# Petition — Illinois v. Interstate Commerce Commission > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385004_1936%3A1 ## Record - **Collection:** Supreme Court brief - **Document type:** Petition - **Published:** January 1, 1977 - **Citation:** 434 U.S. 828 ## Text IN THE — a Supreme Court of the United States... | OCTOBER TERM, 1976 | MICHA. AA, te : a? PEOPLE OF THE STATE OF ILLINOIS, ef al, Petitioners, INTERSTATE COMMERCE COMMISSION, ef ai., Respondents. PETITION FOR A WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE SEVENTH CIRCUIT WILLIAM J. SCOTT Attorney General of the State of Illinois 160 North LaSalle Street Chicago, Illinois 60601 HERCULES F. BOLOS Special Assistant Attorney General MILTON McCLURE 113 State Street Beardstown, Illinois 62618 THOMAS F. McFARLAND, JR. 20 North Wacker Drive Chicago, Illinois 60606 GORDON P. MacDOUGALL 1100 17th Street, N.W. Washington, D.C. 20036 Attorneys for Petitioners er CS THE CASILLAS PRESS, INC.—1717 K Street, N. W.—Weshington, 0. C.-223-1220 TABLE OF CONTENTS OPINIONS BELOW . JURISDICTION . QUESTION PRESENTED STATUTES INVOLVED . STATEMENT REASONS FOR GRANTING THE WRIT I. THE !.2ED FOR THE L.C.C. TO MAKE FINDINGS AS TO THE IMPACT OF THE ABANDONMENT OF ONE LINE SEG- MENT UPON THE VIABILITY OF OTH- ER SEGMENTS PROPOSED FOR ABAN- DONMENT BY THE SAME RAILROAD IS AN IMPORTANT FEDERAL QUES- TION WHICH SHOULD BE PROMPTLY AND DEFINITIVELY RESOLVED AT THIS TIME A. A Large Number of Line Abandonments Are Being Proposed by the Railroads . B. The Validity of the “Segmentation” Ap- proach to Railroad Abandonments Should Be Decided Now By This Court . THE COURT OF APPEALS DECISION CON- FLICTS WITH THIS COURT’S STANDARDS FOR REQUIRING AGENCY CONSIDERA- TION OF INTERRELATED PROCEEDINGS. . 11 Page ae A. hg we 4 and “Middle” — oo Appendix 1 — L.C.C. report and order in F.D. No. 27506 . Time of Filing ie ae ee? ca and F.D. No. 26965, involving Fiora- : Traffic Data er eee” Re gear ae Shawneetown line. (February 17,1977). . 49a B. The “Northern” and “Southern” Segments. . 16 Appendix J — Statutes, Portions of Section | of the Interstate Commerce Act. . . . .. . 78a DE « os @ » 6.6 8 « «¢ ss 2 ¢ ca TABLE OF CITATIONS Appendix A — Opinion and Order of the U.S. Court of ee Cases: Appendix B -— Judgment of the U.S. Court of Appeals . . Ila Ashbacker Radio Corp. v. F.C.C., 326 326 U.S. 327 (1945) ine © & & ae fee ee Appendix C — Order denying eae the U.S. Court of Appeds . . ' see ee ee Te American Trucking Assns. v. U.S., | , a ee! Appendix D — Order granting stay of mandate of the U.S. DE --«. « g/g « 8.0 & 20 OB Appendix E — LC.C. Report and Order recommended by the Administrative Law Judge in F.D. No. i Chicago v. United Stat 26745, The Baltimore and Ohio Railroad City of v es, Company Abandonment Between Coal 396 U.S. 162 (1969) Shaft and Beardstown in Sangamon and Cass Counties, Ill. (January 31,1973) . . 14a City of Chicago v. United States, 314 F. Supp. 886 (N.D. Ill. 1970), reversed 400 U.S. 987 Appendix F — LC.C. Order Denying Consolidation of F.D. (1971) . . AR ee a ee 2 9 No. 26745, F.D. No. 26965, and Docket No. AB-19 (Sub-No. 27) (June 17,1975). . . 33a L.C.C. v. Parker, rn. - ice es eee we ee ee ee Appendix G — LC.C. Decision, Certificate & Order in F.D. No. 26745 — Beardstown/Coal Shaft — McCandles v. Furlaud, OR ee ee _. ey ee Appendix H — LC.C. Order denying reconsideration and con- solidation and authorizing abandonment in Mechling Barge Lines v. U.S., 7 F.D. No. 26745 (May 18,1976) . . . . 37a SIG US. S7SCIGGOQ . . ew ce we ee eee eee iv New Jersey v. New York, S. & W. R. Co., Sra Gi. OQUUEER © se 6 he 6% Se Oe N.L.R.B. v. Metropolitaa Life Ins. Co.., 380 U.S. 438 (1965) . . .. . , >. = Passenger Corp. v. Passengers Assn., ok ee Prairie Trunk Railway-Acquisition and Operation, A ee, eee ee S.E.C. v. Chenery Corp., Sue Gan Cee Geeery Cl tl tl ttl Sethe Southern R. Co. v. North Carolina, i) b... ee eee Upshaw v. United States, 335 U.S. 410 (1948) coe Ga GG s 8 ts te & eee United States v. Chicago, 400 U.S. SS ee ee ee a ee Legislative S. Rept. No. 94-499, 94th Cong., Ist Sess.(1975) . . . . Articles Aug, Stephen M., Private Meeting at I.C.C. Followed by C&O Filing, Washington Star-News (March 19, 1973) 7 fat? 3 2 #s. 2 2 32.2) eee eee 16 17 16 14 IN THE Supreme Court of the United States OCTOBER TERM, 1976 PEOPLE OF THE STATE OF ILLINOIS, er al, Petitioners, INTERSTATE COMMERCE COMMISSION, ef al, Respondents. PETITION FOR A WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE SEVENTH CIRCUIT Petitioners, People of the State of Illinois (William J. Scott, Attorney General), City of Beardstown, Cass County Service Company, and United Transportation Union (John W. McGinness and George B. Lee), respectfully pray that a writ of certiorari issue to review the judgment and opin- ion of the United States Court of Appeals for the Seventh Circuit, entered in this proceeding on March 23, 1977. OPINIONS BELOW The opinion of the U.S. Court of Appeals, not yet re- ported, is printed as Appendix A hereto (App. |a-10a). The orders of the Interstate Commerce Commission in Finance Docket No. 26745, The Baltimore and Ohio Rail- road Company Abandonment Between Coal Shaft and Beards- town, Illinois (Appendices E through H, App. |4a-48a) are unreported. JURISDICTION The judgment of the U.S. Court of Appeals was entered March 23, 1977, and is printed as Appendix B hereto. (App. lla). The order denying rehearing was entered April 22, 1977, and is printed as Appendix C hereto. (App. 12a). On May 2, 1977, that court stayed the issuance of its mandate to and including May 31, 1977.' This Court's jurisdiction is conferred by 28 U.S.C. 1254(1). QUESTION PRESENTED Where a railroad proposes to abandon a 228-mile line of railroad by means of three separate appli- cations to the LC.C. covering three segments, does the LC.C. err in authorizing the abandonment of one segment (“northern”), without evidence and findings concerning the impact of the abandon- ment of that segment upon the continued viabil- ity of the remaining “middle” and “southern” segments? STATUTES INVOLVED The statutes involved are the railroad line abandonment provisions of section | of the Interstate Commerce Act, 49 U.S.C. 1 (18)4(20), as amended February 5, 1976 by enact- ment of sections 802 and 80%c) of P.L. 94-210, Railroad ' ‘The stay order is printed as Appendix D hereto. (App. 13a). 3 Revitalization and Regulatory Reform Act of 1976, and October 19, 1976 by section 218 of P.L. 94-555, Rail Transportation Improvement Act, 49 U.S.C. la. These statutory provisions are set forth in Appendix J. (App. 78a). STATEMENT This is an action to review orders of the Interstate Com- merce Commission (“I.C.C.”) authorizing The Baltimore and Ohio Railroad Company (“B&O”) to abandon a 43.7-mile segment of railroad between Beardstown and Coal Shaft, 1.2 B&O operates a 228-mile line extending between Beards- town, Ill., on the Illinois River, to Shawneetown, Ill., on the Ohio River. (App. 15a). B&O filed three applications for abandonment with the I.C.C. covering separate portions of this 228-mile line, two in 1971, and the third in 1975.’ This court action involves the so-called “northern” segment. The other two segments — still undergoing 1.C.C. considera- tion — are the “middle” segment between Sangamon Jct.‘ and Flora, Ul..5 and the “southern” segment between Flora and Shawneetown, III.° 2 Coal Shaft is situated on the western outskirts of Springfield. (App. 2a). 3 The 1975 application was “announced” by B&O in 1972 dur- ing the hearing for the southern segment, but then retracted. (App. 2a, 17a). The application thereafter was executed by B&O on No- vember 14, 1974, but withheld from the LCC. until March 18, 1975. 4 Sangamon Jct. is located just east of Springfield. (App. 2a). 5 The “middle” segment is pending at the L.C.C. in Docket No. AB-19 (Sub-No. 27). © Finance Docket No. 26965. The Administrative Law Judge recommended denial of the abandonment in 1973. (App. 2a, 34a, Sia). However, the 1.C.C. on February 17, 1977 allowed B&O to discontinue operation of the southern segment, and sale of the seg- ment to a “short-ine™ operator. (App. 49a). Judicial review of this decision was instituted March 22, 1977, No. 77-1333 (7th Cir.). Peo- ple of the State of Illinois v. USA. & LCC. Petitions for reconsid- eration are also pending with the LCC. 4 Petitioners challenge the L.C.C. order authorizing B&O to discontinue operation of its “northern” segment, without the rendition of findings concerning the impact of the pro- posed termination of service over the northern segment upon the continued viability of operations on the other two segments, particularly the “middle” segment between San- gamon Jct. and Flora. Ul.’ In short, the LC.C. improperly considered the northern segment application in a vacuum, without regard to the entire line. The LC.C. on June 17, 1975 declined to consolidate the three abandonment applications, noting that the Adminis- trative Law Judge’s recommended reports in the northern and southern segments were both served February 14, 1973. which granted the northern segment application and denied the southern segment applications, and that concurrent handl- ing of all three applications is not warranted and would un- necessarily result in an undue delay of a final decision in each proceeding. (App. 33a-34a). The 1.C.C. on November 3, 1975 authorized abandonment of the northem segment (App. 34a-36a). Petitions for re- consideration, and for consolidation, were denied May 18, 1976, the L.C.C.’s order taking account of the intervening enactment of amendments to the abandonment provisions of the Interstate Commerce Act on February 5, 1976. (App. 37a-48a). The Court of Appeals sustained the action of the LCC. in not considering the interrelationships between the nor- thern and midde segments, primarily upon the “important fact” that B&O did not file its application to abandon the 7 Operations on the “northern” segment were marginally profitable The railroad realized a net profit in 1969 and 1970 of $16,876 and $27,883 respectively, and a loss of $13,125 in 1971. (App. 24a) 5 middle segment until after the initial decision had been made on the northern segment. (App. 6a). The court further reasoned that the ALJ had before him evidence that “most” of the northern traffic west east to Indianapolis, rather than over the middle segment, and that the northern segment traffic was light to begin with. (App. 6a-7a). The Court of Appeals held that the LC.C. had met the requirements established by this Court in Ameri- can Trucking Assns. v. U.S., 326 U.S. 77 (1945), for considering the possible interrelationships between the “northern” and “middle segments”, and between the “northern” and “southern” segments of B&O’s 228- mile line between Beardstown and Shawneetown, Ill. The court stayed its mandate pending application for writ of certiorari. Earlier, the court had enjoined operation of the L.C.C. orders pending judicial review. REASONS FOR GRANTING THE WRIT |. THE NEED FOR THE L.C.C. TO MAKE FINDINGS AS TO THE IMPACT OF THE ABANDONMENT OF ONE LINE SEGMENT UPON THE VIABILITY OF OTHER SEG- MENTS PROPOSED FOR ABANDONMENT BY THE SAME RAILROAD IS AN IMPORTANT FEDERAL QUES- TION WHICH SHOULD BE PROMPTLY AND DEFINI- TIVELY RESOLVED AT THIS TIME. A. A Large Number of Line Abandonments are Being Proposed by the statement set forth in appendix C. Trans-Action’s objective in its control and operation of Prairie Trunk will not be to accumulate and distribute short-term profits but rather to enhance the asset value of its subsidiary through the development of a responsible and enduring service-oriented short- line railroad. POSITION OF PROTESTANTS AND OTHER PARTIES Illinois. —Protestant vigorously opposes the Abandonment case for the reasons set forth in the February !4, 1973, report and recommended order of the Administrative Law Judge, particularly the strong public need for continued rail service on the Flora- Shawneetown line and the potential for substantial increases in traffic that exists along the line. It opposes the Acquisition and Control cases because it considers Trans-Action and Prairie Trunk to be in a financially weak position and not entirely capable of providing the rail service required on the line. Protestant indicated its support for the acquisition of the Flora-Shawneetown line by another rail carrier not a party to these proceedings. UTU.—UTU opposes the Abandonment case for the same reasons indicated by Iilinois. For similar reasons it also opposes the Acquisition and Control cases. Protestant questions the reliability of the Prairie Trunk traffic projections as well as applicant's ability to perform the rail service it proposes. UTU considers the Burlington conditions inappropriate for protecting the interests of employees in the pending proceedings. Concerned Citizens.—Concerned Citizens, a group of approximately 100 shippers and consignees located in communities on the Flora-Shawneetown line, actively opposes the Abandonment case but supports the acquisition and operation of the subject line by any qualified and responsible railroad. lt supports the proposed P.airie Trunk acquisition as the best available alternative for the improvement of a needed rail service essential to the economic maintenance and development of its area. It considers the financial conditions imposed by the Administrative Law Judge in the initia! decision of June 10, 1975, adequate to insure the financial viability of the proposed Prairie Trunk operation. | 1AA.—These affiliated farm service organizations representing farmer members located in southern Illinois vigorously oppose the Abandonment case. Because of the failure of B&O to provide wR ICC 62a PRAIRIE TRUNK RAILWAY—ACQUISITION AND OPERATION adequate car service and track maintenance on the subject line, [AA reluctantly supported the Acquisition case proposals. It is particularly anxious that its members are arsured of a reliable rail transportation service rendered by a financially responsible carrier. Based on information contained in the joint reply statement submitted by Illinois and UTU in the Control case, IAA is no longer satisfied that Trans-Action is responsible either financially or otherwise to insure that adequate rail transportation service will be available to its members. For this reason it opposes Trans-Action's application for control and no longer supports the proposed acquisition. Port District.—This operator of a public port facility on the Ohio River at Shawneetown stands in opposition to the Abandonment case but fully supports the Acquisition and Control cases. It considers the proposed short-line railroad to be the last hope for regular and dependable rail service for shippers and receivers in its region. It is aware of and has identified several new development projects at its port facility which will require the availability of adequate rail service. DISCUSSION AND CONCLUSIONS At the outset, we take cognizance of the fact that while consummation of the Louisiana Midland rail line acquisition® occurred on April 28, 1974, some 2 months prior to the oral hearing in the Acquisition and Securities cases and some 4 months prior to the formal filing of the Control case herein under consideration, the parent-subsidiary relationship between Trans-Action and Louisiana Midiand and Trans-Action and Prairie Trunk was fully disclosed at the oral hearing and the subject of careful and intensive examination. Indeed the condition imposed by the Administrative Law Judge in the initial decision served June 10, 1975, requiring Trans-Action to file and subsequently secure Commission approval of the common control relationship which would result from approval of the Prairie Trunk acquisition proposal reflected a formalization of Trans-Action’s clearly expressed intent in this regard. Although Louisiana Midland is currently engaged in the “This transaction was approved in F.D. No 27450, Lowisiana Midland Railway Company—A cquisition and Operation of Line of Railroad in Winn, Grant, LaSalle, Catahoula, and Concordia Parishes, Louisiana (not printed), decided March 13, 1974, by the Commission. Review Board Number 5, wherein L owssiana Midiand was authorized to acquire a described line of rasiroad from litinow Central Gulf Railroad Company. 48 LCC. 63a INTERSTATE COMMERCE COMMISSION REPORTS performance of a short-line rail transportation service similar in terms of physical operation to the type of short-line railroad operation herein proposed by Prairie Trunk, the 76-mile line of railroad between Packton and Vidalia, La, located in the northeast portion of central Louisiana over which it operates is separated geographically from the southeastern illinois line of railroad and area of service identified with the proposed Prairie Trunk operativ.. by well in excess of 500 miles. Assuming that approval of the proposed Prairie Trunk acquisition is justifiable, the two railroad operations are so clearly separate and unrelated as te merit our concluding that common ownership and control of Louisiana Midiand and Prairie Trunk by Trans-Action will have no adverse competitive effect upon the utilizers of their respective services. In our consideration of the Prairie Trunk acquisition proposal and its impact upon the interest of the public, two principal questions have been raised. First, accepting the fact that Prairie Trunk and its parent are sincere in their desire to improve and expand rail service on the subject line, is Prairie Trunk capable in terms of operating competence and financial ability of fulfilling its objectives or at a minimum of insuring the continued availability of adequate rail service on the line’ Second, if the undertaking of this endeavor is within the capability of Prairie Trunk, whether the conditions imposed by the Administrative Law Judge in his initial decision served June 10, 1975, for the protection of railroad employees atfected by the acquisition shouid be modified’ Confronted by the consistent erosion in the volume of traffic handied by B&O on its Flora-Shawneetown line, the repetitious shipper complains as to the steady deterioration of service on the line, the negative approach taken by B&O in its operation of the line as reflected by weak and ineffective attempts to develop traffic and a persistency of effort to end its operating responsibility for the line either through abandonment or sale, it is quite evident that the service envisioned by the Prairie Trunk proposal would be a significant improvement over that presently available on the line and of substantial benefit to shippers in the area. Clearly, if Prairie Trunk though initially dependent upon Trans-Action for managerial direction and financial resources is able to function in its own capacity as an independent entity and a financially responsibie short-line railroad, the best interest of the public would be served by approval of the proposed acquisition. Me LOC 64a PRAIRIE TRUNK RAILWAY—ACQUISITION AND OPERATION Trans-Action is a transportation consulting firm specializing in light-density rail line problems. Since its organization in May 1971 ,"* it has been engaged in the development of short-line feasibility studies (including engineering reports), the financing of new railroad ventures, and, in the course of assisting interested parties involved in transportation regulatory matters, in the preparation of pleadings, analyses, and testimony. It has functioned as a consultant and provided complete organization and management services for a variety of short-line railroads. In view of this background, particularly that relating to the organization and operation of short- line railroads, we are satisfied that Trans-Action possesses the experience and knowledge required to provide Prairie Trunk with the kind of responsible leadership and management necessary to undertake and successfully pursue the short-line railroad operation proposed herein. Cf. Cambria & 1. R. Co. Control, 275 1.C.C. 360, 365. The real applicant in the acquisition proceeding is Trans-Action.' It proposes to utilize as the vehicle through which it will own and operate the line of railroad to be acquired a newly created wholly owned subsidiary, We recognize, however, that the subsidiary, Prairie Trunk, represents an independent corporate entity separate and distinct from Trans-Action. It is particularly for this reason that Trans-Action has an obligation to the shipping public served by the subject line to insure that its subsidiary is adequately capitalized and financially independent. Trans-Action has indicated that its interest in the Flora- Shawneetown line is not for short-term profits but rather for the preservation, enhancement, and long-term development of a responsible public service corporation in the short-line railroad field. To finance this undertaking Trans-Action proposes to provide Prairie Trunk with the equivalent of $750,000 in assets and cash to underwrite Prairie Trunk’s anticipated cepital and operating funding requirements, with the understanding that additional resources will 7 “Trans-Action was incorporated under the laws of Illinois on May 28, 1971, as Faburr Fund, inc. ts present name was adopted by charter amendment filed January 10, 1973. "The agreement to acquire the B&O Flora-Shawneciown branch is between Trans-Action and B&O Prairie Trunk is not @ party to that agreement, but through assignment from Trans-Action will acquire the rail line im exchange for securities. While the authority requested in the Acquisition case is technically inaccurate, corrective action need not be taken as the intent of the acquisiies proposal w clear 348 LCC. 65a INTERSTATE COMMERCE COMMISSION REPORTS be made available if needed. From the financial information submitted in these proceedings, we are satisfied that Trans-Action is in @ position to provide Prairie Trunk with this initially suggested $750,000 funding requirement. Unfortunately as proposed in the Securities case the financing of Prairie Trunk will consist of $100,000 in equity capital and $650,000 in secured interest-bearing debt. Such a financial arrangement is hardly reassuring, for it imposes serious limitations upon the financial independence of Prairie Trunk as a separate corporate entity and subjects its rail operation to an unnecessary interest expense burden. In the face of the speculative uncertainties inherent in the optimistic traffic projects of Prairie Trunk, and, as suggested by the evidence presented in the Abandonment case, the potential necessity to incur substantial expenditures tor rehabilitation and maintenance of the line, ut is particularly important that the fledging Prairie Trunk operation be financially flexible. To provide Prairie Trunk with an acceptable degree of financial flexibility and independence, it is necessary that its initial capital structure be simplified by eliminating the $650,000 debt proposal and requring an equity investment by Trans-Action in the common stock of Prairie Trunk of $750,000. Elimination of the $650,000 promissory note, which was to be secured by all of the physical property transferred by Trans-Action to Prairie Trunk, will have a twofold effect. First, it will provide Prairie Trunk with a collection of assets totally unencumbered by debt representing a resource by reason of which additional financing, when and if required, from parties other than Trans-Action may be secured. Second, it will remove a $65,000 annual interest expense burden,’” an amount representing approximately 15 percent of the projected expenses estimated by Prairie Trunk for its first year of operation. Notwithstanding the fact that interest payments duc its parent corporation could readily be deferred by Prairie Trunk, the expense represents a legally enforceable legitimate charge against income and imposes an unnecessary burden and needless obstacle to the financial health of the Prairie Trunk rail operation. — While recognizing the Prairie Trunk proposal to be an attempt to, upgrade the level of service available on the Flora-Shawneetown line, an effort which should be encouraged, we are tully aware of the many uncertainties which surround the projected operation. We are ‘Based on Prawse Trunk'’s pre torma meome statement proyection 66a PRAIRIE TRUNK RAILWAY—ACQUISITION AND OPERATION also aware that the liquidation value of the steel rail and other assets to be acquired by Prairie Trunk far exceeds the $500,000 purchase price. The shipping public has a decided interest in the continuation of a Flora-Shawneetown rail service and should be afforded some measure of assurance that future rail service on the line will not be jeopardized because of an irresponsible or underfinanced ownership or a lack of sincerity of commitment on the part of the new operators. The broadening of Prairie Trunk’s equity capital base will enhance its financial stability and independence providing it with a measure of insulation from the activities of its parent. To avoid the temptation of a handsome profit through abandonment and liquidation, we will retain the 5- year condition imposed by the Administrative Law Judge in the initial decision served June 10, 1975, which preempts the filing of an abandonment application prior to a bona fide offer of resale to any party herein. As a caveat to Prairie Trunk and its parent, we will not look with favor upon any future abandonment proposal which may result in a substantial profit arising out of the liquidated scrap value of the line, particularly if the public demonstrates an active interest in continued rail service. While UTU questions the technical propriety of the manner in which the Administrative Law Judge disposed of the Acquisition case, it is clear that the issues raised—i.c., (1) that an abandonment must be authorized before an acquisition can be approved, and (2) that the proposed transaction is subject to section 5(2) of the act rather than section 1(18)—are actually directed at the employee protection issue, specifically the nature and extent to which conditions for the protection of employees should be imposed. Pursuant to section 5(2\f)"* the imposition by the Commission of employee protective conditions is mandatory in a section 5(2) transaction, whereas in a section 1(18) proceeding the imposition of such conditions is solely within the discretion of the Commission. See Interstate Commerce Commission v. R. Labor Executives Assn., 315 U.S. 373 (1942). “Section S2Kf) states: As a condition of us approval, wader this paragraph (2). of any (ransaction involving a carrier on carters by railroad subyect to the provissons of this pari, the Commision shall require a fair and equitable arrangement to protect the interests of the rasiroad employees affected In its order of approval the Commission shall inc tude terms and conditions providing that during the period of four years from the effective date of such order such transactu- will mow result in employees of the carrier or carriers by railroad affected by such order being im a worse position with cespect to their employment ***. 348 LCC. 67a INTERSTATE COMMERCE COMMISSION REPORTS Section 5(2\Ma) vests jurisdiction in the Commission to authorize: ***any carrier, of two of more Carriers jointly, to purchase *** the properties, or any part thereof, of another (carrier) ***. On the other hand section 1(18) provides in part: ***no carrier by railroad subject to this part *** shall acquire or operate any line of rasiroad, of extension thereof, or shall engage in (ransportation under (his part over of by means of such additional or extended line of rastroad, unless and until there shall first have been obtained from the Commission a certificate that the present or future public comvemence and necessity require of will require tae *** operation *** of such additional or extended line of raiiroad *** Conceivably, although not specifically asserted by UTU, the failure of the Administrative Law Judge to formally approve the B&O abandonment application lends credence to the contention that the subject proceeding deals with a 5(2)(a) purchase application rather than a 1(18) application to acquire and operate, the latter apparently being dependent upon «a prior or simultaneously approved abandonment. As a section 5{2) transaction the requirements of S(2f) mandating the imposition of employee protective conditions would be applicable. Contrary to the coatention of UTU, abandonment authorization is not an essential prerequisite to approval of a 1(18) acquisition or operation proposal, although a close relationship between these types of proceedings is clearly recognizable. See in addition to Cadillac & Lake City Co. Ry. Co. Acquisition and Operation, supra, to which UTU takes strong exception, Jowa Term. R. Co. Acquisition and Operation, 312 1.C.C. $46, in which a 1(18) acquisition was approved without even the filing of a related abandonment application Further, while on the basis of the statutory language it is waderstandable that a degree of confusion exists as to whether section 1(18) of 5(2) applies to the proposed acquisition, a distinction between the types of proceedings to which the respective provisions are applicable has been recognized. On the basis of congressional intent we have found section 5(2) to be the appropriate provision for dealing with the unification of existing railroad enterprises, as in the case of consolidation or merger. Okmuigee Northern Ry. Co. Abandonment, supra, 639-640; see also Tennessee Central Ry. Co. Abandonment, 334 1.C.C. 235, 245; and Southera Ry. Co.—Control—Centrail of Georgia Ry. Co., 331 LC.C. M48 LCC. 68a PRAIRIE TRUNK RAIL WAY—ACQUISITION AND OPERATION . 151, 156-157. Section 1(18), on the other hand, is imended to deal with the abandonment, acquisition, and extemsion of an individus line i railroad and is essentially directed a: the wansporiatios oriented activities of a single rail carrier or applicant, cf. Okmulgee Northern Ry. Co. Abandonment, supra, 639-640, and lowa Term. R. Co. Acquisition and Operation, supra, 548-549. In iw present condition Prairie Trunk stands as a noncarrier seeking to acquire 4 line of railroad. As a nencarrier™ it is not subject to section 5(2) and is only subject to 1(18) inasmuch as, upon approval of the acquisition, it proposes to conduct operations over the Flore Shawneetown line. Jowa Term R. Co. Acquisition and Operation. supra, 548-549. The proposed acquisition does not contemplate merger or unification of existing rail enterprises, bui rather concerned with the simple acquisition of a lene by a prospective new rail carrier. We are satisfied that section 1(18) rather than section 5(2) is the most appropriate provision to deal with the type of transaction herein pending When in the exercise of our discretion in dealing with « section 1118) application we have concluded that protection should be afforded employees adversely affected by the proposal, ii has been our practice to impose the Burlington conditions. Norwithstanding the unsuccessful effort of UTU to subject the proposed Flora- Shawneetown line acquisition to the requirements of section S(2)f), we feel constrained to recognize that the protections afforded adversely affected employees under the Burlington conditions do in fact satisfy the statutory requirements of section 5(2Mf no less than do the Oklahoma ot New Orleans conditions which are normally imposed in a S(2) proceeding™ Indeed considerable similarity berween the Burlington, Oklahoma, and New Orleans conditions exists, with the Burlington conditions being directed at a single, individual rail carrier whose employees may be adversely affected by approval of a proposed transaction whereas the Oklahoma and New Orleans conditions 4re directed at several rail carriers whose employees could be so affected. As Prairie Trunk is not yet an operating organization and currently employs no personne! and as Trans-Action being « “Trans Actroe a2 2 holding Company @ also # noncarrer and. sccordingly, 2 aot subject to 18) of S02) as & carrer by cativead fy «, however, subject to S(2) by virtue of us boidiang company status “See parvcelariy Burlington condivons |!) and (2) which provide wage guarantee protections for a perrod of 4 year from the effective date of the C ommasion's order, Chicago. 8 42 QR Co 48 LCC 69a INTERSTATE COMMERCE COMMISSION REPORTS noncarrier holding company is not engaged in operations as a common carries by railroad, the only employees who migh« be adversely affected by our approval of the proposed acquisition are those presently in the employ of B&O, particularly those currently engaged in the operation of its Flora-Shawneetownr branch B&O has expressed its willingness to assume the responsbilitics imposed Dy the Burlington conditions in the event of approval of the proposed acquisition. The Administrative Law Judge in his initial decision of dune 10, 1975, imposed the Burlington conditions as a condition of his approval of the transaction, the expenses of which to be borne by B&O. While UTU expresses dissatisfication with the Burlington conditions, revealing « preference for the New Orleans conditions, ‘ failed to indicate wherein the Burlington conditions are imedequate as opposed to the New Orleans conditions or to specify why under the circumstances here present New Orleans would be more appropriate than Burlington for the subject transaction. We believe that the interests of employees who may be affected by the proposed transaction should be protected and that imposition of the Burlington conditions upon B&O in the manner directed by the Administrative Law Judge is the appropriate means by which to protect those inieresis. From a financial point of view the immediate and principal beneficiary of the proposed acquisition is B&O. The only employees who can be adversely affected by the transaction are those presently employed by B&O. The Burlington conditions provide fair and reasonable protections, and B&O is more than able to carry the potential costs of employee protection. With regard to the maintenance-of-way-levels condition adopted by the Administrative Law Judge and the mandatory collective bargaining directive requested by UTU, both of which would be imposed upon Prairie Trunk, we believe that Prairie Trunk as a new operator should not be encumbered with Commission-imposed conditions in its initial dealings with its employees. Such conditions would subject Prairie Trunk to inequitable-and unduly limiting standards which are particularly unnecessary when we consider that those employees who might be adversely affected by the transaction are adequately protected by standard employee protective conditions imposed upon and willingly assumed by a financially secure rail carrier. Accordingly, the maintenance-of-wage-levels condition will be removed and the mandatory collective bargaining directive will not be imposed. The specific affirmative findings requested by Prairie Trunk to insure stability and avoid controversey merit some comment. To aa LCC 70a PRAIKIG TRUNK KAI WAY—ACQULISITION AND OPERATION direct a4 Continuation of existing through rates, routes, and divisions presently applicable to the Flora-Shawneetown line would require that those participating in the existing through rates, routes, and divisions be partees to the proceeding This type of condition is similar to those described in Detroit, T. & 1. R. Co. Control, 275 LC.C. 455, 492-493, (DT&I conditions) which are usually imposed upon an applicant at the behest of other carriers who fear possible adverse effects from the transaction, cf. Spokane International R. Co. Control, 295 LC.C. 425, 434-436. The only carrier party to these proceedings is B&O whose obligations with regard to through rates, routes, and divisions constitute an integral part of its agreement with Trans-Action. The sole request for affirmative findings on this subject was made by applicant Prairie Trunk. They can have applicability only to B&O. In the face of B&O's contractual! obligations, the requested affirmative findings would appear to be unnecessary and the possibie source of confusion and controversy. They will not be entered. Authorization for the assumption of all rights and obligations of B&O under its joint trackage agreement with L&N is inherent in our approval of the B&O assignment of its interest in the 5.36-mile segment of line owned jointly with L&N to Prairie Trunk. We find no merit to protestants objections to the positive environmental findings of the Administrative Law Judge in the initial decision of June 10, 1975. The proposed acquisition and the several other proceedings here under consideration contemplate a continuation of rail service over the same trackage. Hence our decision herein can properly be characterized as not a major Federal action significantly affecting the quality of the human environment within the meaning of the National Environmental Policy Act of 1969. The Control case.—As is clearly inferred from our previous discussion, we find that the control relationship contemplated between Trans-Action and Prairie Trunk and, in view of Trans- Action’s control of Louisiana Midland, the control by Trans-Action of more than one common carrier by railroad will be consistent with the public interest. Although Trans-Action is a holding company, its economic activities are exclusively oriented toward railroad transportation. But for the fact that it is a separate Corporate entity possessed of holding company status, Trans-Action would be subject to our jurisdiction as a common carrier by railroad. Under these circumstances and in view of the authorization herein for it to control two common carriers by railroad, we believe that Trans- we CO 7la INTERSTATE COMMERCE COMMISSION REPORTS Action should be subjected to the full impact of section 5(4)” of the act. Accordingly, pursuant to section 5(4) and as a condition of our approval of the control application, Trans-Action shall be considered a common carrier by railroad subject to sections 20(1) to (10) (which relate to reporting and accounting requirements) and 20a(2) to (11) (which relate to the issue of securities and the assumption of liabilities) of the act The Abandonment case.—in view of the B&O request for dismissal of its abandonment application in the event of a positive disposition of the Prairie Trunk acquisition proposal, our consideration of issues raised in the abandonment proceeding has been minimal Nevertheless, we fee! constrained to point out that the substance of the acquisition proposal is in direct conflict with the theory upon which the abandonment application is based and that in the face of the very real potential for traffic development on the Flora-Shawneectown line emphasized in the acquisition proceeding it would be extremely difficult for us to approve the abandonment proposal Rather than proceed further in an analysis of the abandonment proposal, we will comply with B&O’s request and dismiss its application for abandonment ULTIMATE FINDINGS In Finance Docket No. 27506, we find that subject to (1) the conditions for the protection of employees embodied in Chicago, B. & Q. R. Abandonment, 257 L.C.C. 700, responsibility and cost for which to be borne by the Baltimore & Ohio Railroad C ompany, (2) the placing by Trans-Action Associates, Incorporated, at the dipsosal of Prairie Trunk Railway of the sum of $750,000 in cash or equivalent assets to be used for the purposes set forth in the application, and (3) the condition that for a period of 5 years from the date of consummation of the acquisition herein authorized, no abandonment application relating to the subject line of railroad may be filed by Prairie Trunk Railway prior to a bona fide offer of resale to any party to this proceeding at a purchase price no less favorable than the $500,000 to be paid to the Baltimore & Ohio Railroad Company for the acquisition, adjusted to Consumer Price Index changes, the present and future public convenience and necessity require the acquisition and operation by Prairie Trunk Railway of the line of railroad between Flora and Shawneetown, lil, described “Formerly secuon 53) Redesignated as section S14) pursuant io section 40Ma) of the Raiiroad Revuslization sad Reguistory Reform Act of 1976, Public Law 94-210, 90 Stat 63. aseice 72a 73a PRAIRIE TRUNK KAI WAY—ACQUISITION AND OPERATION INTERSTATE COMMERCE COMMISSION REPORTS herein, including all of the B&O interest in the 5.36-mile segment of APPENDIX A line between Junction and New Shawneetown, II, jointly owned and operated by B&O and L&N In Finance Docket No. 27507, we find that the issuance by Prairie Traffic handled by B&O over its Flora-Shawneetown Branch ! 969-1975 Trunk Railway of not exceeding 750,000 shares of no- par-value Year Number ol Tena BAO common stock with a stated value of $1 per share to Trans-Action carloads lomnage revenues Associates, Incorporated, for the purpose of financing the PWD - 289A € 4894 T 4B7A 1 489A (primo $000) suMaue2IBIS 2wOlu Ows0f Osd pajrafosd yumnsy d1sIMAg 2 XKIGN3ddv tse it.) 009 sy 867 oP jmoy ol 01 01 ol 01 01 aBusnwap pue Bury oias iz 1z iz iz Iz iz peays2aQ ow oz oz oz oz oz SMO DU By) 2251 Hy oor oor oor 0s se jo tS 4 st st sz st r 4 wamuay 6s 6s 6s 6s 6s 6s sedwony 4 os! os! sei oz! $01 06 |aaeid pue pues aczs ac7zs ors ivzs cits CB RR rrr rercrrreeeereecenenecsens wey ued aumany § 2A » 22K € #894 tPA | 2A myers jo adh POE PEH SIEM WED PROpIED Loge Oy UIQHA PopPA UT, soe't woz coat sere seve stad saws uo" . eee cet ar deena ae es 4) 4) \) Ose Ose Ose Ose Ost rar acecaaaaaeeeeamenmeamem aes pesqsragy as ball ont ong (woz 00g oz wor SR rrr rrterce reece GR DUET OOS SuemaSS® | creneennee —————- (OFF G81 GOOt Ons os a apeeeeee leanne wv tec ove Ost Ost Osz Osi Ost ___.inaencenenenenmeeemenemeee oem los amy ar ver sur sur ser ser 2 ee sedan 4 SS STTSSIRSNES CHNnECETEENED oou't ost stl ot ONE Oost a anaunenmnennenemmenenmmnenemmentiennagss eyed) ence, baled rot ime a Nf EY eee (Strnpesd wsey) wrEI, \cot Oot 696 | weak 85 IA PMA ETA FFA UEDA meat yo adh icot-es6! OF8 see fq PPUrY sproyey sPd4 Ay SBurperqies ryBos, prrewisg PUI) UMO, 22UMOYS-D40} 4 ay) WO Samuanas i1yBia4f $8048 pum awnjor riffmss O11 SD SuOridafosd yunsy 2141D4g @ XIGN3ddv 76a CERTIFICATE AND ORDER At a Session of the INTERSTATE COMMERCE COMMISSION, Division 3. held at its office in Washington, D.C.. on the 17th day of February 1977. Finance Docket No 27506 PRAIRIE TRUNK RAILWAY—ACQUISITION AND OPERA- TION—BETWEEN FLORA AND SHAWNEETOWN IN CLAY, WAYNE, WHITE, AND GALLATIN COUNTIES, ILL. Finance Docket No. 27507 PRAIRIE TRUNK RAILWAY SECURITIES » Finance Docket No 27728 TRANS-ACTION ASSOCIATES, INCORPORATED— CONTROL—PRAIRIE TRUNK RAILWAY Fi~ance Docket No. 26965 BALTIMORE & OHIO RAILROAD COMPANY ABANDONMENT BETWEEN RINARD AND SHAWNEETOWN, IN CLAY, WAYNE, WHITE, AND GALLATIN COUNTIES, ILLINOIS Investigation of the matters and things involved in these proceedings having been made, and said division, on the date hereof. having made and filed a report containing its findings of fact acd conclusions thereon, which report together with the report of the Administrative Law Judge in Finance Docket No. 26965 and the initial decision of the Administrative Law Judge in Finance Dockets Nos. 27506 and 27507 are referred to and hereby made a part hereof: it is hereby certified. in Finance Docket No. 27506, that subject to the conditions stated im the report, the present and future public convenience and necessity require the acquisition and operation by Prairie Trunk Railway of a line of railroad between Flora and Shawneetown, Ili, as described in the report. including the assignment of interest in the 5. 36- mile segment of line between Junction and New Shawneetown, Iit it is ordered, in Fimance Docket No. 27507, that Prairie Trunk Railway be, and it is hereby, authorized to issue not exceeding 750,000 shares of its no-par-value Common stock with a stated value of $1 per share to Trans-Action Associates, Incorporated, for the purposes and on the terms hereinbefore stated, and that in all other respects the application be, and it is hereby, denied. It is further ordered, in Finance Docket No. 27728, that the acquisition by Trans- Action Associates, Incorporated, of control of Praine Trunk Railway upon the verms and conditions set forth in the report, and the control by Trans-Action Associates, 77a Incorporated, of Prairie Trunk Railway and Loursiana Midland Railway Company. two common carriers by railroad, be, and they are hereby. approved and authorized. It ts further ordered, That Trans-Action Associates, Incorporsted, concurrently with consummation of the transactions herein authorized, pursuant to section 5(4) of the Interstate Commerce Act, shall be considered a carrier by railroad subject to section 2041) to (10), inclusive, and section 20a(2) to (11), inctusive, of the Interstate Commerce Act. Mt is further ordered, in Finance Docket No. 26965, that the application be, and it is hereby. dismissed. It is further ordered, That this certificate and order shall take effect and be in force from and after 35 days from its date of service. Mt is further ordered. That Prairie Trunk Railway, when filing schedules establishing rates and charges applicable to the line, shall in such schedules refer ww this certificate and order by date and docket number. 11 ts further ordered, That, except as herein authorized, the aforesaid stuck shall not be sold. pledged. repledged. or otherwise disposed of by Prairie Trun® Railway uniess of wal so ordered of approved by this Commission. Mt us further ordered, That nuthing herein shall be construed to imply any guarantee of obligation as to said stock. or dividends thereon, on the part of the United States. it is further ordered, That Prawie Trunk Railway shall report concerning the matters herein involved in conformity with the order of the Commission. by division 3, dated May 20. 1964, as amended. respecting applications filed under section 20a of the Interstate Commerce Act (49 CFR 1115.6). It is further ordered, That. if the acquisition authority herein granted to Prairie Trunk Railway is exercised, applicants shall submit for the consideration of this Commission three copies of the yournal entries required to record the transaction, and confirm in writing. to the Commission. immediately after consummation, the date on which consummation has actually taken place. tt is further ordered, That pursuant to section 20a(3) of the act. the Commission may. from time to time. for good cause shown, make such supplemental orders herein a5 ut may deem necessary of appropriate. and may by any such supplemental order modily the provisions of any previous order as to the particular purposes, uses, and eatent to which. of the conditions under which, any securities so authorized or the proceeds thereof may be applied. And it is further ordered. That unless the transactions herein authorized are consummated within 180 days from the date hereof. this certificate and order as it apples ww Finance Docket: No. 27506, Finance Docket No 27507, and Finance Docket No 27728 shall be of no further force and effect. By the Commassion, Division 3 Rosert L. Oswaco. (SEAL) Secretary. 78a APPENDIX J Interstate Commerce Act Section la. (1) No carrier by railroad subject to this part shall abandon all or any portion of any of its lines of railroad (hereafter in this section referred to as ‘abandon- ment’) and no such carrier shall discontinue the operation of all rail service over all or any portion of any such line (here- after referred to as “discontinuance”), unless such abandon- ment or discontinuance is described in and covered by a cer- tificate which is issued by the Commission and which de- clares that the present or future public convenience and necessity require or permit such abandonment or discontin- uance. An application for such a certificate shall be submit- ted to the Commission, together with a notice of intent to abandon or discontinue, not less than 60 days prior to the proposed effective date of such abandonment or discontin- uance, and shall be in accordance with such rules and regula- tions as to form, manner, content, and documentation as the Commission may from time to time prescribe. Abandon- ments and discontinuances shal] be governed by the provi- sions of this section or by the provisions of any other ap- plicable Federal statute, notwithstanding any inconsistent or contrary provision in any State law or constitution, or any decision, order, or procedure of any State administrative or judicial body. The authority granted to the Commission under this section shall not apply to (a) abandonment or dis- continuance with respect to spur, industrial, team, switching, or side tracks if such tracks are located entirely within one State, or (b) any street, suburban, or interurban electric rail- way which is not operated as part of a genera! system of rail transportation. (2Xa) Whenever a carrier submits to the Commission a notice of intent to abandon or discontinue, pursuant to para- graph (1), such carrier shall attach thereto an affidavit cer- 79a tifying that a copy of such notice (i) has been sent by cer- tified mail to the chief executive officer of each State that would be directly affected by such abandonment or discon- tinuance, (ii) has been posted in each termina! and station on any line of railroad proposed to be so abandoned or discon- tinued, (iii) has been published for 3 consecutive weeks in a newspaper of general circulation in each county in which all or any part of such line of railroad is located, and (iv) has been mailed, to the extent practicable, to all shippers who have made significant use (as determined by the Commission in its discretion) of such line of railroad during the 12 months preceding such submission. (b) The notice required under subdivision (a) shall in- clude (i) an accurate and understandable summary of the carrier's application for a certificate of abandonment or dis- continuance, together with the reasons therefor, and (ii) a statement indicating that each interested person is entitled to recommend to the Commission that it approve, disap- prove, or take any other specified action with respect to such (3) During the 60-day period between the submission of a completed application for a certificate of abandonment or discontinuance pursuant to paragraph (1) and the proposed effective date of an abandonment or discontinuance, the Commission shall, upon petition, or may, upon its own initia- tive, cause an investigation to be conducted to assist it in de- termining what disposition to make of such application. An order to the Commission to implement the preceding sen- tence must be issued and served upon any affected carrier not jess than 5 days prior to the end of such 60-day period. If no such investigation is ordered, the Commission shall is- sue such a certificate, in accordance with this section, at the 80a end of such 60-day period. If such an investigation is or- dered, the Commission shall order a postponement, in whole or in part, in the proposed effective date of the abandonment or discontinuance. Such postponement shall be for such rea- sonable period of time as is necessary to complete such inves- tigation. Such an investigation may include, but need not be limited to, public hearings at any location reasonably ad- jacent to the line of railroad involved in the abandonment or discontinuance application, pursuant to rules and regulations of the Commission. Such a hearing may be held upon the request of any interested party or upon the Commission’s own initiative. The burden of proof as to public convenience and necessity shall be upon the applicant for a certificate of abandonment or discontinuance. (4) The Commission shall, upon an order with respect to each application for a certificate of abandonment or discon- tinuance— (a) issue such certificate in the form requested by the applicant if it finds that such abandonment or discontin- uance is consistent with the public convenience and necessity. In determining whether the proposed aban- donment is consistent with the public convenience and necessity, the Commission shall consider whether there will be a serious adverse impact on rural and community development by such abandonment or discontinuance; (b) issue such certificate with modifications in such form and subject to such terms and conditions as are required, in the judgment of the Commission, by the public convenience and necessity; or (c) refuse to issue such certificate. Each such certificate which is issued by the Commission shall contain provisions for the protection of the interests of employees. Such provisions shall be at least as beneficial! to such interests as provisions established pursuant to section 5(2)(f) of this Act and pursuant to section 405 of the Rail Passenger Service Act (45 U.S.C. 565). If such certificate is issued without an investigation pursuant to paragraph (3) of this section, actual abandonment or discontinuance may take effect, in accordance with such certificate, 30 days after the date of issuance thereof. If such a certificate is issued after an investigation pursuant to such paragraph (3), actual abandonment or discontinuance may take effect, in accor- dance with such certificate, 120 days after the date of is- suance thereof. (5)(a) Each carrier by railroad subject to this part shall, within 180 days after the date of promulgation of regulations by the Commission pursuant to this section, prepare, submit to the Commission, and publish, a full and complete diagram of the transportation system operated, directly or indirectly, by such carrier. Each such diagram which shall! include a de- tailed description of each line of railroad which is “potential- ly subject to abandonment”, as such term is defined by the Commission. Such term shall be defined by the Commission by rules and such rules may include standards which vary by region of the Nation and by railroad or group of rail- roads. Each such diagram shal! also identify any line of rail- road as to which such carrier plans to submit an application for a certificate of abandonment or discontinuance in accor- dance with this section. Each such carrier shal! submit to the Commission and publish, in accordance with regulations of the Commission, such amendments to such diagram as are necessary to maintain the accuracy of such diagram (b) The Commission shall not issue a certificate of abandonment or discontinuance with respect to a line of rail- road if such abandonment or discontinuance is opposed by — 82a (i) a shipper or any other person who has made significant use (as determined by the Commission in its (ii) a State, or any political subdivision of a State, if such line of railroad is located, in whole or in part, within such State or politica! subdivision; unless such line or railroad has been identified and described in a diagram or in an amended diagram which was submitted to the Commission under subdivision (a) at least 4 months prior to the date of submission of an application for such cer- tificate. (6a) Whenever the Commission makes a finding, in ac- cordance with this section, that the public convenience and necessity permit the abandonment or discontinuance of a line or railroad, it shall cause such finding to be published in the Federal Register. If, within 30 days of such publication, the Commission further finds that— (i) a financially responsible person (including « government entity) has offered financial assistance (in the form of a rail service continuation payment) to ena- ble the rail service involved to be continued; and (ii) it is likely that such proffered assistance would— (A) cover the difference between the revenues which are attributable to such line of railroad and the avoidable cost of providing rail freight service on such line, together with a reasonable return on the value of such line; or (B) cover the acquisition cost of all or any por- tion of such line of railroad; 83a the Commission shall postpone the issuance of a certificate of abandonment or discontinuance for such reasonable time, not to exceed 6 months, as is necessary to enable such person or entity to enter into a binding agreement, with the carrier seeking such abandonment or discontinuance, to provide such assistance or to purchase such line and to provide for the continued operation of rail services over such line. Upon notification to the Commission of the execution of such an assitance or scquisition and operating agreement, the Com- mission shall postpone the issuance of such a certificate for such period of time as such an agreement (including any ex- tensions or modifications) is in effect. (b) A carrier by railroad subject to this part shal! promptly make available, to any party considering offering financia) assistance in accordance with subdivision (a), its most recent reports on the physical condition of any line of railroad with respect to which it seeks a certificate of aban- donment or discontinuance, together with such traffic, reve- nue, and other data as is necessary to determine the amount of assistance that would be required to continue rail service. (7) Whenever the Commission finds, under paragraph (6)(a) of this section, that an offer of financia) assistance has been made, the Commission shal! determine the extent to which the avoidable cost of providing rail service plus a rea- sonable return on the value of the rail properties involved ex- ceed the revenues attributable to the line of railroad or the rail service involved. (8) Petitions for abandoninent or discontinuance which were filed and pending before the Commission as of the date of enactment of this section or prior to the promulgation by the Commission or regulations required under this section shall be governed by the provisions of section | of this Act 84a which were in effect on such date of enactment, except that paragraphs (6) and (7) of this section shall be applicable to such petitions. (9) Any abandonment or discontinuance which is con- trary to any provision of this section, of any regulation promulgated under this section, or of any terms and condi- tions of an applicable certificate, may be enjoined by an ap- propriate district court of the United States in a civil action commenced and maintained by the United States, the Com- mission, or the attorney general or the transportation regula- tory body of an affected State or area. Such a court may im- pose a civil penalty of not to exceed $5,000 on each person who knowingly authorizes, consents to, or permits any viola- tion of this section or of any regulation under this section. (10) In any instance in which the Commission finds that the present or future public convenience and necessity per- mit abandonment or discontinuance, the Commission shal! make a further finding whether such properties are suitable for use for other public purposes, including roads or high- ways, other forms of mass transportation, conservation, energy production or transmission, or recreation. If the Commission finds that the properties proposed to be aban- doned are suitable for other public purposes, it shall order that such rail properties not be sold, leased, exchanged, or otherwise disposed of except in accordance with such reason- able terms and conditions as are prescribed by the Commis- sion, including, but not limited to, a prohibition on any such disposal, for a period not to exceed 180 days after the effec- tive date of the order permitting abandonment unless such properties have first been offered, upon reasonable terms, for acquisition for public purposes. 85a (11) As used in this section: (a) The term “avoidable cost” means all expenses which would be incurred by a carrier in providing a ser- vice which would not be incurred, in the case of discon- tinuance, if such service were discontinued or, in the case of abandonment, if the line over which such service was provided were abandoned. Such expenses shal! in- clude but are not limited to all cash inflows which are foregone and all cash outflows which are incurred by such carrier as a result of not discontinuing or not aban- doning such service. Such foregone cash inflows and in- curred outflows shal] include (i) working capital and required capital expenditures, (ii) expenditures to elimi- nate deferred maintenance, (iii) the current cost of freight cars, locomotives and other equipment, and (iv) the fore- gone tax benefits from not retiring properties from rail service and other effects of applicable Federal and State income taxes. (b) The term “reasonable return” shall, in the case of a railroad not in reorganization, be the cost of capital to such railroad (as determined by the Commission), and, in the case of a railroad in reorganization, shall be the mean cost of capital of railroads not in reorganization, 7 ined by the C =—q 86a Section 1(18)-1(20) of the Interstate Commerce Act, 49 US.C. 1(18)-1(20). (18) After ninety days after this paragraph takes effect no carrier by railroad subject to this part shall undertake the extension of its line of railroad, or the construction of a new line of railroad, or shall acquire or operate any line of railroad, or extension thereof, or shal] engage in transportation under this part over or by means of such additional] or extended line of railroad, hanless and until there shall first have been obtained from the Commission a certificate that the present or future public convenience and necessity require or wil] require the construction, or operation, or construction and opera- tion, of such additional or extended line of railroad, and no carrier by railroad subject to this part shall aban- don all or any portion of a line of railroad, or the opera- tion thereof, unless and until there shal! first have been obtained from the Commission a certificate that the present or future public convenience and necessity permit of such abandonment. Nothing in this paragraph or in section 5 shal] be considered to prohibit the making of contracts between carriers by railroad subject to this part, without the approval of the Commission, for the joint ownership or joint use of spur, industrial, team, switching, or side tracks. (19) The application for and issuance of any such certificate shal] be under such rules and regulations as to hearings and other matters as the Commission may from time to time prescribe, and the provisions of this part shall apply to all such proceedings. Upon receipt of any application for such certificate the Commission shal! cause notice thereof to be given to and « copy filed with the governor of each State in which suxh additional or extended line of railroad is proposed to be constructed or operated, or all or any portion of a line of railroad, or 87a the operation thereof, is proposed to be abandoned, with the right to be heard as hereinafter provided with respect to the hearing of complaints or the issuance of securities ; and said notice shal] also be published for three consecu- tive weeks in some newspaper of general circulation in each county in or through which said line of railroad is constructed or operates. (20) The Commission shall have power to issue such certificate as prayed for, or to refuse to issue it, or to issue it for a portion or portions of a line of railroad, or extension thereof, described in the application, or for the partial exercise only of such right or privilege, and may attach to the issuance of the certificate such terms and conditions as in its judgment the public convenience and necessity may require. From and after issuance of such certificate, and not before, the carrier by railroad may, without securing approval other than such certificate, comply with the terms and conditions contained in or attached to the issuance of such certificate and proceed with the construction, operation, or abandonment cov- ered thereby. Any construction, operation, or abandon- ment contrary to the provisions of this paragraph or of paragraph (18) or (19) of this section may be enjoined by any court of competent jurisdiction at the suit of the United States, the Commission, any commission o7 regu- lating body of the State or States affected, or any party in interest; and any carrier which, or any director, offi- cer, receiver, operating trustee, lessee, agent, or person, acting for or employed by such carrier, who knowingly authorizes, consents to, or permits any violation of the provisicys of this paragraph or of paragraph (18) of this secti. hall upon conviction thereof be punished by a fine 4 more than $5,000 or by imprisonment for not mors t..an thre. « *ars, or both. --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385004_1936%3A1. Public record. Not legal advice.