Simmons v. Interstate Commerce Commission

775 F.2d 854
Court of Appeals for the Seventh Circuit·Decided October 22, 1985·No. Nos. 83-2791, 84-1795·Published·Cited by 1 cases

Opinion

HARLINGTON WOOD, Jr., Circuit Judge.

We consider two consolidated petitions, one by Patrick Simmons, the other by the State of Illinois, to set aside and remand two Interstate Commerce Commission (“Commission”) decisions concerning a proposed abandonment in Central Illinois by the Illinois Central Gulf Railroad Company (“ICG”) of 148.89 miles of track and the proposed, but never consummated sale of major segments of this tract to another railroad, Freeport & El Paso Railroad Company (“F & EP”).

Petition No. 83-2791, filed by Patrick Simmons October 7, 1983,1 challenges the ICC’s Certificate and Decision of September 15, 1983 authorizing ICG to abandon three segments of its line in central Illinois: an 11.35-mile segment from Heyworth to Normal, an 11.53-mile segment north of Normal (Kerrick) to El Paso on the Amboy District, and a 4.83-mile Bloomington District line. This petition also challenges a decision issued September 21, 1983 authorizing F & EP to acquire the line between Freeport and El Paso, a distance of 121.18 miles, and dismissing ICG’s application to abandon that portion of the Amboy District. In all, 148.89 miles of line are involved.

Petition No. 84-1795, filed by the State of Illinois on May 1, 1984,2 challenges the Commission’s Certificate and Decision of May 10, 1984, authorizing ICG to abandon the remaining 121.18 miles of line between Freeport and El Paso, and vacating the September 21, 1983 decision approving acquisition by F & EP of the 121.18-mile line. The May 10, 1984 decision also vacated a July 1, 1983 finding that F & EP was financially responsible.3

The petitions raise three issues: first, whether the Commission acted in excess of statutory authority in reopening a previously dismissed rail abandonment proceeding where the anticipated sale that predicated the first dismissal failed to occur, thus forcing the railroad seeking to abandon to continue service; second, whether the Commission, in originally approving the entire abandonment, acted arbitrarily and capricously; and third, whether the Commission’s denial of petitioner’s request to reopen the abandonment proceeding was a proper exercise of the Commission’s discretion.

Factual Background

In late 1982, while preparing to file its application to abandon the 148.89-mile seg-[856]*856merit, ICG requested and received permission from the Commission to exclude evidence of bridge traffic revenue, that is, revenue from traffic that, although travel-ling over the segment sought to be abandoned, does not originate or terminate on it. On June 17, 1983, after investigating the application, the Commission gave public notice that public convenience and necessity justified abandonment. Shortly thereafter, F & EP offered to buy 121 miles of the 148.89-mile segment and the Commission proceeded to find that F & EP was financially responsible within the meaning of 49 U.S.C. § 10905(d).4

While F & EP and ICG were negotiating the purchase, the Commission proceeded to hear the appeal from its initial decision authorizing abandonment of the entire 148.89 miles. In its appellate decision the Commission accepted ICG’s use of replacement cost of equipment in calculating “off-branch” costs.5 The Commission also noted that ICG had made available to opposing parties sufficient information to enable them to verify cost calculations. Finally, the Commission reaffirmed that the record need not contain the revenues associated with bridge traffic since ICG had not included corresponding bridge traffic costs and it had rerouted its bridge traffic to other lines.

After considering avoidable losses (including opportunity costs), the needs of the community and shippers, and available transportation alternatives, the Commission affirmed the abandonment of the 148.-89 miles. However, in light of the anticipated purchase of 121.18 miles, the issuing certificate only authorizing abandonment of the 27.71 miles not being purchased. Shortly thereafter the Commission approved the anticipated sale agreement between ICG and F & EP and dismissed the abandonment as to the 121.18-mile line.

When the sale did not go through ICG asked the Commission to reopen the proceeding, vacate the prior dismissal decision, and issue the abandonment certificate for the 121.18-mile segment. In response F & EP asked the Commission to await the outcome of a breach of contract action it had filed against ICG in state court.6

In May, 1984 the Commission reopened the proceeding pursuant to 49 U.S.C. § 10327(G)(1) and its regulations at 49 C.F.R. §§ 1152.2(e)(6) and 1152.27(p). The Commission found F & EP in default on the sales agreement and therefore vacated its prior dismissal of the abandonment petition for the 121.18-mile segment without waiting for the state court decision. The Commission decided that F & EP filed the state action only to delay the proceedings and that ICG should be protected from protracted legal matters. The Commission issued the 121.18-mile abandonment certificate. Pending review, this court stayed the Commission’s decision insofar as it would have allowed ICG to remove the physical assets on the 121-mile segment.

The petitioners argue that the Commission lacked jurisdiction to reopen and revive the dismissed portion of the abandonment proceeding after the sale collapsed, and that to obtain an abandonment certificate ICG must reapply for abandonment authority. Petitioners also argue that ICG must continue to serve the line pending a decision on its reapplication. Petitioners rely upon 49 U.S.C. § 10905(e) which provides that “[i]f the carrier and a person offering to purchase a line enter into an agreement which will provide continued rail service, the Commission shall approve the transaction and dismiss the application for abandonment.”

Petitioners argue that 49 U.S.C. § 10905(e) should be read to mean that the [857]*857proceeding once dismissed is beyond resurrection. We see no need to read and apply that section so inflexibly as to prohibit reopening when the railroad seeking abandonment continues to experience financial losses and is not at fault for the failure of the sale. We construe this provision in light of the congressional desire to see abandonment proceedings expedited, a desire it evinced in 1980, when it shortened the time from six months to 110 days that a railroad seeking to abandon was required to negotiate with a financially responsible potential buyer. Compare 49 U.S.C. § 1a(6)(a) (1976) with 49 U.S.C. § 10905(c)-(f) (Supp. Y); see also 125 Cong.Rec. 6440-41 (1979) (summary of the 1980 revisions stating that Congress intended to shorten abandonment delays and thus shorten the time the railroad would be operating at a loss).

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Simmons v. Interstate Commerce Commission, 775 F.2d 854 (7th Cir. 1985).

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