Seaboard Coast Line Railroad v. United States

599 F.2d 650
CourtCourt of Appeals for the Fifth Circuit
DecidedJuly 26, 1979
DocketNos. 78-2009, 78-2115
StatusPublished
Cited by2 cases

This text of 599 F.2d 650 (Seaboard Coast Line Railroad v. United States) is published on Counsel Stack Legal Research, covering Court of Appeals for the Fifth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Seaboard Coast Line Railroad v. United States, 599 F.2d 650 (5th Cir. 1979).

Opinion

RONEY, Circuit Judge:

This case involves the review of an order of the Interstate Commerce Commission denying to Seaboard Coast Line Railroad Company (SCL) a proposed joint-line commodity rate for the hauling of industrial sand from Marston, North Carolina, to Wyoming, Illinois. Since the proposed tariff would exclude Southern Railway Company (Southern) from participation as a connecting carrier, the Commission held the tariff violated two conditions of the merger agreement under which SCL was formed, and § 3(4) of the Interstate Commerce Act, each of which was interpreted as protecting Southern from such exclusion. Under the narrow standard of review of such orders, we deny the petitions for review.

Summary

A shipper of industrial sand anticipated a new market for his product and requested that Seaboard Coast Line establish an economical rate for the movement of sand from Marston, North Carolina, to Wyoming, Illinois. Such movement would otherwise be covered by an existing class rate, under which this traffic had never moved. SCL proposed a long-haul rate that was roughly one-quarter less than the class rate. To assure that it would be economically feasible, SCL specified that the rate would apply only via routes involving SCL, its subsidiary Louisville and Nashville Railroad Company (L&N), and connecting carriers for delivery, and would not apply via routes involving other carriers whose participation would result in a short-haul of SCL’s Family Line Systems. This tariff condition effectively eliminated Southern from participation. Southern opposed the proposed tariff.

The Commission found three things wrong with the tariff: it violated two conditions of the merger of the Seaboard Airline Railroad Company with Atlantic Coast Line (ACL) approved by the Commission in 1963; and it violated the provisions of the Act prohibiting discrimination between connecting carriers. 49 U.S.C.A. § 3(4).

The Commission decided that, although this was a new point-to-point movement of traffic that had not existed at the time of the merger, it violated Condition 1 of the merger which required SCL to [652]*652“maintain and keep open all routes and channels of trade via existing junctions and gateways,” unless otherwise authorized by the Commission. The Commission held that the proposed tariff effectively closed a route which was required to be kept open under that merger condition. The significance of the decision comes in defining as an open route under the merger agreement a route which had never before been used by this new traffic. It appears to this Court that this is a reasonable interpretation of the condition, and the ICC’s decision cannot be overturned as being irrational.

We do not decide the second and third points. The parties concede that if the Commission must be upheld on any one of the three grounds by which it denied the tariff, then the denial must be sustained, even though the Commission may have been wrong as to the other two grounds. The Commission’s denial on the ground that the tariff violated Condition 1 of the merger agreement being valid, it is not necessary for us to reach the question of whether it also violates Condition 2 and § 3(4). Nor is it necessary for this Court at this time to be constrained by separate administrative proceedings before the Commission in which an administrative law judge recently issued a decision. Seaboard Coast Line R. R. Co.— Investigation of Control and Modification of Traffic Conditions, - I.C.C. -, Finance Docket No. 21215 (Sub-No. 2) (Feb. 22,1979). For informational purposes, however, we set forth the decisions made by the Commission.

The Commission decided that the preference for SCL’s wholly owned subsidiary, L&N, violated the required continuance of “present neutrality” among competing lines required by Condition 2 of the merger. The Commission in effect held that prior to the merger, L&N was not, as alleged, controlled by ACL, a party to the merger, and therefore could not be favored over other lines. SCL argues in its brief that neither the administrative law judge nor the Commission stated reasons for its decision. No decision on this point by this Court is necessary.

The third ground for the denial was that the tariff would violate § 3(4) of the Act which prohibits carriers from discriminating between connecting carriers. Apparently, it would not be violative of § 3(4) to devise a rate which preferred a wholly owned subsidiary for a long-haul tariff, over other connecting carriers. See 49 U.S.C.A. § 15(4). By the merger agreement conditions, SCL promised to treat L&N as a neutral carrier, but it is now a wholly owned subsidiary. We do not decide the issues thus raised.

Decision

At the outset, it should be noted that this case turns on the construction of merger conditions imposed by the Commission under applicable Commission precedents. The Commission’s interpretation of merger conditions and agency precedents is entitled to deference on judicial review. See, e. g., Andrew Nelson, Inc. v. United States, 355 U.S. 554, 558, 78 S.Ct. 496, 2 L.Ed.2d 484 (1958) (Commission’s construction of language in motor carrier permit controlling unless clearly erroneous); Chesapeake & Ohio Ry. Co. v. United States, 187 U.S.App.D.C. 241, 571 F.2d 1190, 1194 (1977) (Commission’s interpretation of merger conditions sustained unless arbitrary and capricious); Kansas City Southern Ry. Co. v. United States, 288 F.Supp. 742, 747-749 (W.D.Mo.1968) (meaning of merger conditions determined by reference to Commission precedents). Such deference is especially appropriate in the fashioning of merger conditions, a matter entrusted by statute to the agency’s expert judgment, which the courts should ordinarily respect. E. g., Florida East Coast Ry. Co. v. United States, 259 F.Supp. 993, 997, 1016 (M.D.Fla. 1966), aff’d per curiam, 386 U.S. 544, 87 S.Ct. 1299, 18 L.Ed.2d 285 (1967); Lehigh & New England Ry. Co. v. I. C. C., 540 F.2d 71, 80 (3rd Cir. 1976), cert. denied, 429 U.S. 1061, 97 S.Ct. 784, 50 L.Ed.2d 776 (1977); Pittsburgh & Lake Erie R. R. Co. v. United States, 294 F.Supp. 86, 99-100 (W.D.Pa.1968).

[653]*653Condition 1 of the routing and gateway conditions imposed in Seaboard Air Line R. R. Co. — Merger—Atlantic Coast Line R. R. Co., 320 I.C.C. 122, 267-268 (1963), provides as follows:

1. Upon consummation of the merger, the Seaboard Coast Line Railroad Company shall maintain and keep open all routes and channels of trade via existing junctions and gateways, unless and until otherwise authorized by the Interstate Commerce Commission.

SCL argues that prior to the present decision, the condition uniformly had been held by the Commission to protect and require the maintenance of only those routes and channels of trade that were in existence at the time the condition at issue was imposed.

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