non-carrier, since Aetna functions as a shipper, rather than as a line operator. A line sale from a carrier to a non-carrier would be governed by § 10901, the same section that governs if the transaction is a sale following an abandonment. Railway Labor Executives' Ass’n v. United States, 791 F.2d 994, 1004 (2d Cir.1986); Railway Labor Executives’ Ass’n v. ICC, 819 F.2d 1172, 1173 (D.C.Cir.1987). Under § 10901, the ICC has discretionary authority to impose employee protection requirements, see Black v. ICC, 762 F.2d 106, 116-17 (D.C. Cir.1985); In re Chicago, Milwaukee, St. Paul & Pac. R., 658 F.2d 1149, 1169-70 (7th Cir.1981), cert. denied, 455 U.S. 1000, 102 S.Ct. 1632, 71 L.Ed.2d 867 (1982), and has indicated that it will impose such requirements only in extraordinary circumstances, Class Exemption for the Acquisition and Operation of Rail Lines Under 49 U.S.C. 10901, 11.C.C.2d 810 (1985), aff'd sub nom Illinois Commerce Commission v. ICC, 817 F.2d 145 (D.C.Cir.1987). Thus, were we to find this transaction to be a line transfer rather than an abandonment, it is unclear what level of employee protections would be implemented. However, that would be a decision for the ICC, rather than for this Court in the first instance. Nonetheless, for our purposes, the possibility that this transaction could be a line transfer between carriers yields sufficient potential for greater protection to CCP employees to provide a justiciable injury in the present case.

In this proceeding, we need determine only whether the ICC’s decision granting the exemption was arbitrary, capricious, an abuse of discretion, or unsupported by substantial evidence on the record as a whole. 5 U.S.C. § 706(2). “The reviewing court is not to substitute its conclusions for those of the Commission. Our duty is simply to determine whether there is substantial support in the record, viewed as a whole, for the ICC’s findings.” Humphrey v. United States, 745 F.2d 1166, 1170 (8th Cir.1984) (citations omitted); accord Winter v. ICC, 828 F.2d 1320, 1322-23 (8th Cir.1987). After reviewing the ICC’s decision, we reject Simmons’s challenge to the decision, and hold that the ICC has shown that its conclusions are in fact supported by substantial evidence.

Simmons argues that the ICC’s decision should be set aside because the ICC relied on information outside of the record —namely, information related to the subsequent transfer of the line to Aetna — in deciding that the abandonment and discontinuance should be exempt from ICC regulation. Simmons argues that, by relying on the fact of the subsequent transfer in making its findings for exemption, the ICC’s decision actually indicates that the abandonment is a sham, and that the transaction is more appropriately structured as a line transfer. The mere fact that a subsequent transfer has been arranged does not by itself bar the ICC from finding the transaction to be an abandonment. See Winter, 828 F.2d at 1323 (ICC finding of abandonment not barred where carrier was negotiating for replacement carrier); see also Okmulgee Northern, 320 I.C.C. 637, 640-41 (1964) (“there is nothing in the act which requires that a line of railroad, the abandonment of which has been permitted, shall be taken out of service for any particular period of time”).

Simmons claims that it would be inconsistent for the ICC to state that it was making its decision based solely on the transaction before it, when it in fact based that decision on its knowledge of the subsequent transaction. The Seventh Circuit dealt with similar circumstances in Black v. ICC, 737 F.2d 643 (7th Cir.1984). Where the parties had conditioned a subsequent sale on abandonment, the Seventh Circuit held that the ICC could not rely on the subsequent sale in approving the abandonment. The court argued that, if the parties wished to conduct a sale that would be governed by § 10901, in a transaction that could occur only after the abandonment, “then it does not seem proper to permit the ICC to rely on the results of this sale, which has not yet taken place, in determining whether to permit the abandonment in the first instance.” Black, 737 F.2d at 652.

We need not decide today whether the ICC can place reliance on a subsequent sale in a finding of abandonment, because we find that the ICC did not rely on the subsequent sale in exempting the abandonment and discontinuance. Simmons bases his arguments of reliance on two statements in the ICC opinion. First, in determining that rail transportation policy would not be adversely affected, the ICC noted that “competition is not affected and the shipper has made satisfactory alternative arrangements.” CMC at 4. Second, in examining the potential for abuse of market power, the ICC relied on the fact that the line served only one shipper and “that shipper fully supports the relief.” Id. Because the shipper’s position in this proceeding relied on the subsequent sale, Simmons argues that the ICC, by relying on the shipper’s position, based its decision on the subsequent sale.

Thus, by Simmons’s account, the ICC could never simply rely on the fact of a shipper’s support in making an abandonment decision. Rather, Simmons would force the ICC to examine the motives behind the actions of every party related to the proceeding to determine if that party were relying on facts that the ICC itself could not take into account. Given the impracticability of such a task, we cannot find that the ICC acted unreasonably by failing to engage in such analysis in the present instance.

Nor do we find that the ICC’s decision contradicts its statement that it based its exemption decision only on the transaction before it. Although the shipper is relying on a future transaction in its decision to pledge its support, that support is a present circumstance in the transaction at issue. That is not to say that the ICC can never look behind a shipper’s position to determine if it is unrealistic. Cf. e.g., Black, supra (rejecting abandonment approval where ICC’s decision relied on a future sale that the court deemed speculative). However, absent independent reasons for doubting a shipper’s position, we believe that the ICC is entitled to rely on that position in making an exemption decision without further examination of the shipper’s motives. Accordingly, we find that the ICC did in fact base its decision on the transaction before it, and that the shipper’s position was relevant to that transaction. We therefore conclude that the ICC’s decision was not arbitrary or capricious, but was based on substantial evidence in the record as a whole.

III. Conclusion

For the foregoing reasons, we conclude that the ICC’s decision to exempt CMC’s abandonment of the line at issue in this case, as well as Soo’s discontinuation of service on that line, was based on substantial evidence found in the record as a whole. Under the Administrative Procedure Act, 5 U.S.C. § 706(2), we therefore hold that Simmons’s petition for review is

Denied.