Opposition — Missouri-Kansas-Texas Railroad v. United States
Supreme Court brief1981
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\ APR 244
DER L.
CLERK
Nos. 80-1434, 80-1439, and 80-1632
In the
SUPREME COURT OF THE UNITED STATES
October Term 1980
Se Eee ee
MISSOURI-KANSAS-TEXAS RAILROAD COMPANY,
Petitioner in No. 80-1434,
RAILWAY LABOR EXECUTIVES’ ASSOCIATION,
Petitioner in No. 80-1439,
PEOPLE OF THE STATE OF ILLINOIS, et al.,
Cross-Petitioners in No. 80-1632
v.
UNITED STATES OF AMERICA,
INTERSTATE COMMERCE COMMISSION and
BURLINGTON NORTHERN INC.,
Respondents.
BRIEF OF RESPONDENT BURLINGTON NORTHERN INC.
IN OPPOSITION TO PETITION FOR A WRIT OF
CERTIORARI TO THE UNITED STATES
COURT OF APPEALS FOR THE FIFTH CIRCUIT
Of Counsel:
FRANK S. FARRELL MartTIN M. LUCENTE
DONALD E. ENGLE CHRISTIAN L, CAMPBELL
Eric A. CUNNINGHAM, JR. SipLeY & AUSTIN
NICHOLAS P. Moros One First National Plaza
176 East Fifth Street Chicago, Illinois 60603
St. Paul, MN 55101 G. PAUL MOATES
SipLeEY & AUSTIN
1730 Pennsylvania Ave., N.W.
Washington, DC 20006
Attorneys for Respondent
Burlington Northern Inc.
April 24, 1981
i
QUESTIONS PRESENTED’
|. Whether the Court of Appeals erred in affirming the Inter-
state Commerce Commission’s determination that the merger of
the Burlington Northern and St. Louis-San Francisco Railway
Company, conditioned to require two years of DT&I protection
for competing carriers, will have a beneficial effect on the
adequacy of transportation to the public, is in the public interest
and should be approved?
2. Whether the Court of Appeals erred in affirming the Inter-
state Commerce Commission’s denial of special protective condi-
tions for MKT?
3. Whether the Court of Appeals erred in affirming the Inter-
state Commerce Commission’s determination that the interests of
‘Pursuant to Rule 28.1 of the Rules of Practice of this Court, Respon-
dent Burlington Northern Inc. states that the following is a listing of all
of its subsidiaries (except wholly-owned subsidiaries) and affiliates, with
percentage owned indicated: The Belt Railway Company of Chicago
(7.69%); Burlington Northern Air Freight (Australian) (99.99%);
Butte Pipe Line Company (10.00%); Camas Prairie Railroad Company
(50.09%); Chicago Union Station Company (25.00%); The Colorado
and Southern Railway Company (90.57%); Davenport, Rock Island and
North Western Railway Company (50.00%); Delta Alaska Terminal
Ltd. (66.67%); Denver Union Terminal Railway Company (16.67%);
Fort Worth and Denver Railway Company (99.97%); Galveston Ter-
minal Railway Company (50.00%); Great Midwest Corporation
(49.35%); Houston Belt and Terminal Railway Company (12.50%); Il-
linois Terminal Railroad Company (18.18%); lowa Transfer Railway
Company (25.00%); Kansas City Terminal Railway Company
(16.68%); Keokuk Union Depot Company (33.33%); The Lake Superior
Terminal and Transfer Railway Company (66.67%); Longview Switch-
ing Company (33.33%); Minnesota Transfer Railway Company
(33.33%); National Railroad Passenger Corporation (36.00%); New
Mexico and Arizona Land Company (50.07%); Paducah and Illinois
Railroad Company (33.33%); Portal Pipe Line Company (60.00%);
Portland Terminal Railroad Company (40.00%); Pueblo Union Depot
(25.00%); The Pullman Company (4.13%); The St. Paul Union Depot
Company (40.20%); Terminal Railroad Association of St. Louis
(12.50%); Trailer Train Company (9.76%); Western Fruit Express
Company (97.14%); Winona Bridge Railway Company (66.67%); and
Wichita Union Terminal Railway Company (33.33%).
affected employees would be appropriately protected by negotiat-
ed agreements for certain employees and New York Dock condi-
tions for affected employees not covered by such negotiated
agreements?
II.
III.
IV,
iil
TABLE OF CONTENTS
THE COURT OF APPEALS EMPLOYED THE PROPER
STATUTORY ANALYSIS IN AFFIRMING THE CoM-
MISSION’S DECISION TO APPROVE THE MERGER .....
THE COURT OF APPEALS CORRECTLY CONCLUDED
THAT THE COMMISSION’S RELIANCE ON AN “ESSENTIAL
SERVICES” STANDARD Is ENTIRELY CONSISTENT WITH
THE STATUTORY CRITERIA GOVERNING APPROVAL OF
Pes I vio 6. d 04s hoe Se nace ae Econ
THE COURT OF APPEALS PROPERLY SUSTAINED THE
COMMISSION’S DETERMINATION THAT MKT Is FULLY
CAPABLE OF WITHSTANDING THE IMPACT OF THE
oo OT TTT Le eRe TPP OrT Fr ae
THE CouRT OF APPEALS CORRECTLY CONCLUDED
THAT THE COMMISSION’S FINDINGS AS TO MKT’s
PROJECTED MERGER REVENUE Losses WERE AMPLY
SUPPORTED BY EVIDENCE OF RECORD ............
THE FirtH Circuit CorRECTLY FOUND THAT THE
COMMISSION’S DECISION TO DENY MKT S?ECIAL
PROTECTIVE CONDITIONS Dip Not VIOLATE PETI-
TIONER’S RIGHT TO PROCEDURAL DUE PROCESS.....
13
iV
VI. THE PETITION FOR WRIT OF CERTIORARI FILED BY
RAILWAY LABOR EXECUTIVES’ ASSOCIATION Dogs
Nort RAISE ANY ISSUE WARRANTING REVIEW BY THIS
DE ci eda S Utah Cab eeeecheckcads ka wne wna.
A. The Court of Appeals Properly Affirmed The Com-
mission’s Order Concerning The Scope of Em-
ployee Protection Afforded by 49 U.S.C. § 11347:
Moreover, The Soo Line Decision Presents No
Conflict With the Decision of the Court Below ..
B. The Court of Appeals Properly Found that the
Commission Fully Discharged Its Statutory Man-
date under Section 11344 to Consider the Interest
of Carrier Employees Affected by the Transaction.
AMET KARA GN WAR EAA NG RRiR Ra dnaaeaccncecas
lF
21
v
TABLE OF AUTHORITIES
Cases
American Trucking Associations v. Atchison, T. &
S. F. Ry. Co., 387 U.S. 397 (1967)...........
American Air Export & Import Co. v. O'Neill, 22)
fo a PP errr
Anderson v. United States, 417 U.S. 211 (1974) ..
Atchison, T. & S. F. Ry. v. Wichita Bd. of Trade,
ee
RA Ae AE Ais ee Se.
Bowman Transportation, Inc. v. Arkansas-Best
Freight System, Inc., 419 U.S. 281 (1975).....
Brotherhood of Maintenance of Way Employees v.
United States, 221 F.Supp. 19 (E.D. Mich. 1963),
aff'd per curiam, 375 U.S. 216 (1963) ........
Brotherhood of Maintenance of Way Employees v.
United States, 366 U.S. 169 (1961) ..........
Burlington Northern Inc.—Control and Merger—
St. Louis-Sai Francisco Railway Co., 360 I.C.C.
GE. rae Meee
Chesapeake & O. Ry. Co.—Control Baltimore & O.
RR, 17 CLC. 261 (1962)... . eee eee eee
Chicago & Northwestern Ry. Co.—Control—
Chicago Rock Island and Pacific R. R. Co., 347
Md, BED AIORED ooo o00crsceee» eve eye rer
Chicago & N.W. Ry. Co. Merger, 330 LCC. 13
DE SAsh ssa tisded as sadb odes s bacdabine
17
23
15
22
passim
vi
Chicago & N. W. Ry. Co.—Merger—Chicago G.
W. Ry. Co., 333 1.C.C. 236 (1968) ......e000.
CSX Corporation—Control—Chessie System, Inc.
and Seaboard Coast Line Industries, Inc., 363
1.C.C, 518 (1980) appeal pending, 7th Cir. No.
PE Sib cube Roe enae dec dendeaatercsiebe
Ex Parte No, 282 (Sub. No. 5), 45 F.R. 46461 (July
8 RR errr rr: Peres yr rrr ere
FCC vy. National Citizens Committee for Broadcast-
i Se a PER EOOEED bn sdcdéncescasrrve
Florida East Coast Railway Company vy. United
States, 259 F.Supp. 993 (M.D. Fla. 1966), aff'd
per curiam, 386 U.S. 545 (1967) .........45.
FPC v. Transcontinental Gas Pipe Line Corp., 365
PRED sas hsGd saber edinddcerasce cre
Great Northern Pac.—Merger—Great Northern,
ee ee ETS cic veddbeusc cere codec
Hormel v. Helvering, 312 U.S. 552 (1941) ......
Illinois Central Gulf R. Co.—Acquisition—G.M. &
i we, Bee Oe BOO CIGTE). ccccccsccoscs
McLean Trucking Co. v. United States, 321 U.S. 67
TT Cel res he kesh raed obae aed ys
Missouri-Kansas-Texas R. Co. v. United States,
632 F.2d 392 (Sth Cir. 1980) ..........e000-
Mo-Pac—Merger—T&P and C&EI, 348 LC.C.
| Ba re ee ee
New York Dock Railway—Control—Brooklyn
Eastern District Terminal, 360 1.C.C. 60 (1979),
aff'd. 609 F.2d 83 (2d Cir. 1979) ........045.
New York Dock Ry. v. United States, o F.2d 83,
ee er eee
Page(s)
14, 15, 21
15
18
22, 23
passim
21
23
22
Vii
NLRB vy. Bell Aerospace Co., 416 U.S. 267 (1974).
Norfolk and Western Railway Company v. United
States (4th Cir. No. 79-1862, 1981)..........
Penn-Central Merger Cases, 389 U.S. 486 (1968).
Pennsylvania R. Co.-~Merger—New York Central
R. Co, 327. 1.C.C. 475 (1966). cccsccccceces
Pennsylvania R. Co.—Merger—New York Central
R. Co., 328 1.C.C, 304 (1968)... ..cccccces ds
Pennsylvania R. Co.—Merger—New York Central
R. Co., 331 L.C.C, 784.( 1968) . ce ccctdcccccces
Pittsburgh and Lake Erie R. Co. v. United States,
294 F.Supp. 86 (W.D. Penn. 1968)...........
Pre-Fab Transit Co. v. United States, 595 F.2d 384
Cee Ge, SBTED 6nckcsc tere
Railway Labor Executives’ Association v. United
States, 216 F.Supp. 101 (E.D. Va. 1963)......
Railway Labor Executives’ Association v. United
States, 226 F.Supp. 521 (E.D. Va. 1964)......
Ralston Purina Co. v. Louisville & N.R. C. 0., 426
Ui SP6(1DTE) oso iicdccexctessdee
Sawyer Transport, Inc. v. United States, 565 F.2d
OR UME Che, 1977) ves ccckccundeaweeene
Seaboard Air Line Railroad Co.—Merger—Atian-
tic Coast Line, 320 1.C.C, 122 (1963), aff'd, Flor-
ida East Coast Ry. v. United States, 259 F Supp.
993 (M.D. Fla, 1966), aff'd per curiam, 386 U.S.
PUR EROOTD 0006008668020 )080) eee
Seaboard Coast Line R. R. Co.—Investigation of
Control, 360 1.C.C. 582 (1979)... ...0ceeeeee
Soo Line R. Co. v. United States, 280 F. Supp. 907
CP Be, SOD ocdeaik is cidcieuseeee
Page(s)
17, 25
17
¥.40
20
20, 23, 26
14, 15, 21
21
21
23
15
22, 25, 26
———————
Vili
Page(s)
Southern Railway Co.—Control—Central of Geor-
gia Railway Co., 317 1.C.C. 557 (1962), afd,
Railway Labor Executives’ Association v. United
States, 226 F.Supp. 521 (E.D. Va. 1964)...... 23
St. Louis Southwestern Ry. Co.—Purchase (Por-
tion)—Chicago, Rock Island and Pacific R. R.
EE cn LEOPED. ves bvesscecetes 15
Texas & Pacific Ry.—Control—Kansas O. & G.
SEA, SOP CESOS) ccccccepescececes 23
United States v. ICC, 396 U.S. 491 (1970) ...... 13
United States v. Lowden, 308 U.S. 225 (1939) ... 22
United States v. Wurtsbraugh, 140 F.2d 534 (Sth
ET Sites gee eUe cent bevens.ene6h 0a 18
Universal Camera Corp. v. National Labor Rela-
* tions Board, 340 U.S. 474 (1951) ........006- 10
Statutes
Pub. L. No. 96-265, § 94 Stat. 399 .............. 28
Revised Interstate Commerce Act, Pub. L. No. 95-
eee eee ee eee 25
Ee Cul s s'ono0.0s0 bo aecksenaw ees 24
I ene re 28
cr. crea cbs es bp ecadeuweewe %
TIED.» poccesndvceseneveseses 16
ee eee rer 16
EE 55s 6650s 0 6e¥eebaeds once bes 16
EE a oe cobs baw biph owe eheeees 15
TIE 5 csp ncgcenccdecevessseceos 1, 7,9, 29
ST PE POMD, oss c cect docseereseseeds 5
PRES vccccccosceceveeseeeens 26, 27, 29
TE Sibs6 beds ce ses ecevese 6 bees v)
SMEG PEEMU cocrcdvcccscccscveevovesess 22, 25, 26, 27
ix
Other Authorities
S. Rep. No. 499, 94th Cong., 2d Sess, 13, 18 (1975).
Hearings on H.R. 2531 Before the House Comm. on
Interstate and Foreign Commerce, 76th Cong.,
Ist Sess. (1939) (Testimony of George M. Harri-
ED 5 oud bas vee Ees bade ewe ch ehbousk ees
Hearings on S. 1310, 1869, 2009 and 2016 Before
the Senate Comm. on Interstate Commerce, 76th
Cong., Ist Sess. (1939) (Testimony of George M.
i SSI F< aD ACR oe eee
Washington Job Protection Agreement of 1936...
Rule 17, Supreme Court Rules—The 1980 Revi-
Se ES NEE 0.6 65 byw ehsdaSeae ohutices
Railroad Consolidation Procedures, 359 I.C.C. 195
NN aa da a a's «hawk 66a ke ak Geb 6.0
Page(s)
22
Nos. 80-1434, 80-1439, and 80-1632
In the
SUPREME COURT OF THE UNITED STATES
October Term 1980
MISSOURI-KANSAS-TEXAS RAILROAD COMPANY,
Petitioner in No. 80-1434,
RAILWAY LABOR EXECUTIVES’ ASSOCIATION,
Petitioner in No. 80-1439,
PEOPLE OF THE STATE OF ILLINOIS, et al.,
Cross-Petitioners in No. 80-1632
Vv.
UNITED STATES OF AMERICA,
INTERSTATE COMMERCE COMMISSION and
BURLINGTON NORTHERN INC.,
Respondents.
BRIEF OF RESPONDENT BURLINGTON NORTHERN INC.
IN OPPOSITION TO PETITION FOR A WRIT OF
CERTIORARI TO THE UNITED STATES
COURT OF APPEALS FOR THE FIFTH CIRCUIT
STATEMENT OF THE CASE
By decision served on April 17, 1980, the Commission ap-
proved and authorized, pursuant to 49 U.S.C. §11344, the merger
of Respondent Burlington Northern Inc. (BN) and the St. Louis-
San Francisco Railway Company (Frisco). This decision was
based on extensive evidence submitted at public hearings com-
mencing May 16, 1978 and concluding June 28, 1979, in which
fifteen rail carriers, numerous shippers, and various public agen-
cies (including the United States Department of Justice) par-
ticipated. In addition to approving the merger transaction, the
Commission imposed standard traffic conditions (DT&I condi-
2
tions) for a period of two years after merger consummation for
carriers participating in the proceeding in order to afford them
sufficient time to adjust to the impact of the merger.
The Commission’s decision was based upon a thorough and
searching review of the record evidence and a specific determina-
tion that the merger will result in substantial benefits to the ship-
ping public in the form of greatly improved transportation ser-
vices:
“Approval of this merger, as conditioned, will have a bene-
ficial effect on the adequacy of transportation to the public.
Not only will the services of the merged company be sig-
nificantly improved, but other railroads will be able to con-
tinue providing essential services. The merged company will
be able to provide new single-line service, reduced transit
times, more efficient and frequent service, and improved car
utilization.” 360 I.C.C. at 935, A238.’
Moreover, the Commission made extensive findings on the ship-
per support which the merger had attracted; benefits to the rail-
road industry generally which the transaction would generate;
operating efficiencies and savings which the merged company
could realize; enhanced opportunities for innovative ratemaking
by the new company; and the positive impact which the merger
would have both on inter- and intra-modal competition. (See 360
I.C.C. at 935-944, A238-247). As the Commission recognized, no
party questioned these extensive public benefits. Rather, “Protes-
tants in fact have based their cases on the belief that a merged
BN-Frisco system would realize the benefits claimed.” (/d. at
943, A246).
Fifteen rail carriers intervened in the Commission proceedings
seeking various types of protection from the effects of the merger.
Following careful consideration of the extensive evidence present-
ed with respect to the necessity for such protection, the Commis-
sion concluded that imposition of the standard or DT &I traffic
protective conditions for a period of two years would afford
affected carriers “sufficient time to adjust to the new competitive
climate” (360 I.C.C, at 947, A260). Accordingly, it rejected the
’The appendix to MKT’s petition (No. 80-1434) is cited herein as A, and
the appendix to RLEA's petition (No. 80-1439) is cited herein as —_ a.
3
requests of the six carriers, including Petitioner Missouri-Kansas-
Texas Railroad Company (MKT or Katy), which continued to
press for much more extensive protection (/d. at 953-957, A256-
260).
Following the issuance of the Commission’s decision approving
the merger, Katy and the Railway Labor Executives’ Association
(RLEA) petitioned for review in the United States Court of Ap-
peals for the Fifth Circuit (Nos. 80-1523 and 80-1563) and that
Court stayed the Commission’s order. The Court of Appeals set
the case for expedited handling, and after receiving briefs and
oral argument both on the merits of the petitions for review and
BN-Frisco’s motion to vacate the stay, it issued an order on
Friday, November 21, 1980, granting the motion to vacate. BN
and Frisco merged on the afternoon of November 21,’ and that
evening Katy obtained a temporary stay of the Fifth Circuit's ac-
tion. On Monday, November 24, the Court of Appeals released
its decision on the merits. On Wednesday, November 26, this
Court (by an 8-0 vote, Justice Marshall not participating) vacat-
ed the temporary stay and denied MKT’s application for a further
Stay pending filing of a petition for certiorari.
Of the original fifteen carriers participating in the proceedings
before the Commission, only two—MKT and Soo Line Railroad
Company (Soo)—sought judicial review of the Commission’s
decision, and only Katy has petitioned for certiorari. Thus, all but
one of the carriers which originally intervened have implicitly
concurred in the Commission’s determination that merger con-
summation will not impair their continued ability to compete
effectively with the merged company and to provide efficient trans-
portation service. RLEA and certain Illinois interests‘ also sought
review of the Commission's decision by the Court of Appeals, and
these parties now seek additional review by this Court.
‘The merger has thus been consummated for more than five months, and the
physical consolidation of BN and Frisco operations is complete. Moreover, the
Frisco no longer exists as a corporate entity; it has no shareholders, officers or
directors; and its assets and obligations have been taken over by BN.
*Cross-petitioners in 80-1632, referred to herein as the Illinois interests, are
People of the State of Illinois, Illinois Commerce Commission, Patrick W. Sim-
mons, and M. S., Stuckey.
4
STANDARDS FOR JUDICIAL REVIEW
The decision of the Court of Appeals correctly delineated the
appropriate standards for review of the Commission’s decision,
(632 F.2d at 399-400, A26-28). Petitioners have not challenged
the Court’s articulation of those standards, choosing instead to
dispute the manner in which the Court applied them to the Com-
mission’s decision. As is evident from a review of the
Fifth Circuit’s opinion, the Court correctly concluded that the
Commission had observed the statutory limits that Congress has
set for its discretion, that it had not acted arbitrarily or ca-
priciously, and that its findings were supported by adequate
analysis and substantial evidence. McLean Trucking Co. v. Unit-
ed States, 321 U.S. 67, 87-88 (1944).
Moreover, contrary to the contrived arguments of Petitioners,
the Court of Appeals’ decision does not conflict with the decisions
of any other Courts of Appeals, and the standards for this Court’s
granting review on certiorari have not been met. See Rule 17,
Supreme Court Rules—The 1980 Revisions, BNA (1980) at 49,
ARGUMENT
I. THE COURT OF APPEALS EMPLOYED THE PROPER
STATUTORY ANALYSIS IN AFFIRMING THE COM-
MISSION’S DECISION TO APPROVE THE MERGER.
Katy first argues that the Commission failed to discharge its
Statutory obligation, pursuant to 49 U.S.C. §11344(b), to con-
sider the effect of the proposed transaction on the adequacy of
transportation to the public, including the service provided by
other rail carriers, and that the Court of Appeals thus erred in
affirming the Commission's approval of the merger. (Katy Pet.,
pp. 19-23),
This contention simply ignores the Commission's response to
the statutory requirements and the !ower Court's review of that
aspect of the Commission's decision. Both the Commission and
the Court of Appeals recognized that merger approval required
analysis of the impact on the adequacy of transportation services
provided by all rail carriers. Thus, the Court's opinion commences
with an explicit recitation of the factors set forth in 49 U.S.C.
5
§11344(b) which the Commission is “required to consider” in a
merger proceeding, specifically noting that one of these factors is
“the effect of the proposed transaction on the adequacy of trans-
portation to the public.” (632 F.2d at 395, A5-6). The Court
found that the Commission had carefully evaluated the evidence
concerning the many merger benefits which would accrue to the
shipping public and the evidence offered by competing carriers
concerning the claimed negative impact of the merger. (632 F.2d
at 397-9, Al7-20). The Court concluded that, based on its assess-
ment of the relevant evidence and “having closely reviewed the
positions of all the parties” in a manner consistent with the “cri-
teria of merger approval contained in the relevant statutes,” the
Commission properly exercised its discretion to approve the
merger (632 F.2d at 398, A20),
As the Court noted, the Commission reached its decision to ap-
prove this merger only after a full and careful evaluation of the
merger’s impact on rail service provided by other carriers as
required by § 11344(b), and clearly treated this as a component of
the public interest standard:
“The Commission has determined that the public will benefit
in overall service if competing carriers are less shielded from
the need to face the challenge of strong merged carriers.
Burlington Northern Inc.—-Control and Merger, 360 I.C.C.
at 950-2. In order to gain that overall benefit for the public,
the Commission has decided that only ‘essential services’
should be protected. We find the new weighing of the public
interest perfectly appropriate under § 11344(b)(1) and any
of the other broad statutory standards,” (632 F.2d at 403,
A40).
Katy attempts to support its contrived argument that the Court
of Appeals “made a basic error in its understanding of . . . the stat-
utory prerequisites for merger approval” by reference to one sen-
tence in the opinion which states “[n]Jone of the petitioners direct-
ly challenge the Commission's ultimate conclusion that the BN-
Frisco merger is in the public interest.” (Katy Pet., pp. 19-20).
Katy conveniently overlooks the next sentence where the Court
states that “the validity of that conclusion” [that the merger is in
the public interest] is attacked indirectly by challenges to specific
6
findings by the Commission (632 F.2d at 399, A24), including the
Commission’s finding that ‘Katy can withstand these diversions
without a loss of essential service.” (632 F.2d at 408, A61).
It is clear, therefore, that Katy’s contention that an improper
statutory analysis was applied by the Commission and the Court
of Appeals presents absolutely no issue for review by this Court.
Il. THE COURT OF APPEALS CORRECTLY CONCLUD-
ED THAT THE COMMISSION’S RELIANCE ON AN
“ESSENTIAL SERVICES” STANDARD IS ENTIRELY
CONSISTENT WITH THE STATUTORY CRITERIA
GOVERNING APPROVAL OF RAIL MERGERS.
Katy also challenges the decision below on the ground that the
“essential services” standard employed by the Commission in
reviewing the merger is inconsistent with the applicable statutory
criteria governing approval of rail mergers. This argument was
thoroughly considered and definitively rejected by the Court of
Appeals, and does not warrant review by this Court.
Under the “essential services” standard, the Commission as-
sesses the impact of a merger on rail carriers by determining
whether it might impair their continued ability to render trans-
portation services essential to the public. As the Court of Appeals
recognized, this standard was adopted by the Commission early in
1978 after an extensive review of consolidations, including public
hearings conducted by its Rail Services Planning Office (RSPO),
after enactment of the Railroad Revitalization and Regulatory
Reform Act (“4-R Act’’) in 1976. See 632 F.2d at 400-401, A31-
32. Katy’s claim here, as before the Court below, that this ap-
proach was new and “shocking” in the BN-Frisco decision is
simply unsupported by the facts. (Katy Pet., p. 32).
As the Court of Appeals correctly found, the essential services
standard, initially formulated by RSPO, represents “a new
weighing of subsidiary factors within the public interest stan-
dard” (632 F.2d at 402, A36) which is fully proper under the
statutory framework governing approval of rail consolidations.
(632 F.2d at 402, A39-40).
Moreover, the Commission's Gfecmination to utilize an “‘es-
sepsial services” analysis in assessing proposed rail consolidations
7
was based on its exercise of the expertise it uniquely possesses in
such matters. This determination is precisely the type of “sensi-
tive re-evaluation of the public interest” (632 F.2d at 403, A40)
which is an integral part of the Commission’s regulatory function.
As this Court has recognized:
“(T]he Commission, faced with new developments or in light
of reconsideration of relevant facts and its mandate, may
alter its past interpretation and overturn past administrative
rulings and practice. ... This kind of flexibility and adapt-
ability to changing needs and patterns of transportation is an
essential part of the office of the regulatory agency. Regula-
tory agencies do not establish rules of conduct to last forever;
they are supposed, within the limits of the law and of fair and
prudent administration, to adapt their rules and practices to
the nation’s needs in a volatile, changing economy. They are
neither required nor supposed to regulate the present and the
future within the inflexible limits of yesterday.” American
Trucking Associations v. Atchison, T. & S.F. Ry. Co., 387
U.S. 397, 416 (1967).
Because Congress has bestowed a broad mandate upon the
Commission in matters affecting transportation, this Court has
consistently shown great deference to policy determinations of
this nature made by the Commission in merger proceedings. As
stated by this Court in the Penn-Central Merger Cases, 389 U.S.
486, 499 (1968):
“*[W Jith respect to the merits of the merger, our task is limit-
ed. We do not inquire whether the merger satisfies our own
conception of the public interest. Determination of factors
relevant to the public interest is entrusted by the law primar-
ily to the Commission, subject to the standards of the govern-
ing statute.”
See also, Ralston Purina Co. v. Louisville & N. R. Co., 426 US.
476, 477-478 (1976); Bowman Transportation, Inc. v. Arkansas-
Best Freight System, Inc., 419 U.S, 281, 285-6 (1975). Katy’s
challenge to the Commission's policy determination should,
therefore, be rejected.
Application of this essential services standard is not, as Katy
argues, inconsistent with the Commission's mandate under 49
U.S.C. §11344 to consider the effect of a merger on the
ee ee eee ne ee
8
“adequacy of transportation service.” In assessing the impact of
this merger, the Commission explicitly found, based on the exten-
sive evidence submitted by all interested parties, including car-
riers such as Katy which claimed the merger might adversely
affect then, that “[a]pproval of this merger, as conditioned, will
have a beneficial effect on the adequacy of transportation to the
public.” (360 I.C.C. at 931, 935-941; A234; 238-244: emphasis
added).°
Katy next contends that the “essential services” standard con-
flicts with the National Transportation policy “to encourage
sound economic conditions in transportation, including sound
economic conditions among carriers.” 49 U.S.C. § 10101. Katy
argues that by its reliance upon an “essential services” standard,
“the Commission now welcomes the bankruptcy” of carriers,
such as Katy, which may lose traffic as a result of a rail merger.
(Katy Pet., p. 32). Nothing in the Commission’s decision supports
Katy’s exaggerated suggestion. The decision simply articulates
the Commission’s judgment that the public interest will best be
served by focusing on preservation of service, rather than preser-
vation of corporate entities which do not provide needed transpor-
tation services. The Commission’s decision makes it clear that
where a merger threatens to jeopardize the ability of any carrier,
weak or strong, to provide essential services, appropriate protec-
tive conditions will be afforded. As the Court found, this standard
for approval of merger is fully consistent with the broad objec-
tives of the National Transportation Policy set forth in 49 U.S.C.
§ 10101. (632 F.2d at 403, A40).
Katy’s argument that the Commission’s decision ignores the
need for “sound economic conditions” among railroads adversely
affected by the merger overlooks the Commission’s overall finding
that the merger will not impair any railroad’s ability to continue
to provide essential rail services (360 I.C.C. at 935, A238) and its
specific finding that Katys future prospects are “bright” and
*Katy’s related contention that the Commission adhered to a “double stan-
dard” in approving the merger is equally untenable. By applying the “essential
services” standard consistently throughout its opinion, as the Court found (632
F.2d at 401, A33-34), and thereby focusing on the quality of service rather than
on which corporate entity provides it, the Commission clearly adhered to a stan-
dard designed to emphasize the adequacy of transportation to the public.
9
sufficient to protect it against losses in traffic revenues which may
result from the merger. (360 I.C.C. at 954-955, A257-258).
These findings also destroy Katy’s contention that the “ade-
quacy” of Katy’s service after merger was ignored. (Katy Pet., p.
33). As stated, the Commission found that consummation of the
merger would have a beneficial overall effect on the adequacy of
transportation services provided to the shipping public. This
finding, based on the Commission’s exhaustive analysis of the
evidence, completely satisfies the Commission’s obligation to con-
sider the impact of a rail merger on the adequacy of transporta-
tion to the public.’
Ill. THE COURT OF APPEALS PROPERLY SUSTAINED
THE COMMISSION’S DETERMINATION THAT MKT
IS FULLY CAPABLE OF WITHSTANDING THE IM-
PACT OF THE MERGER.
Based on its review of the evidence, the Commission deter-
mined that Katy is fully capable of withstanding a projected loss
of $8.75 million in gross revenues and $4.5 million in net revenues
(360 I.C.C. at 954, A257). The Court of Appeals affirmed this
finding, stating that “‘a review of the record shows that the Com-
mission cited very reliable evidence as the basis of its projection
that Katy can withstand these diversions without a loss of essen-
*The Illinois interests also challenge the essential services standard, contend-
ing that the Commission erroneously lifted “the more lenient ‘essential services’
standard from section 5(3) [49 U.S.C. §11346] and made it applicable to section
5(2) [49 U.S.C. §11344] proceedings.” (Pet., p. 8). In the first place, the essen-
tial services standard was not taken from either §11346 or §11344, but, as noted
above, was the product of the Commission’s own extensive study of rail con-
solidations conducted through its RSPO. Moreover, the Commission has deter-
mined that the public interest standard for merger approval is the same for ap-
plications processed under either §11344 or §11346. Railroad Consolidation
Procedures, 359 I.C.C. at 199 (1980). Thus, as the Court found, the Commission's
decision to apply an essential services standard as a component of the public in-
terest standard was perfectly proper under either §1 1344 or §1 1346 (A35-37).
The Illinois interests’ further argument (Pet., pp. 10-11) that the Commission
should have made findings on the cumulative impact of this merger on other pos-
sible rail consolidations ignores both the settled law that such specific findings
concerning projections of future events are not required, FCC v. National Citi-
zens Committee, 436 U.S. 775, 814 (1978), as well as the practical fact that any
such requirement would directly contravene the Congressional intent expressed
in the 4-R Act to expedite rail merger proceedings (S. Rep. No. 94-499, 94th
Cong., 2d Sess. (1975), pp. 13, 18). See 632 F.2d at 410, A72-73.
10
tial service.” (632 F.2d at 408, A61). On petition to this Court
Katy recites again the same arguments concerning these findings
which have now been raised and rejected before both the Com-
mission and the Court of Appeals.
We émphasize at the outset that where, as here, the Court of
Appeals has found the agency’s findings to be supported by sub-
stantial evidence, further review by this Court is unwarranted:
“Our power to review the correctness of application of the
present [“substantial evidence”] standard ought seldom to
be called into action. Whether on the record as a whole there
is substantial evidence to support agency findings is a ques-
tion which Congress has placed in the keeping of the Courts
of Appeal. This Court will intervene only in what ought to be
the rare instance when the standard appears to have been
misapprehended or grossly misapplied.” Universal Camera
Corp. v. National Labor ‘Relations Board, 340 U.S. 474,
490-1 (1951).
In any event, it is clear that the Commission’s findings in this re-
spect are abundantly supported by the evidence.
Although Katy criticizes the Commission’s findings as to its fu-
ture prospects, it cites no evidence to support its contention that it
will be unable to withstand the merger’s impact. The reason for
this glaring omission is that Katy failed to present any such
evidence to the Commission. The only evidence submitted by
Katy concerning the potential post-merger impact consisted of
, three-year financial projections which were based on the assump-
tion (admitted by Katy to be erroneous) that the merger would be
consummated in 1978, an assumption which totally undermined
the validity of Katy’s entire post-merger analysis. (Exhibit H-160,
Nos. Z-7 and Z-8). The financial projections submitted by Katy,
which treat 1979, 1980 and 1981 as three post-merger years, thus
dic not afford the Commission any evidence of the impact of the
merger on Katy’s post-merger operations.
Despite the fundamental deficiencies in its own presentation
regarding post-merger impact, Katy challenges the Commission’s
findings with respect to three post-merger developments which
the Commission found would enable Katy to fully withstand the
nal 11
impact of the merger. Although Katy criticizes the basis for these
findings, it concedes in its petition that they were taken largely
from the testimony of its own witnesses and its exhibits. (Katy
Pet., p. 36).
Katy first criticizes the Commission’s finding that anticipated
coal movements will contribute to its post-merger viability. (Katy
Pet., pp. 37-39). As the Court of Appeals noted, however, the
evidence on this point was abundant and, in fact, would have
alone been sufficient to support the Commission’s view that Katy
can withstand the impact of the merger:
“... the Commission found that Katy can expect strong
growth in revenues because of coal transportation for several
new electric generating plants. Three of these units were
completed as of the time of the Commission’s opinion, and
Katy itself projected $26 million annually in new revenues
from these plants alone. Five additional units were and are
projected, each generating $10 million in additional gross
revenues for Katy. These findings alone would support the
Commission’s view that Katy can withstand the merger,
because the maximum gross revenue loss for Katy due to the
merger is projected to be about $9 million. 360 I.C.C. at
1091.” (632 F.2d at 408, A61-62).
Moreover, the evidence concerning these vast new coal
movements in post-merger years beyond 1981 consisted of finan-
cial projections and testimony of Katy’s own witnesses, including
the testimony of Katy’s president (Tr. 5929-5931: Exhibit H-1 49,
p. 11; Tr. 6534-36). Katy also assured its stockholders that these
coal movements “should provide very substantial new business in
future years.” (MKT Annual Report 1977, pp. 3-4).’
Katy also challenges the validity of the Commission’s findings
concerning the favorable impact on its net revenue prospects re-
The significance of this future coal traffic is conclusively established by Ka-
ty’s indemnity proposal. Katy proposed that the indemnification to be paid ex-
clude any new coal traffic delivered by the merged company to MKT for the
LCRA and GRDA plants. On Brief to the Commission, Katy stated that “[i]f
such traffic were not excluded from the post-merger interchange revenues
referred to in MKT’s proposed formula, the effect of its inclusion would be to
eliminate the need to pay indemnity, even if all traffic estimated by MKT to be
diverted were diverted.” (MKT Br., pp. 34-35, fn. 21)
12
sulting from the completion of its massive rehabilitation program.
Regarding that claim, the Court of Appeals properly noted that
“the testimony of Katy’s own witnesses largely supported the
Commission’s evaluation of the program” and therefore “Katy
cannot argue with the Commission’s choice to believe them.”
(632 F.2d at 408, A62). Moreover, Katy’s contention that the
Commission should have been more precise as to the exact time the
rehabilitation program will be completed is absurd in light of the
fact that Katy’s own evidence offered on this issue was equally
general in character. Thus Katy’s own executives testified in
terms of completing the rehabilitation “within the next three
years.” (Exhibit H-149, p. 3; Tr. 5921). Further, Katy’s witnesses
referred to rehabilitation of the entire railroad (Tr. 5921) and
there is no evidence to support MKT’s present suggestion (Katy
Pet., p. 40) that the program addresses less than all of MKT’s
current rehabilitation needs, including the St. Louis line.
Katy next contends that the Commission’s findings as to the
benefits from its tax agreement with its parent are erroneous.
Again, the Court’s discussion convincingly disposes of this ar-
gument:
**.. . the Commission recognized that Katy had concluded an
agreement with its parent company to be reimbursed for any
Katy tax losses that could be utilized by the parent company.
The agreement is an undisputed fact, and demonstrably
provides Katy with a significant ‘cushion’ against losses. It
was not an improper consideration in evaluating Katy’s over-
all financial stability.” (632 F.2d at 408, A63).
Moreover, the Commission did not itself calculate the financial
benefits of the agreement but, again, implicitly relied on Katy’s
own evidence of such benefits for the years 1978-81 (Exhibits
H-160, H-166). These specific dollar amounts clearly support the
Commission’s finding that the agreement provides significant
financial benefits for Katy. Any technical inaccuracy in the Com-
mission’s description of the agreement is thus of no significance.
Katy also objects generally to these findings on the grounds
that the Commission has not reduced each of these post-merger
prospects to a finite mathematical projection. It is settled, how-
ever, that an agency is not required to engage in the futile task of
making finite mathematical findings concerning future projec-
13
tions, particularly where, as here, the agency has employed its
expert judgment concerning three uncontested post-merger pros-
pects each of which will have a substantial undisputed favorable
impact on Katy’s future. FCC v. National Citizens Committee for
Broadcasting, 436 U.S. 775, 814 (1978); United States v. ICC,
396 U.S. 491, 516 (1970); FPC v. Transcontinental Gas Pipe
Line Corp., 365 U.S. I, 28-29 (1961),
The Commission’s findings that Katy can withstand the impact
of the merger are thus abundantly supported by evidence of
record and present no basis for review by this Court.
IV. THE COURT OF APPEALS CORRECTLY CONCLUDED
THAT THE COMMISSION’S FINDINGS AS TO MKT’S
PROJECTED MERGER REVENUE LOSSES WERE
AMPLY SUPPORTED BY EVIDENCE OF RECORD.
MKT’s contention that the Fifth Circuit erred in affirming the
Commission’s findings with respect to Katy’s projected merger
revenue losses (Pet. pp. 46-53) is completely without merit. In re-
sponse to Katy’s identical contention below, the Court carefully
analyzed the Commission’s detailed examination of the evidence
submitted both by BN-Frisco and by MKT itself as to projected
revenue losses due to diversions of traffic from Katy to the merged
company (see 360 1.C.C. at 1069-1073, A372-376 and 1083-1091,
A386-394) and concluded that the Commission’s findings—that
Katy might suffer a maximum gross revenue loss of $8.9 million
and a maximum net revenue loss of $4.5 million’— were amply
supported by record evidence. (632 F.2d at 404-407, A44-58).
The predicate for Katy’s argument that there was no substan-
tial evidence to support the Commission’s diversion findings is
simply that the Commission determined that it would impose the
so-called “DT &I conditions” (which prohibit the merged com-
pany from closing gateways and cancelling joint rates and routes
with other carriers) for a period of two years. Since the BN-Frisco
studies of projected diversions assumed that 100 percent of such
*The likelihood that Katy and other carriers would be forced to respond to the
competitive challenge of the merged company with initiatives of their own (and
thereby minimize the scope of projected diversion losses) was recognized by the
Commission to be a positive factor weighing in support of the merger’s approval.
See 360 I.C.C. at 943-944, A246-247.
14
diversions would not be realized for three years following con-
summation of the merger and that DT &I conditions would be in
effect for those years, MKT protests that there is no way to know
whether greater diversions of its traffic might occur after the
DT &I conditions have been lifted. As the Court correctly noted,
however, the Commission’s finding that 95 percent of all diver-
sions which would occur because of the »enefits “inherent in the
merger itself’ would take place by the second year after merger
(632 F.2d at 405, A49) made its diversion estimates 95 percent
complete and reliable for the first two full years following mer-
ger.” (Id. at 407, A57).
Accordingly, MKT does not and cannot dispute the fact that
the Commission made a soundly reasoned projection (indeed, an
intricately reasoned projection, see 360 I.C.C. at 1083-1091,
A386-394) of the maximum losses which Katy might experience
during the first two years of the merged company’s operations.
Since it is well-settled that the Commission is not required to
make traffic diversion projections with mathematical precision"
and in view of the fact that the Commission itself acknowledged
in detail the limitations of such projections which “... have as
their purpose the quantitative measurement of the expected gen-
eral, short-term changes in the relative competitive strength of a
merged rail system in relation to competing carriers” (360 I.C.C.
at 1068-69, A371-372, emphasis added), the Commission’s ob-
ligation to consider the revenue impact of the merger on other
railroads was properly discharged. Indeed, as the Fifth Circuit
recognized, the Commission was free to exercise its expert judg-
ment with respect to the relevant period of time for evaluating the
merger’s impact on the public interest, and it was free to conclude
that a two year analysis was adequate. (632 F.2d at 405, fn. 34;
AS2, fn. 34).
*These merger benefits—notably single-line service and the faster transit
times and greater reliability associated therewith—were recognized by Katy it-
self as the most significant factors contributing to diversion of its traffic. 360
I.C.C, at 1084, A387.
“In the case of MKT, the estimate was 100 percent reliable since Katy’s own
evidence showed that it projected 100 percent of all diversions would occur by
the end of the second year. See 360 I.C.C. at 1084, A387.
"See, e.g., Chicago & N.W. Ry. Co.—Merger—Chicago G.W. Ry. Co., 333
1.C.C. 236, 238-239 and cases cited therein; Pennsylvania R. Co.—Merger—
New York Central R. Co., 331 1.C.C. 754, 759 (1968).
15
However, since a number of the Commission’s other merger
projections were made for a three year period, the Court felt com-
pelled to consider MKT’s argument that substantial evidence was
both required for and absent from the analysis of adverse impact
on other carriers. Respondent Burlington Northern does not
believe that the Commission was required to make further
findings as to impacts either in year three or in following years.
However, to the extent that the possibility of any additional diver-
sions following the lifting of the DT &I conditions is a proper sub-
ject of concern, the Fifth Circuit correctly concluded that
whether additional diversions occur at all is totally within the con-
trol of the Commission and MKT. (632 F.2d at 406, AS53).
Specifically, the Commission’s reserved jurisdiction under condi-
tion 1(j) of the decision (360 I.C.C. at 1180, A483) affords all
parties to the proceedings, including Katy, an opportunity to seek
an extension of the time in which DT &I conditions will apply to
the transaction, should actual experience prove such relief neces-
sary. This avenue of potential redress has been held by the courts
to constitute an adequate safeguard against the possibility that
the diversion losses actually experienced are greater than origi-
nally estimated.” See Penn-Central Merger Cases, 389 U.S. 486,
520 (1968); Brotherhood of Maintenance of Way Employees v.
United States, 221 F. Supp. 19 (E.D. Mich. 1963), aff'd per
curiam, 375 U.S. 216 (1963).
Moreover, as the Court noted, existing provisions of the Inter-
state Commerce Act, which the Commission has given notice it
intends to vigorously enforce,'’ would prohibit the merged com-
pany from arbitrarily cancelling joint routes and rates with, or
closing gateways to Katy once the DT &I conditions are lifted. In-
deed, Section 11101 (requiring BN to honor fundamental com-
"The Commission has repeatedly emphasized the importance of this post-
merger remedy:
“Our reserved powers are adequate to deter improper traffic diversion,
inequitable conduct on the part of the merged company, or if necessary, to
provide additional protection in the future.” Pennsylvania R. Co.—Merg-
er—New York Central R. Co., 331 1.C.C. 754, 759-760 (1968) (emphasis
added). See also, Chicago & N.W. Ry. Co.— Merger—Chicago G.W. Ry.
Co., 333 LC.C. 236, 239 (1968).
"Seaboard Coast Line R.R. Co.—Investigation of Control, 360 1.C.C. 582,
603 (1979); St. Louis Southwestern Ry. Co.—Purchase (Portion) —Chicago,
Rock Island and Pacific R.R. Co., if Of on (1979); CSX Corpora-
tion—Control—Chessie System, Inc. and Seaboard Coast Line Industries, Inc.,
363 I.C.C. 518 (1980), appeal pending 7th Cir. No. 80-2534.
16
mon carrier obligations by providing service and establishing rea-
sonable through routes and rates); Sections 10741 and 10742
(requiring BN to provide reasonable and equal interchange facili-
ties with connecting carriers); and Section 10705(d) (preventing
BN from cancelling existing joint rates and through routes unless
it can establish that such cancellation is consistent with the public
interest) afford MKT ample protection against additional sig-
nificant diversions once the DT &I conditions have been lifted."
In addition, the Court’s proper acknowledgment that the Com-
mission is entitled to use its expertise to independently analyze
and, where appropriate, to supplement the parties’ projections of
future economic conditions (632 F.2d at 406, A55-56) should set
to rest the contention that the Commission’s assessment of Katy’s
ability to withstand the competitive rigors of the merger was not
supported by substantial evidence. As discussed previously, the
Commission considered in detail both Katy’s problems and future
opportunities and concluded that the carrier’s “future prospects
are sufficient to protect it.”’ (360 I.C.C. at 955, A258). Since the
Commission made that judgment with the knowledge that it was
imposing DT &I conditions on the transaction for a period of only
two years, it necessarily factored the possibility of additional
diversion losses following the lifting of the conditions into its
evaluation. As the Fifth Circuit correctly observed, this Court has
often held that the Commission’s “predictive judgments” are en-
titled to considerable deference, and “‘[t]o hold otherwise would
‘Katy’s claim that such protections are useless because they would require it
to pursue its remedies with the Commission (Pet., p. 52, fn. 15) warrants little
credence. Not only has Katy vastly overstated the scope of what it would have to
do to pursue such cases (since a relatively few of the “thousands of routes” it
refers to account for a large portion of its total traffic with BN and since BN
would have the burden of proving the public interest benefits of any cancella-
tions), but it has revealed its true concern that it might not fare well in justifying
the maintenance of any joint routes or rates for which cancellation could be
sought. MKT’s reservations on this score lend support to the Commission’s con-
cern that it not impose conditions “*. . . calculated to freeze the flow of traffic into
a preexisting pattern or to protect competing and connecting carriers against all
possible adverse effects which might follow from the unification and resulting
improvements in service by the surviving corporation. Such action would
prevent, to a substantial extent, the effectuation of service improvements to
which the shipping public is entitled, and would unduly restrict the unified com-
pany in its solicitation and routing of traffic under development of a strong com-
petitive system.” (360 L.C.C. at 951, A254, footnotes omitted).
17
paralyze agencies merely because the future is not subject to
proof.” (632 F.2d at 406, A56).
Finally, BN notes that the Fourth Circuit recently dealt with
the issue of the DT &I conditions in Norfolk and Western Rail-
way Company v. United States, decided on February 17, 1981 (4
Cir. No. 79-1862), a case which no Petitioner has cited. There the
Fourth Circuit affirmed a Commission decision with respect to
control of the very railroad for which the conditions are
named—the Detroit, Toledo and Ironton (or DT &1)—but re-
manded the case on the grounds that the Commission had altered
its policies on the conditions in that proceeding without giving
proper notice to the parties. There are, however, fundamental dis-
similarities between the Commission’s decisions in BN-Frisco and
Norfolk and Western which make the actions of the reviewing
courts entirely distinguishable.
First, rather than imposing DT &I conditions for the benefit of
protesting railroads for a two year period as it did in BN-Frisco,
the Commission in Norfolk and Western refused to impose DT &I
conditions for any period at all.’ Moreover, the Commission’s
decision in Norfolk and Western did not contain the reasoned
analysis of the anticompetitive and chilling effects of conditions
which appears in BN-Frisco (see 360 I.C.C. at 950-952, A253-
255), and which the Fifth Circuit held to constitute adequate
support for “. . . the Commission’s larger policy decision restrict-
ing the use of protective conditions ...” (632 F.2d at 409,
A69). Thus the Fourth Circuit was faced with a decision which
was essentially devoid of the requisite articulation of the reasons
supporting a change in Commission policy. The Fifth Circuit on
the other hand, found the required articulation in BN-Frisco and
correctly noted that this Court has approved policy changes in
such circumstances. NLRB v. Bell Aerospace Co., 416 U.S. 267
(1974); Atchison, T. & S.F. Ry. Co. v. Wichita Bd. of Trade, 412
U.S. 800 (1973); American Trucking Assns, Inc. v. Atchison, T.
& S.F. Ry. Co., 387 U.S. 397 (1967),
"The significance of the Commission’s application of the conditions for a two
year period in BN-Frisco is that MKT will have a sufficient opportunity during
this time to adjust to the merger’s impact by implementing competitive initia-
tives of its own and, if necessary, to petition the Commission for additional
relief. The Commission's decision in Norfolk and Western afforded adversely
impacted carriers no similar protection for a transition period within which the
impacts of the merger could be analyzed and appropriate responses developed.
18
Second, Katy did not pursue the issue of the propriety of the
Commission’s decision to limit DT &I conditions before the Fifth
Circuit, and it has not raised the issue in its Petition for Certiorari.
In fact Katy took extreme care to advise the Court below that it
was specifically not raising that issue for consideration but was
rather contending that the limitation resulted in an undermining
of substantial evidence needed to support Commission findings as
to MKT’s future prospects:
“Katy does not regard this appeal as the proper forum for de-
termining the desirability of retention or elimination of the
DT &I conditions and has not herein asserted the decision to
limit them as independent error.’’ Reply Brief of Missouri-
Kansas-Texas Railroad Company before the Fifth Circuit,
dated July 29, 1980, at p. 20 (emphasis added).
Similarly, Katy in its Petition for Certiorari again limited its
argument to the substantial evidence point, contending that
“Whatever the merits of the Commission’s decision to limit the
time period of the DT &I conditions as a matter of policy, the
evidence herein is inadequate to support the finding that the max-
imum loss to Katy will be only $8.75 million a year... .” (Pet. p.
48). Accordingly, the issue decided by the Fourth Circuit was ex-
plicitly disavowed by Katy as an issue for review both before the
court below and before this Court."
It has long been a well-settled point that, in the words of Justice
Black, “Ordinarily an appellate court does not give consideration
to issues not raised below.” Hormel v. Helvering, 312 U.S. 552,
556 (1941). See also, American Air Export & Import Co. v.
O'Neill, 221 F.2d 829 (D.C. Cir. 1955); United States v. Wurts-
braugh, 140 F.2d 534 (Sth Cir. 1944). Of necessity the rule must
apply even more forcefully in cases where a party like Katy has
Moreover, to the extent that there might be any need for further resolution of
the policy issue of the treatment of DT &1 conditions, the most appropriate fo-
rum in which to frame that resolution is the Commission's pending rulemaking
proceeding in Ex Parte No. 282 (Sub-No. 5), 45 F.R. 46461 (July 10, 1980).
MKT is a party to that rulemaking proceeding.
"Although courts have recognized an exception to the rule, they have confined
the exception to instances where ignoring a new argument would work a grave
injustice—notably in criminal cases. See Anderson v. United States, 417 U.S.
211, 217, fn. 5 (1974). Such an exception can hardly be deemed appropriate
where, as here, a party has taken pains to articulate actual disavowal of the point
before the court below.
19
taken affirmative steps to advise the reviewing court that it know-
ingly disavows a particular claim as grounds for error.
V. THE FIFTH CIRCUIT CORRECTLY FOUND THAT THE
COMMISSION’S DECISION TO DENY MKT SPECIAL
PROTECTIVE CONDITIONS DID NOT VIOLATE PE-
TITIONER’S RIGHT TO PROCEDURAL DUE PROCESS.
Katy argues that although the Commission has granted indem-
nification previously, its decision not to do so in this case, accom-
panied by the dual warning that such relief will no longer be
viewed “as a viable condition under any circumstances” (360
I.C.C. at 953, A256) and that the Commission will not impose
conditions not sought by a protesting carrier (/d. at 951, A254),
constitutes a denial of procedural due process. (Pet., pp. 54-65)
As the Fifth Circuit found, Katy’s argument is academic
because of the overriding consideration that these policies had no
actual impact on Katy in this case:
“There is no indication in the opinion itself that the Commis-
sion reached any decision through applying the new policies
to Katy. The Commission consistently states that Katy failed
to establish the need for any protective condition at all, a
decision on the merits that does not involve either policy.”
(632 F.2d at 410, A70-71, emphasis added).
MKT’s suggestion that this fundamental finding “‘was made only
in the context of the Commission’s denial of {indemnification ]
relief” (Pet., p. 59) is absolutely erroneous. After reyiewing the
evidence of Katy’s future prospects (which it termed “bright”,
360 I.C.C. at 954, A257), the Commission found that those pros-
pects “are sufficient to protect it.”""* Obviously, once the Commis-
sion had concluded that Katy’s future business and potential were
sufficient to protect it, there was no reason to consider protective
conditions for its benefit."
Katy’s suggestion that because the Commission imposed cer-
tain trackage rights conditions on behalf of the Chicago and
"Following an extensive review of Katy’s business history and prospects (360
1.C.C. at 1118-1122, A421-425), the Commission concluded that “Even with
consummation of the merger MKT should produce a profit in 1981.” (/d. at
1122, A425).
“It should be noted, however, that despite its announced “unrequested condi-
tions” policy, the Commission was aware of, and explicitly acknowledged that
“[its] statutory authority to impose such conditions is not limited to conditions
proposed or favored by the carriers.” (360 I.C.C. at 933). See also, I/linois Cen-
tral Gulf R. Co.—Acquisition—G.M.&O. et al., 338 L.C.C. 805, 844 (1971).
20
Northwestern Railroad Company (CNW) it “might well have
granted such relief’ to MKT (Pet., p. 59) is both speculative and
misleading. As Katy knows full well, CNW and eight other car-
riers entered into stipulation agreerments with the merger
applicants for certain conditions in return for those parties’ not
opposing the transaction. See 360 I.C.C. at 1152-1156, A455-
459. In recognition of the fact that these stipulated conditions
were “operationally feasible, [would] not detract from the bene-
fits of the merger, and are in the public interest” (360 I.C.C. at
957, A260) (and that they represented voluntary settlements by
the parties), the Commission imposed them on the transaction.
Contrary to the suggestion by MKT (Pet., p. 60, fn. 19), all
stipulated conditions save one—which was opposed by another
carrier and found by the Commission to be inimicable to the pub-
lic interest (360 I.C.C. at 957, A260)—were imposed. Katy never
proposed any similar conditions and indeed advised the Commis-
sion during the presentation of its case that it was not interested in
trackage rights and that indemnity was the only acceptable condi-
tion. (Exhibit H-160, pp. 27-28).
Equally unconvincing is Katy’s attempt to dispute the Fifth
Circuit’s unequivocal conclusion that Petitioner’s claimed
reliance on being accorded an indemnification condition was
“grossly misplaced” (632 F.2d at 410, A71). As the Court accu-
rately observed, the Commission has imposed indemnification as
a condition only twice in its history and then, as the Commission
itself noted (360 I.C.C. at 952, A255), only as a short-term or in-
terim measure “while a more permanent solution” was being
fashioned. Pennsylvania R. Co.—Merger—New York Central R.
Co., 328 1.C.C. 304 at 326-327 (1966); Chicago & Northwestern
Ry. Co.—Control—Chicago, Rock Island and Pacific R.R. Co.,
347 1.C.C. 556 (1974). Moreover, even in those two cases (neither
of which resulted in the Commission’s actually administering an
indemnity condition), the basis for imposing the relief was the
Commission’s finding that the merger under review threatened
the continued existence of carriers whose preservation was
deemed essential to the public interest.” Pennsylvania R.
Co.—Merger—New York Central R. Co., 327 LC.C. 475 at
529, 532 (1966); Chicago & Northwestern Ry. Co., supra at 616,
*Katy’s statement that “no case at all denying indemnity is cited by the Court
of Appeals” (Pet., p. 61) is disingenuous. As MKT is aware, the Commission has
(Footnote continued on next page.)
21
627, 630-31. As discussed previously, the Commission here made
specific findings both that Katy’s continued existence was not
threatened and that essential services provided by Petitioner
would not be lost.
Finally, Katy simply cannot escape the fact that the policy
changes of which it complains were found by the Court of Ap-
peals to have been adequately explained by the Commission in the
BN-Frisco decision. (632 F.2d at 408-409, A66-70). Moreover, as
the Court indicated, “An agency may change its policies in the
course of a specific adjudication, American Trucking, 387 U.S. at
416, 87 S.Ct. at 1618, and even apply those policies for the first
time to the parties involved, NLRB v. Bell Aerospace Co., 416
U.S. 267, 292-294 (1974): SEC v. Chenery Corp., 332 U.S. 194
(1947).””' (632 F.2d at 409, A66). Accord, Pre-Fab Transit Co. v.
United States, 595 F.2d 384 (7th Cir. 1979); Sawyer Transport,
Inc. v. United States, 565 F.2d 474 (7th Cir. 1977); Pittsburgh
and Lake Erie R. Co. v. United States, 294 F Supp. 86, 95 (W.D.
Penn. 1968). As the Fifth Circuit’s decision and these additional
citations make clear, there is simply no merit to Katy’s claim of a
conflict of Circuits on this point.
VI. THE PETITION FOR WRIT OF CERTIORARI FILED BY
RAILWAY LABOR EXECUTIVES’ ASSOCIATION DOES
NOT RAISE ANY ISSUE WARRANTING REVIEW BY
THIS COURT.
A. The Court of Appeals Properly Affirmed The
Commission’s Order Concerning The Scope of
Employee Protection Afforded by 49 U.S.C,
§11347; Moreover, The Soo Line Decision
Presents No Conflict With the Decision of the
Court Below.
Railway Labor Executives’ Association (“RLEA”) first con-
tends that the Commission’s determination, fully accepted by the
(Footnote continued from previous page.)
rejected indemnity conditions in a number of cases, and Respondents cited such
cases to the Court. See, e.g., MoPac—Merger—T&P and C&EI, 348 1.C.C.
414, 424 (1976); Pennsylvania R. Co.—Merger—New York Central R. Co.,
331 L.C.C. 643, 736-737 (1967).
“The Supreme Court's ruling in American Trucking Associations v. Atchison
T. & S.F. Ry. Co., 387 U.S. 397, 416 (1967), is particularly on point in view of
the Commission’s reasoned analysis of the changes in the railroad industry and
the regulatory climate which led it to change its policy with respect to indem-
nification (see 360 ICC at 952-53, A255-256).
22
Court of Appeals, that employees of non-applicant competing
carriers are not within the class of employees protected by 49
U.S.C. §11347 of the Interstate Commerce Act, is erroneous and,
in light of the allegedly conflicting decision in Soo Line R. Co. v.
United States, 280 F. Supp. 907 (D. Minn. 1968), warrants
review by this Court. This argument is totally without merit.
As the Court of Appeals properly reasoned, a plain reading of
the statutory provision involved (49 U.S.C. §11347) refutes
RLEA’s assertion that protection must be extended to employees
of competing carriers:
“The Commission first noted that, although the first sentence
of §11347 seems to require protection for any carrier em-
ployee affected by the merger, the second sentence provides,
in an undifferentiated transition, that ‘the arrangement may
be made by the rail carrier and the authorized representative
of its employees.’ It is difficult to imagine that when
Congress wrote this sentence it was contemplating that a
non-merging carrier would agree to protect its own em-
ployees from the merger of two competing carriers. Because
the second sentence obviously applies only to the merging
carrier, the Commission reasons that Congress intended the
same meaning in the preceding sentence.” (37a-38a).
Similarly, a three-judge court in Florida East Coast Railway
Company v. United States, 259 F. Supp. 993, 1019 (M.D. Fla.
1966) affirmed per curiam, 386 U.S. 545 (1967), agreed that this
construction is “the logical interpretation of the statute.”
This statutory interpretation is reinforced by the legislative his-
tory of the provision. Section 11347 was first enacted as Section
5(2)(f) of the Transportation Act of 1940. The basis of Section
5(2)(f) was the Washington Job Protection Agreement of 1936
(“WJPA”). Brotherhood of Maintenance of Way Employees v.
United States, 366 U.S. 169, 173-4 (1961); United States v. Low-
den, 308 U.S. 225, 237-38 (1939).” The term “employees affect-
“See also New York Dock Ry. v. United States, 609 F.2d 83, 86 (2d Cir.
1979); testimony of George M. Harrison before the House Committee on Inter-
state and Foreign Commerce, H.R. 2531, 76th Congress, Ist Sess. (1939), pp.
213, 216-17, 241 and 243; and before the Senate Committee on Interstate Com-
merce, S. 1310, 2016, 1869, and 2009, 76th Cong., Ist Sess. (1939), p. 34.
23
ed” was taken directly from the WJPA which limited its job pro-
tection to employees of the merging carriers.’
Further, the Commission and the courts have consistently and
overwhelmingly held that this provision does not apply to em-
ployees of competing carriers, despite repeated unsuccessful
efforts by labor interests to secure a contrary statutory interpreta-
tion.“ Moreover, Congress explicitly sanctioned this settled Com-
mission interpretation in its enactment of the Railroad Revi-
talization and Regulatory Reform Act of 1976 (“4-R Act”). This
is most apparent from the amendment to §5(2) (f) in the 4-R Act
(since recodified as Section 11347) which established the past
practices of the Commission concerning employee protection as
one of two governing standards. Thus, §5(2) (f), as amended,
required the Commission to provide employee protection “no less
protective of the interest of employees than those heretofore im-
posed pursuant to this subdivision” and those established pur-
suant to Section 565 of Title 45. The governing inquiries with re-
spect to the scope of the present labor protective provisions thus
involve the Commission’s customary practices in cases prior to
the 4-R Act and the provisions of Appendix C-1 (which were es-
te’ lished under Section 565 of Title 45).
With respect to the first inquiry, there simply is no basis for dis-
pute. As noted above, the Commission has uniformly rejected the
argument that it is required to protect employees of competing
“See, e.g., section 4 of the WJPA cited by the Commission, 360 LCC. 949
n.81 which provides:
“Each carrier contemplating a coordination shall give at least ninety (90)
days written notice of such intended coordination by posting a notice on
bulletin boards convenient to the interested employees of each such carrier
and by sending registered mail notice to the representative of such interest-
ed employees.” (emphasis supplied)
“Baltimore & Ohio Railroad Co. Operation, 261 1.C.C. 615, 619-620 (1946):
Southern Railway Co.—Control—Central of Georgia Railway Co., 3\7 LCC
557, 567-8 (1962) aff'd, Railway Labor Executives’ Association v. United
States, 226 F. Supp. 521 (E.D. Va. 1964); Chesapeake & O| Ry
Co.—Control— Baltimore & O. R. Co., 317 L.C.C. 261 (1962); Seaboard Air
Line Railroad Co.— Merger— Atlantic Coast Line, 320 1.C.C. 122, 203-204
(1963), aff'd, Florida East Coast Ry. v. United States, 259 F. Supp. 933, 1019
(M.D. Fla. 1966), aff'd per curiam, 386 U.S. 545 (1967); Texas & Pacific
Ry.—Control— Kansas O. & G. Ry., 321 1.C.C. 309, 339 (1964), Pennsylvania
R. Co.— Merger—New York Central R. Co., 328 1.C.C. 304, 343-344 (1968):
Great Northern Pac.— Merger—Great Northern, 331 \.C.C. 228 (1967): New
York Dock Ry.—Control— Brooklyn Eastern Dist., 360 “.C.C. 60 (1979). aff'd.
sub nom., New York Dock Ry. v. United States, 609 F.2d 83 (2d Cir., 1979).
te
24
carriers and has consistently limited employee protection to
affected employees of the merging carriers. It is equally clear that
the provisions of Appendix C-1 are properly reflected in the con-
ditions imposed in this case and do not require protection for em-
ployees of competing carriers.”
In the New York Dock proceedings, the Commission, after care-
ful consideration of Appendix C-1 and prior administration of
§5(2)(f), formulated the conditions which it imposed in this case
(360 L.C.C. 60, Appendix III). RLEA participated in the New
Yor! Dock proceedings before the Commission and submitted a
proposed set of conditions which provided exactly the same pro-
tection for employees of competing railroads of RLEA sought in
the present proceedings. (Article V of Appendix I, 360 I.C.C. 60;
Exhibit H-58 herein). The Commission rejected the tendered
provision. On review, the Court of Appeals for the Second Circuit
(with RLEA participating) held that the labor protection condi-
tions formulated by the Commission complied with the mandate
of §5(2)(f), as amended (now Section 1 1347), taking-into account
both the past practices of the Commission in prescribing em-
ployee protection and the provisions of Appendix C-1.
As both the Commission and the Court of Appeals noted, the
express Congressional approval of past Commission administra-
tion of §5(2)(f) in the 1976 legislation completely forecloses the
attempt by RLEA to secure a novel interpretation of that section
in this case. (360 1.C.C. at 949, 167a; 632 F.2d at 412, 39a),
“It is difficult to believe that RLEA seriously relies on the contention, ad-
vanced for the first time in its petition, that the refirence in the Rail Passenger
Service Act (RPSA) to employees of terminal companies indicates that
“Congress has in effect mandated that employees of non-applicant carriers be
protected”. (Pet., p. 13) The protective conditions established pursuant to this
statute (Appendix C-1) provide protection for those employees of terminal com-
panies which are owned in whole or in part by one of the applicants and which
have a relationship to the applicants similar to that of the terminal company in-
volved in Railway Labor Executives’ Association v, United States, 216 F. Supp.
101 (E.D. Va. 1963). Protection for employees of such associated companies has
been imposed by the Commission in the past on the basis that they “were in
reality, though not in contract” the employees of the applicants (216 F. Supp.
101 at 103). In fact, the New York Dock conditions which the Commission im-
posed in this case include an identical provision (Article II] of Appendix III, 360
ICC 60 (1979)) relating to terminal companies. The provisions established pur-
suant to 45 USC § 565 thus refute RLEA’s claim that the Commission was
required to extend protection to employees of the numerous competing carriers
involved in these proceedings.
25
NLRB vy. Bell Aerospace, 416 U.S. 267, 274-275 (1974). This
conclusion is also supported by the fact that Congress again had
occasion to review this provision in its amendments and
recodification of the Interstate Commerce Act in 1978. Revised
Interstate Commerce Act, Pub. L. No. 95-473, 92 Stat. 1337.
Although the language of that section was changed in certain re-
spects, the provision affirming the Commission’s past practice was
left intact.” As the Court of Appeals properly decided, “this dou-
ble affirmation by Congress, in the absence of any other support
for the RLEA position, puts the question to rest.”’ (632 F.2d at
412, 39a).
RLEA relies on two judicial decisions to support its construc-
tion of the statute. Railway Labor Executives’ Assoc. v. United
States, 216 F. Supp. 101 (E.D. Va. 1963) and Soo Line R. Co. v.
United States, 280 F. Supp. 907 (D. Minn. 1968). (RLEA Pet., p.
7). Its reliance on the first case is entirely misplaced, for there the
court specifically found that the employees to be afforded protec-
tion were in effect employees of the merging carriers.” This deci-
sion, therefore, clearly cannot be read as supporting RLEA’s po-
sition that to employees of competing carriers must be protected.
Moreover, the following year in a case brought before the same
court by RLEA (and involving two of the same three judges), the
court unambiguously rejected RLEA’s far broader construction
of the statute urged on petition to this Court. Railway Labor
Executives’ Association v, United States, 226 F.Supp. 521, 525
(E.D. Va. 1964). In a subsequent decision, the Commission like-
wise explicitly rejected RLEA’s interpretation of that earlier
decision, again affirming its settled position that §5(2)(f), now
“RLEA argues that this 1978 Congressional recodification of the provision is
not significant because the “recodification may not be construed as making a
substantive change in the laws replaced.” (Pet., p. 14-15) BN, however, is not
contending that the 1978 recodification to §5(2)(f) effected any substantive
change, but instead is making precisely the opposite point—that Congress again
impliedly approved, as it did in 1976, the Commission's past administration of
the statute respecting employee protection. See, e.g., Bell Aerospace, supra.
“There protection was granted to employees on the payroll of the Chesapeake
& Ohio, who actually performed work for the merger applicant, Seaboard, at a
jointly-owned terminal facility. The court found that because of their immediate
relationship to Seaboard “they were in reality, though not in contract, as much
the employees of Seaboard as of Chesapeake,” and hence entitled to statutory
protection, 216 F. Supp. at 103.
26
§11347, was not intended to apply to employees of competing
roads. Pennsylvania R. Co.—Merger—New York Central R. Co.
328 LC.C. 304, 313-14 (1966).
RLEA’s reliance on the one aberrant decision in Soo Line is
also misplaced. In Soo Line, the court held that employees of
competing carriers, if adversely affected by a merger transaction,
are within the scope of §5(2)(f) protection. The Commission had
rejected such a construction below based on its long-standing
statutory interpretation and compelling policy reasons. Chicago
& N.W. Ry. Co.—Merger, 330 I.C.C. 13, 54 (1967),
As the Court of Appeals noted, Soo Line predates and is incon-
sistent with the governing standard approved by Congress in
amending §5(2)(f) in the 4-R Act. (39a). This standard clearly
excludes from the minimum requirements of the statute (§5(2)(f))
protection for employees of competing carriers because the Com-
mission has not imposed such protection in its prior administra-
tion of the Act. Moreover, on remand of the Soo Line decision, the
Commission again disagreed with the holding of the court, and, in
fact, did not impose protective conditions for employees of the
Soo Line Railroad. 333 I.C.C. at 252-3. The Commission’s re-
sponse to the Soo Line decision thus preserves intact its history of
refusal to accord protection to employees of competing carriers,
and this approach was approved by Congress when §5(2)(f) was
amended by the 4-R Act.
The decision of the Court of Appeals below properly recog-
nized that the Soo Line decision should not be accorded any
weight as a legal precedent because it “was decided before
Congress amended and recodified §5(2)(f) in 1976 and 1978.”
(632 F.2d at 412, n.50, 39a). In view of the absence of any conflict
in decisions, the unambiguous legislative history of the statute
and its settled construction, there is absolutely no reason for this
Court to review this issue.
B. The Court of Appeals Properly Found that the
Commission Fully Discharged Its Statutory
Mandate under Section 11344 to Consider the
Interest of Carrier Employees Affected by the
Transaction.
RLEA contended before the Court of Appeals that §11344(b)(4)
requires that Commission to consider the “interest of the carrier
27
employees affected by the proposed transaction” as an element of
the public interest before it decides whether a merger is “‘consis-
tent with the public interest.” (Br., p. 14) RLEA contended that
the Commission’s consideration of the impact of the merger on
railroad employees did not occur in proper sequential order
because the Commission’s discussion of this subject at pp.
946-950 of its decision follows the statement that “we have decid-
ed to approve the merger.” /d. at 946. In categorically rejecting
this argument, the Court of Appeals correctly found that “Sec-
tion 11344 is not intended to dictate a procedural order for the
Commission’s considerations,” and, hence, that the Commission’s
“thorough discussion of the effect of the merger on employees
fulfilled all the statutory requirements.” (632 F.2d at 412-413,
40a).
RLEA now contends that “when it [the Commission] con-
sidered the impact of the proposed transaction upon non-ap-
plicant carriers’ employees, the ICC examined it solely with the
question of whether Section 11347 of the Act required the imposi-
tion of protections.” (RLEA Pet., p. 16) According to RLEA, this
approach “effectively deprived other carrier employees of a fair
hearing on this issue.” (Pet., p. 17)
Since both 49 U.S.C. §11344(b)(4) and §11347 refer to the in-
terests of “employees affected” by a proposed transaction, it
would seem indisputable that the Commission’s conclusion that
employees of competing carriers are not entitled to protection
under §11347 also fixes the scope of the identical phrase in
§$11344(b)(4). This issue, however, is not raised by this case
because the Commission did consider the interests of all carrier
employees and it discussed and evaluated the impact on such em-
ployees in the process of determining that the proposed merger
was Consistent with the public interest.
Thus, as the Court of Appeals noted (632 F.2d at 412-413,
40a), the Commission on its own initiative conducted a com-
prehensive analysis of the impact of this merger on all railroad
employees by sending out detailed questionnaires to the fourteen
carriers who might be conceivably affected by the merger. In re-
sponse to the questions posed by the Commission, ten of these re-
28
sponded that the merger will have no adverse impact on their em-
ployees.” Four stated that there might be some adverse impact:
Rock Island, Milwaukee, Katy and Illinois Central Gulf: 360
I.C.C, at 860; 848-9; 872; and 881 (78a; 66a-67a; 90a; 99a). The
Rock Island, of course, is currently being liquidated, and is no
longer an operating carrier. The suggestion that its employees
might be adversely affected by the merger is thus sheer fantasy.
The same is true of the Milwaukee which is in the process of
liquidation and restructuring. Moreover, Congress has specifical-
ly provided in separate recent legislation for comprehensive pro-
tective benefits for employees of both carriers. (Public Law 96-
265, 94 Stat. 399; 45 U.S.C. §907-14). It cannot be argued, there-
fore, that consummation of this merger will adversely affect these
employees.
The remaining two carriers (Katy and ICG) stated that it
would be difficult, if not impossible, to identify employees affected
by the merger. Katy claimed a possible impact on only 37 em-
ployees but admitted that even this would be “mitigated by attri-
tion.” (360 I.C.C. at 872, 90a). ICG stated that the adverse im-
pact could not be “precisely defined”’ because any decision to cut
back is the result of “numerous variables besides the proposed
merger.” (360 I.C.C. at 881, 99a). After reviewing this evidence,
the Court of Appeals properly found “that this investigation and
the Commission’s thorough discussion of the effect of the merger
on employees fulfilled all the statutory requirements.” (632 F.2d
at 412-413, 40a). RLEA’s assertion that the Commission did not
examine the interests of carrier employees in its decision to ap-
prove the merger is, therefore, totally refuted by the facts.
Because the evidence of record demonstrates that employees of
competing carriers will not be adversely affected by this merger,
RLEA’s recently-contrived recitation of issues the Commission
should have considered in its discussion of this issue is plainly
irrelevant. Thus, RLEA complains that the Commission did not
determine “if it would be consistent with the public interest to
“Denver & Rio Grande Western; Soo Line; Union Pacific Railroad; Chicago
and North Western; Kansas City Southern; Atchison, Topeka and Santa Fe;
Family Lines; Southern Pacific; Southern and Missouri Pacific. 360 I.C.C. at
908, 897, 915; 912; 909; 911; 913; 911; and 908 (126a; 1 15a; 133; 130a; 127a:
129a; 13la; 129a; 126a).
29
authorize a transaction which would cause employees of other rail
carriers to bear unaided the burden of the BN-Frisco’s profits.”
(Pet., p. 16) Obviously, such a determination is not required
where the evidence demonstrates no such adverse labor impact.
The same is true of RLEA’s other criticism—that the Commis-
sion did not determine whether “it should impose certain provi-
sions to aid those affected rail employees, such as a requirement
that furloughed non-applicant employees be given priority of em-
ployment with the merged carrier.” (/d.) Moreover, contrary to
RLEA’s claim, it was not “denied a fair hearing on this issue,”
(Pet., p. 17), but instead elected not to present any affirmative
evidence of its own regarding the merger’s impact on employees
of competing carriers. Having taken this position, RLEA cannot
now criticize the extensive evidence produced by the Commission
itself on this issue.
[t is clear, therefore, that the Commission fully addressed “the
interest of carrier employees affected by the proposed trans-
action” in accordance with the requirements of 49 U.S.C.
§11344(b)(4).
30
CONCLUSION
For the foregoing reasons, the various petitions for certiorari
should be denied.
Respectfully submitted,
FRANK S. FARRELL MARTIN M. LUCENTE
DONALD E. ENGLE CHRISTIAN L. CAMPBELL
Eric A. CUNNINGHAM, JR. SIDLEY & AUSTIN
NICHOLAS P. Moros One First National Plaza
176 East Fifth Street Chicago, Illinois 60603
St. Paul, MN 55101
G. PAUL MOATES
SIDLEY & AUSTIN
1730 Pennsylvania Ave., N.W.
Washington, D.C. 20006
Attorneys for Respondent
Burlington Northern Inc.
April 24, 1981
This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.