# Petition for Writ of Certiorari — Missouri-Kansas-Texas Railroad Co. Co. v. Brotherhood of Locomotive Engineers (Nos. 85-793, 85-792) > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385012_0418%3A02 ## Record - **Collection:** Supreme Court brief - **Document type:** Petition for Writ of Certiorari - **Published:** January 1, 1985 ## Text : 85-793 ~ Supreme Court, U.S. FiLED NOV 7 1995 JOSE?:1 F. SPANIOL, JRL CLERK No. 85- IN THE Supreme Court of the United States October Term, 1985 MISSOURI-KANSAS-TEXAS RAILROAD COMPANY, Petitioner, V. BROTHERHOOD OF LOCOMOTIVE ENGINEERS AND UNITED TRANSPORTATION UNION, Respondents. PETITION FOR WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE DISTRICT OF COLUMBIA CIRCUIT Joseph L. Manson, III (Counsel of Record) Ronald B. Natalie Verner, Liipfert, Bernhard McPherson & Hand, Chartered Suite 1000 1660 L Street, N.W. Washington, D.C. 20036 (202) 775-1088 Michael E. Roper 701 Commerce Street Dallas, Texas 75202 (214) 651-6741 Date: November 7, 1985 QUESTION PRESENTED Whether the Interstate Commerce Commission, when approv- ing a transaction pursuant to 49 U.S.C. §§11343 and 11344, is required to make specific findings of necessity pursuant to 49 U.S.C §1134l(a) in order to exempt the carriers participating in the approved transac- tion from the requirements of the Railway Labor Act (45 U.S.C. §§151-160 (1982))? LIST OF PARTIES Brotherhood of Locomotive Engineers and United Traasporta- tion Union were petitioners in the case below in the District of Colum- bia Circuit Court of Appeals. Interstate Commerce Commission and United States of Ameri- Ca Were respendents. Missouri-Kansas-Texas Railroad C ompany. Denver & Rio Grande Western Railroad Company. Missouri Pacific Railroad Company. and Union Pacific Railroad Company were intervenors in support of the Interstate Commerce Commission. TABLE OF CONTENTS Page ck wanes ueccesease es 8.11 Chevron. U.S.A., Inc. v. Natural Resources Defense Council, Inc., 104 S.Ct. 2778 (1984) ......... 15.16 Chicago, St. P,, M. & O. Ry. Lease, 295 L.C.C. 696 (1958) ............ geeeeseeceeees . City of Palestine, Tex. v. United States, §59 F.2d 408 (Sth Cir. 1977), vert. denied, BO OE din occa ec ste esesecicsecoveds 1S County of Marin v. United States, 356 U.S. SN. ccd bin waetathakea Cane Ke Raver t~wee cede ll Ex Parte No. 260. Revised Regulations Governing Officers, 336 LC.C. 679 (1970) .... 6... +>. saa 0’ Mendocino Coast Ry., Inc. — Lease and Operate — California W. R.R., 360 LCC. 653 (1980), affd sub nom., Railway Labor Executives’ Ass'n v. United States, 675 F.2d 1248 (DC. Cie. W562)... 2. cc eee eens: re 4.7 Missouri Pacific R.R. Co. v. United Transp. Union, 580 F. Supp. 1490 (E.D. Mo.). appeal docketed, No. 84-1465 (8th Cir. 1984)........ | | 5 Nemitz v. Norfolk and W. Ry., 436 F.2d 841 (6th Cir.). affd on other grounds, 404 U.S. 37 (I97I) ....--. 14.15 Norfolk & W. Ry. Co. — Trackage Rights — BN, _ 5). 2 | rn rere et 4 Railway Express Agency, Inc., Notes, 348 LCC. OF GED wens nccccestsdenesses sn Wa walla oe ek 16 vi TABLE OF AUTHORITIES—( Continued) CASES: Schwabacher vy. United States, 334 U.S. 182 ee ee Aces kee ee bee es Set eececuen Seaboard Air Line R.R. Co. v. Daniel, 333 U.S. 1B (IDSB) .. wee eee wees Southern Pacific Transp. Co. v. LCC, 736 F.2d 708. (DC. Cir. 1984) (per curiam). cert. denied. OS S.Ct. W72 (1985)... .-- eee eee St. Joe Paper Co. v. Atlantic Coast Line R.R. Co.. 347 U.S. 298 (1954) ... 6.6.6 ee eee eee Texas & N. O. R.R. Co. v. Brotherhood of R.R. Trainmen, 307 F.2d 151 (Sth Cir. 1962) cert. denied. 371 U.S. 952 (1963) ......-- 66 ese e eee Texas Turnpike Auth. Abandonment by St. Louis S.W. Ry. Co. of Tex., 328 LCC. 42 re Texas v. United States, 292 U.S. 522 W934) ...-- +--+ Union Pacific Corp., Pacific Rail System, Inc. and Union Pacific R.R. — Control, Missouri Pacific Corp. and Missouri Pacific R.R., 366 LCC. 459 (1982) ... 1... eee eee eee teens Page 8.9.11.12 8.11.12 Vii —_ TABLE OF AUTHORITIES—(Continued) STATUTES: Page 28 U.S.C. $1254(1) (1982) ... 6. ee eee eee ee eee 2 28 U.S.C. $2344 (1982)... 2... eee ee ree teens 8 45 U.SC. B1S6 (19G2) .. wc cece eee wens: 7 49 U.S.C. $11341(a) (1982) .. 2... eee eee passim 49 U.S.C. §11343 (1982) .........- 6. eee. se eae 2.7 49 U.S.C. $11344 (1982) ........... 0. eee eee es 234 7IO 2 49 U.S.C. $11347 (1982)... 6... eee ee eee 2.34.7.13 Bankruptcy Act of 1898, §205, 30 Stat. 544, repealed by Bankruptcy Reform Act of 1978. ch. 1-15. §101-411, 92 Stat. 2549 ...........---+5-. aan , Transportation Act of 1940, ch. 722. §7. 54 Stat. 908 (1940) (current version at , 49 U.S.C. $1341, §11344, (1982)) .. 6... 66s. 10.11.13.14 BD USL. BS (IDOD) . ww wc cece cece cece ene ccees ll 49 U.S.C. $5(2) (1940)... «6.6 eee eee 11.13 49 U.S.C. §S5(1l) (1940) .... 2. ee ee eee Se peeemeteneememas IN THE Supreme Court of the United States ) October Term, 1985 MISSOURI-KANSAS-TEXAS RAILROAD COMPANY, “ . Petitioner, v. BROTHERHOOD OF LOCOMOTIVE ENGINEERS AND UNITED TRANSPORTATION UNION, Respondents. PETITION FOR WRIT OF CERTIORARI TO -HE UNITED STATES COURT OF APPEALS rOR THE DISTRICT OF COLUMBIA CIRCUIT Missouri-Kansas-Texas Railroad Company (“MKT™) petitions for a writ of certiorari to review an opinion and judgment of the United States Court of Appeals for the District of Columbia Circuit, entered May 3, 1985, as amended July 12, 1985. The court of appeals’ judg- ment vacated two orders of the Interstate Commerce Commission “ICC” or “Commission”) which held that the Commission's approval in Finance Docket No. 30,000 of MKT’s trackage rights application rendered the provisions of the Railway Labor Act inapplicable to MKT’s decision to operate the trackage rights with its own crews. I. OPINION BELOW The decision of the United States Court of Appeals for the Dis- trict of Columbia Circuit is reported at 761 F.2d 714 (1985). It ap- pears in the Appendix at Al. The Commission's orders appear in the Appendix at A36 and Ad40. Il. JURISDICTION The judgment of the court of appeals was entered on May 3, 1985. and amended on July 12, 1985. On August 9, 1985, the court of ap- peals entered orders denying petitions for rehearing and suggestions for rehearing en banc. Jurisdiction of this Court is invoked under 28 U.S.C. §1254(1) (1982). IIl. STATUTES INVOLVED The statutes involved in this proceeding are ihe Interstate Com- merce Act (49 U.S.C. §§1'341(a), 11343, 11344 and 11347) and the Rail- way Labor Act. (45 U.S.C. §§151-160). The pertinent provisions of these statutes are set forth in the Appendix at A55-A63. IV. STATEMENT OF THE CASE This case presents a critical question of the Interstate Commerce Commission's authority under 49 U.S.C. §11341(a) to exempt carriers participating in transactions approved by it under 49 U.S.C. §§11343 and 11344 from other laws, and, as pertinent here, the Railway Labor Act (45 U.S.C. §156). Although it is undisputed that ICC has authority to grant exemptions “as necessary” to let carriers implement approved transactions, a split panel of the District of Columbia Circuit Court of Appeuls in this case has ruled that the exemption may be granted only if the law in question poses an obstacle to implementation of the transaction, and on/y if ICC makes specific findings of necessity under 49 U.S.C. §11341 justifying the exemption. The court of ap- peals’ decision misapplies decisions of this Court, is inconsistent with ICC's longstanding interpretation of the Interstate Commerce Act, and directly conflicts with decisions of the Sixth and Eighth Circuit Courts of Appeal. The importance of this question of statutory interpreta- tion in this case cannot be overstated. Thousands of shippers face a potential disruption of rail service unless this Court reviews the court of appeals’ decision. On September 15, 1980, Union Pacific Corporation filed an ap- plication before the ICC in Finance Docket No. 30,000 seeking ICC approval, inter alia, of the consolidation of Union Pacific Railroad Company (““UP"’) ard Missouri Pacific Railroad Company (**MP”’) pursuant to 49 U.S.C. §§11343 and 11344. On the same date, Union Pacific Corporation and Western Pacific Railroad Company (*“WP"’) filed a similar application. Petitioner Missouri-Kansas-Texas Rail- road Company, a railroad operating principally in the states of Kan- sas, Missouri, Oklahoma, and Texas, opposed the consolidation, alleging that it would suffer revenue diversions of approximately $23.8 million if the UP-MP-WP merger were approved. It contended that this loss of revenue would impair its ability to provide essential rail service on shipments moving between the Midwest and the Gulf Coast via Kansas City. 366 LCC. at 469.' P As part of its opposition case, and in an effort to minimize the anticompetitive effects of the UP-MP-WP merger in this market, MKT in January, 1981 filed an application seeking trackage rights over certain MP and UP lines, including the Kansas City-Omaha trackage rights here in issue. MKT proposed to conduct this trackage rights opera- tion with its own employees. Propose? Agreement, Sec. 5, MKT Track- age Rights Application, F.D. 30,000 (Sub-No. 25). MKT filed evidence in support of its trackage rights application on February 20, 1981, and ICC held hearings on the application. Both Brotherhood of Locomo- tive Engineers (“BLE”) and United Transportation Union (“UTU”) were parties to the UP-MP-WP merger proceeding. Both BLE and UTU submitted evidence relating to MKT’s trackage rights proposal. At no time during the evidentiary proceeding did BLE or UTU challenge MKT’s right to use its own crews in its proposed trackage rights application or contend that the use of MKT’s own crews would violate the Railway Labor Act. On October 20, 1982, ICC served its decision in the UP-MP-WP merger case. In that order, the Commission observed that its review of the proposed consolidation was governed by 49 U.S.C. §11344, and noted that it was required to approve the transaction if it found the transaction to be “consistent with the public interest.” 366 I.C.C. at 483. The interest of carrier employees affected by the proposed trans- action was one of the mandatory factors that the Commission was required to consider in making its “public interest’ determination. 49 U.S.C. §11344(b)(1)(D). In addition, under 49 U.S.C. §11347, the Commission was required to provide protective conditions for em- ployees affected by the transacuun. 366 L.C.C. at 618-619. In its decision, ICC found that unconditional approval of the UP- MP-WP consolidation would not be in the public interest because, 'The procedural history of these consolidated proceedings is set forth in Union Pacific Corp., Pacific Rail System, Inc. and Union Pacific R.R.— Control—Missouri Pacific Corp. and Missouri Pacific R.R. , 366 UC.C. 459, 471-72. 479, 482 (1982). inter alia, MKT would suffer an impairment of its ability to provide essential rail service on grain shipments moving from Omaha and other grain gathering points in the Midwest via Kansas City to Gulf Coast points. 366 L.C.C. at 530-531, 547. ICC concluded that those anticompetitive consequences could be “ameliorated” (366 1.C.C. at 531) and in some respects “fully off-set” (366 1.C.C. at 547) by con- ditioning its approval of the transaction upon the grant of certain of MKT’s trackage rights requests.? In defining the nature of these con- ditions, the Commission specifically addressed the crew manning issue in analyzing MKT’s trackage rights application. ICC commented on MP’s challenge to MKT’s estimate of the number of MKT employees required to provide the proposed service. 366 I1.C.C. at 566-572. It agreed that MKT most likely had underestimated its crew require- ments, but still found that MKT’s proposed operation would be en- tirely feasible with an increased MKT crew complement. 366 1.C.C. at 569. It then approved MKT’s trackage rights application as filed and imposed protective conditions for the benefit of employees af- fected by MKT’s trackage rights operation. 366 I1.C.C. at 6212 UTU (and a number of other labor unions) appealed the Com- mission's decision approving the UP-MP-WP consolidation, arguing that the level of employee protection imposed on the primary trans- action was insufficient to satisfy the provisions of 49 U.S.C. §§11344(b)(1)(D) and 11347. BLE did not appeal the ICC’s October 20, 1982 decision. Neither UTU nor any other union claimed on ap- peal that approval of MKT’s trackage rights application allowing MKT to use its own crews violated the Railway Labor Act (or any other statute). The District of Columbia Circuit Court of Appeals rejected the unions’ arguments assailing the level of employee protection im- posed by the ICC and affirmed this aspect of the Commission's deci- sion. Southern Pacific Transp. Co. v. ICC, 736 F.2d 708, 725 (DC. Cir. 1984) (per curiam), cert. denied, 105 S.Ct. 1172 (1985). "ICC also granted certain trackage rights requested by Denver & Rio Grande Western Railroad Company. 366 L.C.C. at 572-578. ‘Those conditions for employees affected by MKT’s trackage rights ap- plication were as specified in Norfolk and W. Ry. Co.—Trackage Rights— BN, 354 1.C-C. 605 (1978), as modified in Mendocino Coast Ry. Inc.—Lease and Operate, 360 L.C.C. 653, 664 (1980). See Union Pacific Corp. , Pacific Rail System, Inc. and Union Pacific R.R.—Control—Missouri Pacific Corp. and Missouri Pacific R.R., supra, at 621. Both prior to and subsequent to the Commission's October 20, 1982 order, MKT held discussions with BLE and UTU concerning the necessity to commence the trackage rights operations as soon as possible after approval was granted. In November, 1982, MKT ex- changed proposals with BLE and UTU concerning the manning of the trackage rights operations. (J.A. at 27). MKT negotiated amend- ments to its collective bargaining agreements with BLE on January 5, 1983 to govern the trackage rights operation. On January 6, 1983, MKT commenced operations as a trackage rights tenant over the in- volved MP and UP lines using its own crews. (/d.). On February 3, 1982, several weeks after the time for seeking judicial review had run, the International President of UTU expressly confirmed that Com- mission approval of MKT’s trackage rights application gave MKT full authority to utilize its own crews. (MKT Motion to Dismiss, dated February 28, 1984, App. A and B). On March 10, 1983, MKT and MP filed a formal trackage righis agreement with ICC. (J.A. at x, No. 15). MKT reached formal agreements with UTU concerning the trackage rights operation on April Ii and April 13, 1983. (J.A. at 27). Soon after MKT commenced its trackage rights operations, UTU, on behalf of MP employees, demanded of MP that MKT use MP crews to conduct MKT’s trackage rights operations. MP did not accede to this demand, because ICC had specifically authorized MKT to use its own crews. As stated in UTU’s brief to the court below, “petition- er UTU responded to MoPac’s refusal to negotiate by declaring a strike of MoPac for April 4, 1983." (UTU Brief, p. 13). On March 30, 1983, MP filed a complaint in the Eastern District of Missouri seeking declaratory and injunctive relief against the strike. On that same date, the district court entered a temporary restraining order prohibiting, inter alia, implementation of UTU’s strike threat. The district court preliminarily enjoined the strike on February 7, 1984, and issued a permanent injunction soon thereafter. Missouri Pacific R.R. vy. Unit- ed Transp. Union, 580 F. Supp. 1490 (E.D. Mo.), appeal docketed, No. 84-1465 (8th Cir. 1984). On April 4, 1983, shortly after the district court issued a tem- porary restraining order prohibiting UTU’s threatened strike, BLE filed with ICC a “Petition For Clarification” of the Commission's October 20, 1982 order, issued almost six months earlier. BLE cited “[rJecent communications” from MP to the effect that MKT (and DRGW) were relying on the Commission's order in Sub-No. 25 (and Sub-No. 18) as authority for the use of its own crews in performing the trackage rights operating in question. BLE argued that the Com- mission's October, 1982 order did not address the crew issue (J.A. at 2). The Commission denied BLE’s petition in an order served on May 18, 1983. In that decision, the Commission concluded as follows: The consolidation decision does not require clarification. We approved the responsive trackage rights applications of DRGW and MKT in Sub-No. 18 and Sub-No. 25 sub- ject only to applicable employee protective conditions and the requirement that the parties negotiate compensation for use of the MP lines (or request us to set compensation in the event of an impasse). Inasmuch as DRGW and MKT proposed in their applications that the operations would be performed with their own crews, our approval of the applications authorizes such operations. . . BLE has presented no arguments or evidence setting forth any issue in need of clarification. Rather, BLE is attempt- ing io re-argue an issue that has already been decided. (A38). Thereafter, on May 31, 1983, BLE filed with ICC a “Petition for Reconsideration” of the May 18 order. BLE contended that the Commission exceeded its jurisdiction in its October 20, 1982 order when it authorized MKT to use its own crews. BLE’s conclusion and prayer for reiief provided: In sum, the Brotherhood of Locomotive Engineers sub- mits that the Commission does not have jurisdiction over these labor disputes since such matters are within the pur- view of the Railway Labor Act, and respectfully requests that the Commission grant this petition for reconsidera- tion and issue an order holding that crew assignments and manning of positions are matters not within the jurisdic- tion of the Commission but are labor disputes to be resolved under the procedures of the Railway Labor Act. (J.A. at 54). On June 7, 1983, UTU also petitioned ICC for reconsideration of its May 18, 1983 order. UTU allegedly had presumed that the Mendocino conditions* would provide MP employees with an oppor- tunity to participate in MKT’s decision to assign crews for the track- age rights operation. (UTU Reply to MKT Motion to Dismiss at I4). UTU argued that: This Commission does not have the authority under 49 U.S.C. §11341 to grant an exemption from the unilateral change prescriptions of the Railway Labor Act, and even if it did, it has not done so in this case. (J.A. at 77). The Commission entered an order on October 25, 1983, denying BLE’s and UTU’s petitions for reconsideration (A40). In that deci- sion, ICC held that it had jurisdiction under 49 U.S.C. §11341(a) to exempt a transaction approved under 49 U.S.C. §§11343 and 11344 from the provisions of the Railway Labor Act (A45 U.S.C. §156). In addition, it rejected UTU’s argument that specific supporting find- ings of necessity were required to exempt the crewing issue from any other laws, since it had made detailed findings of the public interest requirements in approving MKT’s trackage rights application, and since the identity of the crews was a material term of the approved transac- tion. In tight of these facts, the Commission found that Section 11341 immunity was self-executing on the crew issue (A44-48). In December, 1983, BLE and UTU filed with the District of Columbia Circuit petitions for review of the ICC's May 18, 1983 and October 25, 1983 orders. The unions claimed in the case below that, inter alia, \CC exceeded its authority by exempting MKT’s decision to use its own crews in the trackage rights operation from the require- ments of the Railway Labor Act. *See supra note 3. ‘The unions also argued that this action violated the Mendicino condi- tions imposed pursuant to 49 U.S.C. $11347, (see supra note 3), but the majori- ty found it unnecessary to reach this issue in light of its view that the Commission failed to justify an exemption from the requirements of the Rail- way Labor Act (A]13). In a 2-1 decision, the District of Columbia Circuit vacated the ICC's May 18, 1985 and October 25, 1985 decisions. Judges Wright and Mikva found that ICC did not show a necessity for waiving the Railway Labor Act in the exercise of its Interstate Commerce Act authority® (Al3). The majority held that “the Commission must supp, / some basis for a necessity determination before the exemption authority applies.” and relied upon a line of Supreme Court cases that suppos- edly hold that “ICC may waive... laws only if these... laws pose an obstacle to the transaction.” (Al4). The majority rejected ICC's holding in the October 25, 1983 order thet “the terms of Section 11341 immunizing an approved transaction from any other laws are self- executing.” and stated that “to the extent that [the Eighth Circuit's deci- sion in Brotherhood of Locomotive Eng’rs. v. Chicago & N.W. Ry. Co.*| may be read to say that ICC need supply no basis for the necessity determination, we find the interpretation ill-conceived and reject it” (Al6.n.6). The majority then remanded the case to the Commission with instructions that “the Commission must explain why termina- tion of the asserted right to participate in crew selection is necessary to effectuate the pro-competitive purpose of the grant of trackage rights or some other purpose sufficiently related to the transaction” (A17). Judge MacKinnon filed a vigorous dissent to the majority opin- ion. He correctly noted that “the whole basis for granting the track- - age rights, which included the crew selection provisions, was the implicit conclusion that the granting of such rights was necessary to the approval of the merger” (A24). He observed that 49 U.S.C. §$11341(a) grants ICC very broad exemption powers and cited Brother- hood of Locomotive Eng'rs. v. Chicago & N.W. Ry., 314 F. 2d 424 (8th Cir.), cert. denied, 375 U.S. 819 (1963), to support his and the *The majority also rejected the arguments of respondents and intervenors that BLE and UTU’s appeals were untimely since they were aggrieved by the October 20. 1982 decision of the ICC and failed to file their petitions for review within the statutorily prescribed 60-day period. as required by 28 U.S.C. §2344 (1982) (A9-12). 7See Callaway v. Benton, 336 U.S. 132 (1949), Seaboard Air Line R.R. Co. v. Daniel, 333 U.S. 118 (1948), Texas v. United States, 292 U.S. 522 (1934), and Schwabacher v. United States, 334 U.S. 182 (1948). *Brotherhood of Locomotive Eng'rs. v. Chicago & N.W. R.R. Co., 314 F.2d 424 (8th Cir.), cert. denied, 375 U.S. 819 (1963). Commision’s view that the terms of that paragraph are “self-executing™ (A25-26). Judge MacKinnon discussed all of the Supreme Court cases relied upon by the majority to support its “‘obstacle’’ standard of not only did the Supreme Court nor adopt the rigorous ‘ob- stacle’ standard which the majority today requires, the Court envisioned that the legislative purpose was to grant the Commission greater authority than the majority sug- gests to override state laws where needed to approve trans- actions ‘consistent with the public interest’ and to ensure that they are ‘just and reasonable. Schwabacher, 334 U.S. at 94-95. (A32). Judge MacKinnon agreed with the majoriiy’s obvious assertion that “the ICC cannot bootstrap any exemption to its approval of trans- actions without justification,” but he correctly pointed out that “this is far from such a case, since the necessity for waiver is clear”(/d.! He then stated, The whole point of granting the trackage rights applica- tions was to reduce the anti-competitive effects of the con- solidation (J.A. 169). Under the ICC's decision the Katy and the Rio Grande will be handling traffic for their own accounts, not for the consolidated UP-Missouri Pacific- Weste™ Pacific (/d.). Thus, the trackage rights operations were meant to be conducted in competition with the merged UP-Missouri Pacific-Western Pacific operations, id. , and to offset to some extent the monopolistic effects of that enor- mous cons ‘idation. The majority opinion gives short shrift to these essential reasons for the ICC's decision. To be sure, the Commission's goal of preservation of competi- tion through the grant of trackage rights might well be frus- trated by the prospect of requiring the railroads granted those rights to negotiate with the union representing the employees of its competitors. It is no surprise the Com- mission did not feel compelled to spell out specifically such a proposition. (A32-33). 10 Both ICC and MKT filed petitions for rehearing and suggestions for rehearing en banc. Those petitions were denied by the District of Columbia Circuit in orders dated August 9, 1985 Vv. REASONS FOR GRANTING THE WRIT A. THE COURT OF APPEALS’ INTERPRE- TATION OF 49 U.S.C. §1134l(a) IS AT ODDS WITH THE LEGISLATIVE HISTO- RY AND UNAMBIGUOUS LANGUAGE OF THE STATUTE AND IS IRRECONCIL- ABLE WITH THE DECISION OF THIS COURT IN SCHWAB‘CHER V. UNITED STATES. Section 11341(a) contains unmistakable language conferring broad authority upon ICC. It provides that the Commission's authority to upprove transactions such as rail mergers is “exclusive” and exempts carriers, Corporations, Or persons participating in approved transac- tions “from the antitrust laws and from all other law, including state and municipal law as necessary to let that person carry out the trans- action [and] holc, maintain or operate property. . . °° 49 U.S.C. §11341(a) (1982). By requiring ICC to make express findings to justify the neces- sity of every waiver before invoking its exemption authority under Section 11341(a), in addition to the findings mandated by 49 U.S.C. §11344, the majority, in Judge MacKinnon’s words, “has made the ICC's Section 11341(a) exemption authority completely disappear.” and has created a new step in the consolidation procedures required by the Act which will hinder rather than facilitate Congressional trans- portation policy. Section 11341 was formerly Section 5(11) of the Interstate Com- merce Act.'° and was enacted into law as part of the Transportation *Circuit Judge MacKinnon voted to grant the petition for rehearing, and Circuit Judge Starr voted to grant the suggestion for rehearing en banc (A53-54). The Interstate Commerce Act was recodified in 1978 without substan- tive change. Interstate Commerce Act, Pub. L. No. 95-473, 1978 U.S. Code Cong. & Ad. News (92 Stat. 1337). il Act of 1940, 54 Stat. 908. On several occasions, this Court has exa- mined the legislative history of that statute (see, e.g., St. Joe Paper Co. v. Atlantic Coast Line R.R. Co., 347 U.S. 298, 315 (1954)), and has found that the congressional purpose in the sweeping revision in Section 5 of the Interstate Commerce Act in 1940 was “to facilitate merger and consolidation in the national transportation system” [em- phasis supplied]. County of Marin v. United States, 356 U.S. 412 (1958). This Court also has observed that the enactment of Section 5(11) of the Transportation Act of 1940 constitutes “additional proof” of Congress’ purpose to grant adequate power to the Commission to override laws which may interfere with efficient and economical rail- road operation. Seaboard Air Line R.R. Co. v. Daniel, 333 U.S. 118 (1948). The interrelationship of the exemption provisions of Section 511) and the merger approval provisions of Section 5(2) of the Interstate Commerce Act was addressed by the Court in Schwabacher v. Unit- ed States, 344 U.S. 182 (1948). In that case, the Court held that approval of a voluntary railroad merger is dependent upon three, and upon on/y three, considerations: First, a find- ing that “it will be consistent with the public interest” (§5(2)(b)). Second, a finding that, subject to any modifi- cation made by the Commission, it is “just and reason- able” (§5(2)(b)). Third, assent of a “majority, unless a different vote is required under applicable State law, in which case the number so required shall assent, of the votes of the holders of the shares entitled to vote™ (§5(11)). [Em- phasis added]. (Id. at 194). The Court then stated that, When these conditions have been compiled with, the Commission-approved transaction goes into effect without need for invoking any approval under state authority, and the parties are relieved of restraints, limitations, and pro- hibitions of law, Federal, State or municipal, insofar as may be necessary to enable them to carry into effect the trans- actions. (Id.). Thus, Schwabacher stands for the proposition that if the Com- mission makes the findings required by 49 U.S. §11344, as it undeniably did in this case, the exemption provisions of §11341(a) automatically apply to enable the carriers to effect the transaction. The majority virtually ignored Schwabacher in its analysis of this Court's decisions. Instead, it relied on three decisions of this Court —Callaway v. Benton, Seaboard Air Line R.R. Co. v. Daniel, and Texas v. United States which assertedly supported its view that ICC only may waive laws that pose “obstacles” to transactions before it. Judge MacKinnon ably highlighted the majority's erroneous reasoning. He noted that Callaway arose under Section 77 of the Bankruptcy Act (formerly Il U.S.C. §205) rather than under the merger provisions of the Irterstate Commerce Act, and “ in its only com- ment relevant to thi: case.” the Court indicated merely that nothing in its opinion should be read to derogate its prior opinions upholding the ICC’s power to override state laws interposing obstacles in the path of otherwise lawful plans of reorganization. (A28). Similarly. Seaboard failed to support ihe majority's opinion. As stated above. the Court in that case acknowledged ICC's power to override laws that may interfere with approved transactions. That language alone vitiates the “obstacle” standard created by the majority in the case below. Finally. Texas v. United States is also misinterpreted by the majori- ty. As Judge MacKinnon correctly observed, the Court in that case emphasized that one purpose of the immunity provision was to pro- mote economy and efficiency by removing burdens created by state laws. (A30). This reasoning is far removed from the majority's hold- ing that a statute must create an obstacle to a transaction before an exemption may be granted. By holding that ICC may exempt carriers only from laws that pose obstacles to a successful implementation of approved transac- tions, and holding that separate findings of “necessity” are required under 49 U.S.C. §11341 before an exemption may be granted, the court of appeals has ignored the clear meaning of the language of 49 U.S.C. §11341 and has rendered a decision that is irreconcilable with the Schwabacher decision of the Court. 13 B. THE JUDGMENT BELOW CONFLICTS WITH DECISIONS OF THE SIXTH AND EIGHTH CIRCUIT COURTS OF APPEAL AND CREATES A SPLIT OF AUTHORI- TY THAT CALLS FOR AN EXERCISE OF THIS COURT’S POWER OF SUPER- VISION In its October 25, 1983 decision, the Commission relied on the decision of the Eighth Circuit in Brotherhood of Locomotive Eng’rs. v. Chicago and N.W. Ry., 314 F.2d 424 (8th Cir.), cert. denied 375 U.S. 819 (1963) to support its view that, once it made appropriate findings on the public interest aspects of a transaction under 49 U.S.C. §$11344, the exemption provisions of §1134I(a) are “self-executing.” (A44). The District of Columbia Circuit's interpretation of the Com- mission's authority under 49 U.S.C. §11341(a) to exempt carriers from the requirements of the Railway Labor Act directly conflicts with BLE and decisions of other circuits as well. In BLE, the Eighth Circuit characterized the basic issue present- ed as “whether the statutory authority conferred upon the ICC by the Interstate Commerce Act to approve and facilitate mergers of car- riers includes the power to authorize changes in working conditions necessary to effectuate such mergers.”'' It examined the legislative history of former Section 5(2)(f) of the Interstate Commerce Act. (now 49 U.S.C. §11347) and it noted that Congress rejected an amend- ment to the Transportation Act of 1940 proposed by Representative Harrington which, if adopted, would have frozen existing empioyees in their job rights. The Eighth Circuit reasoned that the ICC|‘s] power to authorize mergers would be complete- ly ineffective if authority to adjust work realignments through fair compensation did not exist... [U]nder the Railway Labor Act provisions, it is possible for either party ''Significantly, the majority in the case below suggest that MKT's track- age rights operation would create a unilateral change in the working condi- tions of MP employees. which would violate the Railway Labor Act [45 U.S.C. $156 (1982)]. (A7-16). As both the dissent and the Commission en- phasized. no factual support whatsoever existed for that assertion, since the unions failed to introduce any evidence to establish the existing collective bargaining rights and actual working conditions of MP employees. (A24. Ad). l4 to completely block any change in working conditions by refusing to agree to a change and by refusing to arbitrate. Like the Harrington amendment, the Railway Labor Act. if it applied. would threaten to prevent many consolidations. (id. at 430-431). As in this case. the Eighth Circuit was faced in BLE with an ar- gument by the unions that the Commission made no “express find- ing” that the Railway Labor Act necessarily conflicted with the Commission's approval under the Interstate Commerce Act. /d. at 432. It then agreed with the Commission's interpretation of §5(11), as set forth in Chicago St. P- M. & O. Ry. Lease, 295 LCC. 696 (1958): We find nothing in that paragraph | §5(11)] or in other por- tions of Section 5, which authorizes us to determine and declare the particular laws within the scope of paragraph (11) from which a carrier shall be relieved. The terms of this paragraph are self- executing, and there is no need for this Commission expressly to order or declare that a car- rier be relieved from certain restraints. / is sufficient if we make clear what the carrier is authorized to do. |Em- phasis added. | (/d. at 432). The Eighth Circuit then noted that the Commission did actually approve the proposed merg- er and the included agreement for the protection of rail- road employees as it was authorized to do. Such approval, in absence of language manifesting a contrary intent, car- ried with it any exemption from the restraints of other laws as contemplated by §5(11) to the extent necessary to carry out the merger. (/d.). The Eighth Circuit's interpretation of §5(11) was followed by the Sixth Circuit in Nemitz v. Norfolk and W. Ry. , 436 F.2d 841 (6th Cir.), affd on other grounds, 404 U.S. 37 (1971). In that case, arising our of another rail merger, the court of appeals was faced with a claim that the procedures of the Railway Labor ‘Act rather than the employee 1S protective conditions imposed by the Commission were applicable to resolve a labor dispute. The Sixth Circuit rejected the Railway Labor Act argument. holding that there must be exclusive and plenary authority in the LCC. to achieve the purposes of the Act. The authority vested in the L.C.C. to effectuate proposed mergers would be ren- dered ineffective if authority to adjust work alignments through fair compensation did not exist. Since, under the Railway Labor Act, employees cannot be compelled to ac- cept or arbitrate new working rules or conditions, the ap- plication of the Railway Labor Act to situations such as that presented here, like the Harrington Amendment, would threaten to prevent many consolidations, and, therefore, should not be applied. (Id.at 845). The judgment below directly conflicts with the decisions of Sixth Circuit in Nemitz and the Eighth Circuit in BLE. This Court should resolve the conflict by adopting the Eighth Circuit's interpretation of the statute.'* C. THE JUDGMENT BELOW OVERRULES WITHOUT JUSTIFICATION A LONG- STANDING INTERPRETATION OF THE INTERSTATE COMMERCE ACT BY THE INTERSTATE COMMERCE COM- MISSION This Court in Chevron, U.S.A., Inc. v. Natural Resources Defense Council, Inc. 104 S.Ct. 2778 (1984), summarized the proper standard The majority also relies on two decisions of the Fifth Circuit Court of Appeals to support its interpretation of 49 U.S.C. $11341. See Ciry of Pales- tine, Tex. v. United States, 559 F.2d 408 (Sth Cir. 1977). cert. denied, 435 U.S. 905 (1978). and Texas & N. O. RR. Co. ». Brotherhood R.R. Train- men, 307, §.2d 151 (Sth Cir. 1962). cert. denied, 371 U.S. 1952 (1963). (AIS). However. unlike the present case. the Fifth Circuit in those two cases was not faced with a determination by ICC that the requested exemption related to a material term of the approved transaction. (See ASO). Those cases merely stood for the obvious proposition that ICC may not exempt carriers from requirements of other laws unless the exemptions are necessary to enable the carriers to carry out the approved transactions. of review of an agency's interpretation of its governing statute: When a court reviews an agency's construction of the Sta- tute which it administers, it is confronted with two ques- tions. First, always, is the question whether Congress has directly spoken to the precise question at issue. If the in- tent of Congress is clear, that is the end of the matter; for the court, as well as the agency, must give effect to the unambiguously expressed intent of Congress. If, however, the court determines Congress has not directly addressed the precise question at issue, the court does not simply im- pose its own construction on the statute, as would be neces- sary in the absence of an administrative interpretation. Rather, if th. statute is silent or ambiguous with respect to the specific issue, the question for the court is whether the agency's answer is based on a permissible construc- tion of the statute. [Emphasis added. } (/d. at 2781-2782 footnote omitted). The Court also emphasized in Chevron that considerable weight should be accorded to the agency's construction of the statutory scheme it is entrusted to administer. (/d.at 2782). The Court below simply ignored the guidance provided by Chevron. It erroneously reinterpreted Section 11341(a) without find- ing that the statutory language involved was ambiguous. It also failed to accord ICC its deserved deference in interpreting its governing sta- tute. As Judge MacKinnon correctly put it, ‘‘in doing so, the panel has usurped the statutory authority of the ICC and has substituted its own judgment for that of the ICC.” (A35). The Commission's interpretation of 49 U.S.C. §11341(a), (as set forth in the BLE decision at page 14, supra), consistently has been followed for over twenty-five years. See, e.g. Texas Turnpike Auth.- Abandonment-St. L. S.W. Ry. Co. of Tex., 328 LCC. 42, 46 (1965) Ex Parte No. 260, Revised Regulations Governing Officers, 336 1.CC. 679, 682 (1970): Railway Express Agency, Inc., Notes, 348 1.C.C. 157, 215 (1975). That interpretation is consistent with the interpretation of the statute rendered by this Court and with the legislative history. It is inconceivable that the majority's interpretation rather than ICC's interpretation is correct, where the result of the majority’s decision o™~ 17 could require MKT to bargain with MP’s employees and face poten- tial disruptions of service in its efforts to perform rail service required by the public interest. (A34). VI. CONCLUSION Fu. the foregoing reasons, Missouri-Kansas-Texas Railroad Com- pany respectfully requests the Court to grant this petition for writ of certiorari. Respectfully submitted, Joseph L. Manson, III (Counsel of Record) Ronald B. Natalie Verner, Liipfert, Bernhard, McPherson & Hand, Chartered Suite 1000 1660 L Street, N.W. Washington, D.C. 20036 (202) 775-1088 Michael E. Roper © 701 Commerce Street - Dallas, Texas 75202 (214) 651-6741 Ai TABLE OF APPENDICES A. Opinion of the United States Court of Appeals for the District of Columbia Circuit, May 3, 1985, Brotherhood of Locomotive Engineers v. Interstate Commerce Commission and United States, United Transportation Union v. United States and Interstate Commerce Commission, Petitions for Review of an order of the Interstate Commerce Commission, Nos. 83-2290, 83-2317. EE ME dd bedebesersecosccece B. Order of the Interstate Commerce Commission Denying Brotherhood of Locomotive Engineers Petition Requesting Clarification of ICC Decision Approving the Consolidation of Union Pacific Railroad and Missouri Pacific Railroad. Served May 18, 1983 ................ C. Order of the Interstate Commerce Commission Denying Brotherhood of Locomotive Engineers and United Transportation Union Petition Seeking Reconsideration of ICC decision to Deny the Petition for Clarification. Served SG EE Le a D. Order of the United States Court of Appeals for the District of Columbia Circuit. Granting Stay of Mandate. September 18. 1985. Brotherhood of Locomotive Engineers v. Interstate Commerce Commission and the United States and Consolidated Case No. 83-2317. No. 83-2290. September REGS £62 CeO E Vad a'o 6 HEN wos 000 0-0 vee Page A36-A39 ASI Ail TABLE OF APPENDICES—(Continued) Page . Order of the United States Court of Appeals for the District of Columbia Circuit. Granting Further Stay of Mandate. October 21. 1985. Brotherhood of Locomotive Engineers v. Interstate Commerce Commission and the United S.ates and Consolidated Case No. 83-2317. No. 83-2290. September Ferme TS ow ccs ceeeeen ce eee ae A52 Order of the United States Court of Appeals for the District of Columbia Circuit Denying Rehearing, August 9. 1985. Brotherhood of Locomotive Engineers v. Interstate Commerce Commission and the United States and Consolidated Case No. 83-2317. No. 83-2290. September Term 1984 ..... A53 . Order of the United States Court of Appeals for the District of Columbia Circuit Denying Rehearing. en banc, August 9, 1985, Brotherhood of Locomotive Engineers and United Transportation Union v. Interstate Commerce Commission and the United States and Consolidated Case No. 83-2317. No. 83-2290, September Term 1984 ............ A54 - BD USL. Ge Gee + 6c cccscivivasaeee ASS USK. GRR GOR). 0s pve dvecesceanenee AS6 49 U.S. GSES GaSe) os soccer ewan apeneen AS7- A59 - FB USL. Gases GaP occ ccvccwsssseeaeeee A60- A62 - 4 USL. GS GRR). cs ec ancwscnbaceeeeeee A63 — . rs Po Al APPENDIX A BROTHERHOOD OF LOCOMOTIVE ENGINEERS, Petitioner, Vv. INTERSTATE COMMERCE COMMISSION AND UNITED STATES OF AMERICA, Respondents, Missouri-Kansas-Texas Railroad Company, Denver & Rio Grande Western Railroad Company, Union Pacific Railroad Company, et al., Intervenors. UNITED TRANSPORTATION UNION, Petitioner, Vv. UNITED STATES OF AMERICA AND INTERSTATE COMMERCE COMMISSION. Respondents. Missouri-Kansas-Texas Railroad Company. Denver & Rio Grande Western Railroad Company. Union Pacific Railroad Company, et al.., Intervenors. Nos. 83-2290, 83-2317. United States Court of Appeals. District of Columbia Circuit. Argued Dec. 4, 1984. Decided May 3. 1985. As Amended July 12. 1985. Vacated and remanded. MacKinnon. Senior Circuit Judge. filed a dissenting opinion. Petitions for Review of Orders of the Interstate Commerce Commission. Harold A. Ross. Washington. D.C.. with whom Gordon P. Mac- Dougall. Washington. D.C.. was on the brief. for petitioner in No. 83-2290. John O'B. Clarke. Jr.. Washington. D.C.. for petitioner in No. 83-2317. . Sidney L. Strickland. Jr.. Atty.. 1.C.C.. Washington. DC.. with whom Robert S. Burk. Acting Gen. Counsel. and Henri F. Rush. As- sociate Gen. Counsel, 1.C.C.. J. Paul McGrath, Asst. Atty. Gen.. and John J. Powers, III and Frederic Freilicher. Attys.. Dept. of Justice. Washington. D.C.. were on the brief. for respondents. John H. Caldwell and Denise M. O'Brien. Washington. DC.. and Kendall T. Sanford. Denver. Colo.. were on the brief for inter- venor Denver & Rio Grande Western R. Co. James M. Verner, Ronald B. Natalie and Joseph L. Manson, III, Washington, D.C.. and Michael E. Roper. Dallas. Tex.. were on the brief for intervenor Missouri-Kansas-Texas R. Co. William C. Evans. Washington, D.C.. entered an appearance for that intervenor. James V. Dolan, Charles A. Miller, and Gregg H. Levy, Washing- ton. D.C., and Nina K. WuestJing, St. Louis, Mo., were on the brief for intervenors Union Pacific R. Co. and Missouri Pacific R. Co. Before WRIGHT and MIK\VA, Circuit Judges, and MacKIN- NON. Senior Circuit Judge. Opinion for the court filed by Circuit Judge WRIGHT. Dissenting opinion filed by Senior Circuit Judge MacKINNON. J. SKELLY* WRIGHT, Circuit Judge: Two unions—the Brotherhood or; Locomotive Engineers (BLE) and the United Transportation Union (UTU)—object to the Interstate Commerce Commission’s interpretation of labor issues arising from ICC's approval of a railroad consolidation. The unions claim that, when the dust settled from the consoli- dation, certain raitroads had effectively squeezed them out of their previous role in determining the crews used on particular routes. At the time, in early 1983, the unions objected and argued that the rail- fr : | ; : : it if ' A3 roads’ actions violated statutory labor protections. Since the railroads responded that ICC had given the full crew selection rights in the consolidation approval, the unions appealed to ICC for an order clarifying that its general consolidation approval did not affect previ- ous labor arrangements, including crew selection rights. In two decisions ICC rejected the unions’ arguments. It main- tained that the railroads’ intentions on crew selection had been clear in the consolidation as approved and that ICC’s authority to exempt transactions from legal obstacles, 49 U.S.C. §11341(a) (1982), im- munized these crew selection prerogatives from later attack. The unions now petition this court to vacate those ICC decisions. Four railroads—the Denver & Rio Grande Western (D&RGW), the Missouri-Kansas-Texas (MKT), the Missouri Pacific (MP), and the Union Pacific (UP)—are intervening in support of the Commission. Because we find that ICC made no semblance of a showing that the exemption was necessary, as required by the exemption authority section, we vacate the ICC decisions and remand the case to the Com- mission for proceedings consistent with this opinion. I. BACKGROUND A. Legal Framework This case presents the intersection of two statutory mandates— ICC’s exclusive authority to approve rail consolidations under the In- terstate Commerce Act and the statutory protection for rail labor em- ployees under both the Railway Labor Act and the Interstate Commerce Act. The unions argue that (1) ICC did not show a necessity for waiving the Railway Labor Act in the exercise of its Interstate Commerce Act approval authority, and (2) ICC cannot waive the Interstate Commerce Act’s labor protection conditions in the exercise of that approval authority. Ultimately, we find the Railway Labor Act argument dis- positive, and we vacate the ICC decisions on that basis. To fully un- derstand the texture of this dispute, however, it is necessary to examine the Interstate Commerce Act labor protection conditions as well. |. CC's approval authority. Undez the Interstate Commerce Act. ICC has exclusive authority to approve certain consolidations and mergers. 49 U.S.C. 11341 er seq. (1982). The Act enumerates the types of transactions to which ICC’s approval authority applies. id. §11343. and the considerations that must guide ICC, id. 11344. Most signifi- cantly for this appeai. “|a] carrier. corporation, or person participating in that approved or exempted transaction is exempt from the antitrust laws and from all other law, including State and municipal law. as necessary to let that person carry out the transaction. hold. main- tain. and operate property. and exercise control or franchises acquired through the transaction.” /d. §11341(a). Thus ICC has the power to approve a transaction and exempt its participants from legal obsta- cles that would impede its fruition. In the exercise of this authority to exempt consolidations from the constraints of applicable statutes. ICC has certain ultimate con- straints On its broad authority. First. there is a necessity component to the plenary authority: the statute specifies that ICC may exempt transactions from applicable laws “as necessary” for completion of the transaction. Second, as with any agency action. ICC's exercise of its authority must comport with the requirements of reasoned deci- sionmaking. See generally United States v. ICC, 396 U.S. 491. 90 S.Ct. 708, 24 L.Ed.2d 700 (1970). 2. Labor protection requirements. Statutory protections for rail: road employees have received considerable congressional attention. Two important statutory vehicles for the current labor protection re- quirements are the Railway Labor Act, 45 U.S.C. §151 et seq. (1982). and the Interstate Commerce Act’s labor protection section, 49 U.S.C. §11347. The Railway Labor Act creates a highly structured system for administering and resolving labor disputes. In passing the Railway Labor Act Congress sought. in part, “*[t]o avoid any interruption to commerce * * * to forbid any limitation upon freedom of associa- tion among employees * * *, [and] to provide for the prompt and ord- erly settlement of all disputes concerning rates of pay, rules, or working conditions[.] 45 U.S.C. §15la. The statute specifies eleven general duties of rail carriers, id. §152. It also creates a variety of mechan- isms to settle rail labor disputes—a National Railroad Adjustment Board, id. §152, a National Mediation Board, id. §§154-155, and a system of arbitration, id. §§157-159. The statute gives special atten- tion to changes in rates of pay, rules, and working conditions. It pro- vides that employers give employees the opportunity for negotiation and mediation before implementing such changes. Jd. §156; see also » ae AS id. §152, Seventh duty. The Railway Labor Act thus stands as an im- portant structure for maintaining labor peace and fairness. The Interstate Commerce Act labor protection section, 49 U.S.C. §11347, affords employees substantial protection from the effects of mergers and consolidations. Such labor protection conditions have a long history. See New York Dock Railway v. ICC, 609 F.2d 83,86-90 (2d Cir. 1979). In its current version the section provides that, in the exercise of its approval authority, “the Interstate Commerce Com- mission shall require the carrier to provide a fair arrangement at i_ast as protective of the interests of employees who are affected by the transaction as the terms imposed under this section before February 5, 1976 * * * 49 U.S.C. §11347 (emphasis added). ICC has specified the particular conditions that must be observed for this Section 11347 requirement. The conditions for protecting labor in a merger are known as New York Dock conditions, see New York Dock Railway, 360 ICC 60 (1979), affd sub nom. New York Dock Rail- way v. ICC, supra. The conditions for protecting labor in transfers of trackage rights are known as Norfolk & Western conditions, see Norfolk & Western Railway Co., 354 ICC 605 (1978), modified by Mendocino Coast Railway, Inc. , 360 ICC 653, 664 (1980). affd sub nom. Railway Labor Executives’ Ass'n v. United States, 675 F.2d 1248 (D.C. Cir.1982). These conditions include negotiation and mediation for dismissal and displacement of employees, 354 ICC at 610-611, 360 ICC at 85; dismissal and displacement compensation, 354 ICC at 611-612. 360 ICC at 86; and a system of arbitration, 354 ICC at 613. 360 ICC at 87-88. Generally. the conditions provide that “(t]he rates of pay, rules, working conditions and all collective bargaining aad other rights, privileges and benefits * * * of railroads’ employees un- der applicable laws and/or existing collective bargaining agreements or otherwise shall be preserved unless changed by future collective bargaining agreements or otherwise shall be preserved unless changed by future collective bargaining agreements or applicable statues.” 354 ICC at 610, 360 ICC at 84. ICC has thus established conditions for discharging its statutory responsibility to protect labor benefits in the midst of consolidations. In short, [CC has authority to approve certain transactions, even to the extent of exempting the transactions from other laws. At the same time. the Railway Labof Act structures rail labor relations. and the Interstate Commerce Act's labor protection section gives rail em- ployees a measure of protection from the effects of rail transactions. B. The Current Dispute This dispute has three important stages: (1) ICC's consolidation approval in 1982: (2) the post-approval conflict over crew selection: and (3) the two ICC decisions in 1983. 1. JCC approval for the consolidation. In 1982 UP and MP ap- plied to ICC for approval of a consolidation under ICC's exclusive authority.' Several railroads and severab unions (including the peti- tioners) objected to the proposed consolidation. On October 20, 1982 ICC approved the consolidation, but it also approved the applicaticn of two railroads for “trackage righis’"? over specified MP routes to ameliorate possible anticompetitive effects. D&RGW received trackage rights for one route (Pueblo. Colorado to Kansas City. Missouri)» and MKT received trackage rights for several other routes. See Union Pacific-Control-Missouri Pacific, 366 \CC 459 (1982), affirmed in part and remanded in part sub nom. Southern Pacific Transporta- tion Co. v. ICC, 736 F.2d 708 (D.C. Cir.1984) (per curiam), cert. de- nied, — U.S. —, 105 S.Ct. 1172. 84 L.Ed.2d 322 (1985). These are the four railroads who are intervening in support of the ICC decisions—the two who received ICC approval of their consolidation (UP and MP) and the two who received trackage rights for MP routes as conditions of that approval (D&RGW and MKT). In their applications for trackage rights D&RGW and MKT both commented on crew selection. D&RGW specified that it could, at its Option, use its own crews when it used the newly granted track- age rights, Finance Docket No. 30,000 (Sub-No. 18) (DRGW-8) (cit- ed in ICC Decision of October 25, 1983, Joint Appendix (JA) 164): MKT specified that it would use its own crews, Finance Docket No. 'Western Pacific Railroad Company was also involved in the consoli- dation, but its role is not relevant to these petitions. *“Trackage rights” give one railroad the right to run its trains over another railroad’s tracks. Indisputably, trackage rights are “subject to ** specific negotiations,” dissent at 734. They are also subject to governing Statutes and to the conditions of the Commission's approval, including the imposition of general labor protection conditions. = ~—— eee eee A7 30,000 (Sub-No. 25) (MKT-25) (cited in ICC Decision of October 25, 1983, JA 164). In granting the trackage rights ICC did not mention crew selec- tion. The Commission primarily addressed the need for the trackage rights to prevent possible anticompetitive effects from the consolida- tion. 366 ICC at 566-568, 572-578. Indeed, the Commission denied part of MKT’s application for trackage rights because it did not agree that these trackage rights were needed to promote competition. /d. at 570-572. Notably, ICC emphasized that its general trackage rights approval was subject to the Norfolk & Western conditions that pro- tect workers’ rights in trackage rights situations. 366 ICC at 654; id. at 621-622. This statement was ICC's only reference to labor arrange- ments in the use of trackage rights. 2. The crew assignment controversy. After the consolidation be- came effective, the railroads began performing their approved track- age rights operations. D&RGW temporarily used MP crews on the MP routes, but claimed that it would soon use its own crews. Exhibit A to BLE’s Petition for Clarification of ICC's October 20, 1982 de- cision, JA 6. MKT, meanwhile, began using its own crews. UTU’s Petition for Reconsideration of ICC's denial of BLE’s Petition for Clarification at 3, JA 74. The unions objected. They claimed that the unions representing MP employees had an established right to a rolé in crew assignment and that the railroads were changing that condi- tion without consulting them. Both D&RGW and MKT, however. claimed that the ICC approval of their applications gave them a right to use their own crews and that ICC's exemption authority immunized this right from later legal challenge. MP's Reply to BLE’s Petition for Clarification at Il, JA 24: UTU’s Petition for Reconsideration at 3-4. JA 74-75. D&RGW also made an additional argument. The Atchison, Tope- ka, & Santa Fe Railway Company had challenged D&RGW's tem- porary use of MP crews in the trackage rights as anticompetitive and impermissible. On November 24. 1982 and January 18, 1983, ICC issued decisions rejecting the challenge and upholding D&RGW's plans. including the preliminary decision to use existing MP crews. The Commission noted that D&RGW had .4e choice of using its own crews: the Commission did not mention any lurking labor relations issues. ICC Decision. November 24. 1982. at 3 (D&RGW brief. Ap- AS pendix B): ICC Decision. January 18. 1983. at 3 (id.. Appendix C). In response to the unions’ challenge. D&RGW claimed that these ICC decisions settled the validity of its crew selection plans. Reply of D&RGW to BLE’s Petition for Clarification. JA 9-10. Initially. the two unions responded to the railroads’ position on crew selection in different ways. The United Transportation Union threatened to strike over the crew assignment issue. MP sought an injunction preventing the threatened strike. On March |, 1984 the Dis- trict Court for the Eastern District of Missouri issued such an in- junction. Missouri Pacific R. Co. v. United Transportation Union, 580 F.Supp. 1490 (E.D.Mo.1984). An appeal from that injunction is pending. The Brotherhood of Locomotive Engineers took a different tack. On April 4. 1983 it filed a petition with the Commission and requested clarification that the consolidation approval did not alter previous labor arrangements, particularly with respect to crew selection. BLE claimed that the normal Railway Labor Act and Interstate Commerce Act labor protection conditions (§11347) should app'y. BLE’s Petition for Clarifi- cation. JA 2-4. After ICC rejected BLE’s interpretation in a May 18. 1983 decision, UTU joined BLE in a May 31 petition requesting recon- sideration. On October 25, 1983 the Commission elaborated on its earlier decision and continued to reject the unions’ contentions. 3. The ICC decisions. In its May 18 decision refusing BLE’s re- quest, ICC maintained that it had already decided the issue of crew selection. The Commission claimed that it had exempted the crew selection provisions, which it had not mentioned in its decision, from all legal obstacles because those provisions were in the trackage rights applications. “Inasmuch as DRGW and MKT proposed in their ap- plications that the operations would be performed with their own crews, our approval of the applications authorizes such operations. * * We have broad authority to impose conditions on consolidation and our jurisdiction in plenary. Therefore, we properly authorized performance of trackage rights tenants using their own crews.” ICC Decision of May 18, 1983 at 4-5, JA 36-37. ICC did not specifically address the Railway Labor Act and Section 11347 arguments. Thus in its May de- cision ICC implied that it had immunized the crew selection preroga- tives from legal obstacles by dint of having approved the trackage applications. A9 In its October decision the Commission again denied the unions’ request. It rejected the notion that it had to provide some basis for concluding that waiver of the Railway Labor Act was necessary to the transaction. ‘The terms of section 11341 immunizing an approved transaction from any other laws are self-executing and there is no need for us expressly to order or to declare that a carrier is spec’ ‘ically relieved from certain restraints.” ICC Decision of October 25, 1983 at 7, JA 163. The Commission similarly rejected the claim that Sec- tion 11347 rights were being violated. ‘To the extent that existing work- ing conditions and collective bargaining agreements conflict with a transaction which we have approved, those conditions and agreements must give way to the implementation of the transaction. The labor conditions imposed under section 11347 preserve conditions and agree- ments in the context of the authorized transactions.’ /d. at 6, JA 162. The Commission thus continued to maintain that it had immunized the crew selection from all subsequent legal obstacles, and it con- tinued to offer no analysis of the necessity of this immunity for com- pletion of the transaction. The unions filed petitions to this court. They claim that ICC ex- ceeded its authority by unjustifiably waiving the Railway Labor Act and the Interstate Commerce Act labor protection conditions. Il. THRESHOLD ISSUES Before reaching the statutory issues, we must consider two threshold issues: timeliness and issue preclusion. A. Timeliness ICC and the four intervening railroads argue that the unions are barred because their appeal is not timely. We disagree. The timeliness dispute turns on the interpretation to be given var- ious Commission actions. The jurisdictional statute permits judicial review if an appeal of a final order is filed within 60 days. 28 U.S.C. $2344 (1982). The railroads and ICC contend that ICC’s final order on crew selection prerogatives issued on October 20, 1982 (the deci- sion giving general approval for the UP/MP consolidation, subject to the grant of trackage rights to D&RGW and MKT). They argue that the unions’ appeals for clarification in April 1983 (resulting in the Mav 1983 decision) and May 1983 (resulting in the October 1983 AlO decision) are entitled to no weight because those ICC decisions were merely procedural refusals to reopen a matter decided in the October 1982 order. The railroads and ICC rely heavily on Nat? Bank of Davis \- Office of Comptroller of Currency, 725 F.2d 1390 (D.C. Cir.1984) (per curiam). In that case the court ruled that a petition for review was not timely when petitioner took no action during the statutory time period of 30 days. asked the agency to reconsider two months after the decision, and sought to invoke the court's jurisdiction by filing a petition for judicial review within 30 days after the agency denied the petition for reconsideration. The railroads and ICC argue that. similarly, in the case on appeal. the unions seek to make their peti- tion timely by dating the time period for judicial review only from the procedural refusal to reopen a previous proceeding. [1] Their reliance on Davis is misplaced. As this court observed some time ago in /nvestment Company Institute v. Board of Gov. of FRS, 551 F.2d 1270. 1281-1282 (D.C.Cir.1977), and very recently in Eagle-Picher Industries, Inc. v. EPA, 759 F.2d 905, 912. 915 (D.C-Cir.1985) time limits on review may, in exceptional circumstances, be “excused” when an issue is not ripe for review during the statuto- ry period. As we emphasized in Eagle-Picher, petitioners generally are obliged to seek judicial determination of the ripeness of their claims during the statutory period. “In general, we will refuse to hypothe- size whether, in retrospect, a claim would have been deemed ripe for review had it been brought during the statutory period, in order to save an untimely claim.” 759 F.2d at 909. However, we specifical- ly noted that “*[e]xceptions occasionally may be justified in the light of changed circumstances giving rise to a new cause of action be- yond the statutory period for review; compelling case precedent that makes it clear beyond doubt that the claim was not ripe during the statutory period; or clear evidence that a failure to consider a peti- tioner’s claims would work a manifest injustice.” /d. [2] The instant case clearly presents a situation ir. which the neti- tioners’ claim ripened after the expiration of the statutory period due to changed circumstances resulting from a misleading statement of position by ICC. The petitioners had no notice of their present claim until after ICC denied their petition for clarification and reconsider- ation thereof. In its iritial decision, the ICC specifically said that the All Statutory labor protection conditions would apply and, thus, it would have been premature for the unions to have claimed that the condi- tions were being violated. The Commission and the railroads argue that the trackage applications specifically noted that D&RGW might, and MKT would, use their own crews, and thus there was no ripe- ness problem. However, those applications were bounded by ICC’s general pronouncement that the labor protection conditions would not be violated. As soon as it became apparent that MKT intended to use its own crews, the unions petitioned ICC for clarification of the application of the labo’ protection conditions. The issue did not be- come ripe for judicial review until the Commission had specified that crew selection was exempt from all otherwi-e at, -icable legal re- quirements.’ [3.4]Nor can it be claimed that the petition should be barred be- cause it was not filed within 60 days after the May decision. For the Commission then undertook extensive review and issued a lengthy opinion in October. If the motion for reconsideration is filed within the statutorily prescribed review period, the time limitation tolls un- til the agency issues its final decision on the motion for reconsidera- tion, see Outland v. CAB, 284 F.2d 224 (D.C-Cir.1960); Davis, supra, 725 F.2d at 1391 n. 5, and it is tolled while the agency is giving full consideration to the issues presented for judicial review, see Nar 7 In- sulation Transportation Committee y. ICC, 683 F.2d 533, 543 n. 17 (D.C.Cir. 1982). [5] The ra*icoads and the Commission also claim that the peti- tion should be barred as untimely because ICC clarified its policy on crew assignment in decisions issued on November 24. 1982 and January 18, 1983. At that time D&RGW had rot exercised its option ‘The dissent’s extended timeliness objection rests on a single. mistaken assumption: “Though these labor protections were held to be applicable in general, * * * they were to be inapplicable to the crew se'ection Issue since the crew selection provisions constituted part of the trackage rights applica- tions approved by the final order of the commission.” Dissent at 727. Un- fortunately. not one word of ICC's October 1982 decision suggested that its unequivocal commitment to labor protection conditions was somehow “in- upplicable to the crew selection issue.” From all appearances. ICC's impo- sition of labor protection gonditions qualified its approval of the crew selection upplications. rather than the reverse. Therein lies the nub of this case and the reason why petitioners’ claim was in fact. not ripe until [CC modified that curlier commitment in the proceedings . sue. Al2 to use its own crews: the Atchison. Topeka & Sania Fe Railway was protesting its use of MP crews as anticompetitive. In its decisions ICC noted that D&RGW had the option of using its own crews. The argument that this statement should have put the unions on notice is unconvincing: nothing suggested that ICC had changed,its view that the general labor protection conditions would apply in full force. The dispute is not over whether the railroads could use their own crews: it is whether they could use their own crews subject to the requirements of the labor protection conditions. Before May 1983 the Commission never suggested that D&RGW and MKT could use their own crews without observing the basic labor protection conditions. And before the railroads refused to negotiate in early 1983. the un- ions had no reason to appeal to the Commission for clarification. Thus the November 1982 and January 1983 decisions should not stand as a bar: although those decisions suggested that the railroads could use their own crews, ICC did not suggest that they could do so without observing the basic labor protection conditions. Finally. pointing to the principle that parties should raise their objections in administrative proceedings. United States v. L.A. Tuck- er Truck Lines, 344 U.S. 33, 73 S.Ct. 67, 97 L.Ed. 54 (1952). the railroads and ICC claim that the unions should have raised their ob- jection in the Octeber 1982 proceeding. However, in the administra- tive proceedings the unions did argue for vigorous labor protections. 366 ICC at 621-622. As discussed. it was not until the May decision that the unions should have realized that the labor protection condi- tions would not be fully applicable to crew selection. B. /ssue Preclusion [6] MKT raises an additional threshold objection. It claims that the crew selection issues were decided in the opinion accompanying the Missouri District Court's injunction prohibiting UTU from strik- ing, see Missouri Pacific R. Co. v. United Transportation Union, supra, 580 F. Supp. 1490, appeal pending. and that issue preclusion pre- vents this court from reaching the issues. This argument is frivolous. Despite broad dicta, the District Court recognized that it had no power to consider the validity of ICC orders. See id. at 1502 (“‘The United States Courts of Appeals are vested with exclusive jurisdiction to de- termine the validity of orders of the ICC.”’). Thus there can be no preclusive effects on this court’s review of the validity of + ICC Al3 order. See 18 C: WRIGHT, A. MILLER & E. COOPER, FEDERAL PRACTICE AND PROCEDURE $4420 (1981) (“The fundamental rationale of issue preclusion dictates the clearly settled requirement that it be limited to matters that have been actually decided.”’). We thus reject the threshold objections and turn to the merits of the unions’ contentions. Ili. STATUTORY ISSUES The unions raise two statutory arguments: (1) ICC offered no in- kling of a justification for the view that waiving the Railway Labor Act with respect to crew assignment was necessary to effectuate the transaction, and (2) the Interstate Commerce Act labor protection con- ditions (49 U.S.C. §11347) may not be waived because the labor pro- tection section specifically qualifies ICC's consolidation approval authority (49 U.S.C. §11341). We find the first argument decisive. The unions claim that ICC has wholly failed to justify the neces- sity for waiving the Railway Labor Act’s applicability to the crew selec- tion issue. The Commission claims that no such justification is necessary. [7] Although an agency receives deference in interpreting its or- ganic statute. tie agency's authority is not unbounded. Bureau of Al- coho!, Tobacco & Firearms v. FLRA, 464 U.S. 89, —- & n. 8, 104 S.Ct. 439, 444 & n. 8, 78 L.Ed.2d 195 (1983). In reviewing an agen- cy’s interpretation we must consider whether it is within the delega- tion to the agency envisioned by Congress. State of Montana vy. Clark, 749 F.2d 740, 744-747 (D.C.Cir.1984). Our analysis must begin with the language of Congress. “If the intent of Congress is clear. that is the end of the matter: for the court. as well as the agency. must give effect to the unambiguously expressed intent of Congress.” Chevron, U.S.A., Inc. v. Natural Resources Defense Council, Inc., — U.S. —. —. 104 S.Ct. 2778, 2782. 81 L.Ed.2d 694 (1984). [8] The statutory language dictates that the Commission's exemption authority upplies only “as necessary” to allow transactions to occur. 49 U.S.C. $11341(a). Congress has given ICC broad powers to immunize trans- actions from later legai obstacles, but this ¢elegation by Congress is explicitly qualified by a necessity component. The statute thus re- quires that the exemption authority operate according to necessity. not according to whim ur caprice. Al4 This statutory limit on the Commission's authority creates cer- tain responsibilities for ICC. In exercising its waiver authority ICC must do more than shake a wand to make a law go away. It must sup- ply a reasoned basis for that exercise of its statutory authority? This necessity component of ICC's waiver authority has not fre- quently arisen in the case law. In part this is because. in many of the ICC waiver authority cases. the necessity for the waiver ts clear: the battle is fought over whether the waiver and transaction are in the public interest. Sec, e.g., United States v. ICC, supra, 396 U.S. 491. 90 S.Ct. 708. 24 L.Ed.2d 700. However. ample precedent sup- ports the view that the Commission must supply some basis for a necessity determination before the exemption authority applies. In one line of cases the Supreme Court has assumed that ICC may waive State laws only if those state laws pose an obstacle to the transaction. See Callaway v. Benton, 336 U.S. 132. 140-141. 69 S.Ct. 435, 440-41. 93 L.Ed. 553 (1949) (waiver authcrity applies to “state laws inter- posing obstacles in the path oi otherwise lawful plans of reorganiza- tion”): Seaboard Air Line R. Co. v. Daniel, 333 U.S. 118, 126, 68 S.Ct. 426, 430, 92 L.Ed. 580 (1948): Texas v. United States, 292 U.S. 522. 534-535. 54 S.Ct. 819, 825, 78 L.Ed. 1402 (1934).° Furthermore. the Supreme Court has stressed that the words of ICC's approval authority section must be carefully scrutinized to ensure that ICC does not exceed its statutory powers, County of Marin v. United States, 356 U.S. 412, 78 S.Ct. 880, 2 L.Ed.2d 879 (1958). and that ICC's approval authority, though broad, is ultimately reviewable as an ex- ercise of reasoned decisionmaking. See United States v. ICC, supra; Seaboard Air Line R. Co. v. United States, 382 U.S. 154, 86 S.Ct. *This is not to say that the ICC must enumerate every legal obstacle that is waived in its approval. Such a requirement might undermine the ap- proval authority's purpose of “facilitat|ing}] merger and consolidation in the national transportation system. “Country of Marin v. United States, 356 U.S. 412. 416. 78 S.Ct. 880, 883. 2 L.Ed.2d 879 (1958). because some legal ob- stacles to fruition of the transaction may not be entirely foreseeable at the time of approval. But ICC's decisionmaking process, either in the approval or in a later proceeding. must reveal evidence supporting a conclusion that waiver of particular legal obstacle is necessary to effectuate the transaction. ‘Schwabacher v. United States, 334 U.S. 182. 68 S.Ct. 958. 92 L.Ed. 1305 (1948). also supports this analysis. As the Fifth Circuit has explained. “In Schwabacher * * * the insistence on further compensation by preferred stockholders of a merging company exceeded the compensation found just Al5 277, 15 L.Ed.2d 223 (1965); Minneapolis & St. Louis R. Co. v. Unit- ed States, 361 U.S. 173, 80 S.Ct. 229, 4 L.Ed.2d 223 (1959); McLean Trucking Co. v. United States, 321 U.S. 67, 64 S.Ct. 370, 88 L.Ed. 544 (1944). Other courts have also emphasized that there must be a basis in the record for the conclusion that the statutory waiver is necessary to the transaction. In City of Palestine, Texas v. United States, 559 F.2d 408 (Sth Cir.1977), cert. denied, 435 U.S. 950, 98 S.Ct. 1576, 55 L.Ed.2d 800 (1978), the Fifth Circuit provided an extensive anal- ysis of this necessity problem. In vacating ICC’s determination that it had waived certain contractual obligations the court stressed: “The ICC exceeds the scope of its authority when it voids contracts that are not germane to the success of the approved * * * transaction. In its grant of approval authority, Congress did not issue the ICC a hunting license for state laws and contracts that limit a railroad’s et- ficiency unless those laws or contracts interfered with carrying out an approved merger.” Id. at 414 (emphasis added). Similarly, in an earlier case the Fifth Circuit noted that ICC approval of a carrier's plans did not automatically remove the requirements of the Railway Labor Act and the Norris-LaGuardia Act. Texas & New Orleans R. Co. v. Bhd of Railroad Trainmen, 307 F.2d 151 (Sth Cir.1962). cert. denied, 371 U.S. 952. 83 S.Ct. 508, 9 L.Ed.2d 500 (1963). See also Interstate Investors, Inc. v. Transcontinental Bus System, Inc., 310 F.Supp. 1053. 1068 (S.D.N.Y.1970) (court must determine whether waiver of antitrust laws is “necessary™ to completion of transaction).° [9] With these principles in mind, the current dispute comes clear- ly into focus. ICC claims that the Railway Labor Act was a “law” appropriately waived in the exercise of its exclusive authority. ICC's analysis of the necessity for waiving the Railway Labor Act. however. is virtually non-existent. both in the 1982 decision and in the 1983 decisions. In the 1982 decision ICC never offered a word about waiving and reasonable in the ICC's approved plan of merger. In cach ot these {Supreme Court] cases the voided state-related provision impinged upon the effectuation of the transaction. * * © In a// of the cases approving the ICC's nullifications of state law. the laws stood in the way of the approved trans- action.” City of Palestine, Texas v. United States, 559 F.2d 408, 414-415 (Sth Cir.1977) (emphasis added). cert. denied, 435 U.S. 950, 98 S.Ct. 1576. SS5L.Ed.2d 800 (1978). MCC relies on Bhd of Locomotive Engineers vo Chicago & Northwestern Al6 the Railway Labor Act with respect to the crew assignment in the trackage rights. much less the necessity for doing so. As noted, it merely approved the trackage applications and specified that the labor protection conditions applied in full. In the 1983 decisions ICC con- tinued to give no necessity justification for the waiver of the Railway Labor Act. It claimed that “*[t]he terms of section 11341 immunizing an approved transaction from any other laws are self-executing and there is no need for us expressly to order or to declare that a carrier is specifically relieved from certain restraints.” ICC Decision of Oc- tober 25. 1983. JA 163. In its proceedings, then, the Commission did not give a shred of reasoning to support its view that completion of the transactions required shielding crew selection from the Railway Labor Act.’ _ ICC's complete failure to justify the necessity for waiving the Railway Labor Act respecting crew selection is especially conspicu- ous 1n light of evidence suggesting that the issue would nor interfere with the trackage rights. First, the Commission specifically left the question of trackage compensation open to later negotiation between R. Co., 314 F.2d 424 (8th Cir.). cert. denied, 375 U.S. 819, 84 S.Ct. 55. Il L.Ed.2d 53 (1963). to support its position. In that case the Eighth Circuit affirmed an ICC order that the Railway Labor Act would not apply. The government claims that C&NW stands for the proposition that the immunity is automatic and requires no finding of necessity. However. C&NW fails to carry the day for several reasons. First. C&NW itself recognized that im- munity attached only to obstacles that would frustrate fruition of the merg- er. Id. at 432. Second. C&NW distinguished. but did not disagree with, Texas & New Orleans. R. Co. v. Bhd of Railroad Trainmen, 307 F.2d 151 (Sth Cir.1962). cert. denied, 371 U.S. 952, 83 S.Ct.508, 9 L.Ed.2d 500 (1963). 314 F.2d at 433. And third, C&NW was explicitly limited to its facts. Jd. at 434. C&NW did say that no statement of necessity was required. /d. at 432. To the extent that C&NW may be read to say that ICC need supply no basis for the necessity determination, we find the interpretation ill- conceived and reject it. ICC points to its October decision statement that **[t}he approval con- fers self-executing immunity on all material terms of the agreement from all other law to the extent necessary to permit implementation of the agree- ment.” ICC Decision of Oct. 25, 1983 at 15, JA 171. It then claims that this reference to “material terms” provides a sufficient basis for immunity be- cause crew selection was a “material term” of the trackage rights transac- tion. However. merely stating in totally conclusory terms that something is a “material term” is inadequate to provide the basis for the conclusion Al7 the railroads, 366 ICC at 589-590; it never suggested why the ques- tion of crew selection was somehow so much more necessary to frui- tion of the transaction that normal Railway Labor Act procedures could not apply to the issue of crew selection. Second, ICC noted that MKT might find it necessary to use more crews than it suggested in its ap- plication, 366 ICC at 569-570; again, the Commission never sug- gested why the question of crew selection was so much more necessary to fruition of the transaction. On both of these issues, then, the Com- mission expressed a willingness to leave subsidiary trackage issues to later determination. Finally, the Denver & Rio Grande operated for some months with existing Missouri Pacific crews, and there has been no suggestion that the trackage rights were somehow frustrated as a result.’ In short, ICC has given no justification for a view that waiver of the Railway Labor Act is necessary to effectuate the transactions at issue. Indeed, the evidence in the record strongly suggests the con- trary conclusion. The Commission therefore exceeded its authority when it claimed to have waived the Railway Labor Act regarding crew selection. In view of this disposition, it is unnecessary to reach the second statutory issue—whether ICC may ever waive the labor protection con- dition section (§11347) through the exercise of the exemption authority (§$11341(a)). That issue turns on whether Section 11347 is viewed as a “law” that may be appropriately waived, or as a specific qualifica- tion on the exemption authority itself. We note only that the Com- mission has completely failed to show any conflict between these two that waiver is necessary to fruition of the transaction, as $11341(a) requires. We do not. as the dissent suggests, “attempt[] to disregard” this statement. Dissent at 735. Rather. we search in vain for the articulated. rational expla- nation of this purported finding that elementary principles of reasoned deci- sionmaking clearly demand. Burlington Truck Lines, Inc. v. United States, 371 U.S. 156. 168. 83 S.Ct. 239, 245, 9 L.Ed.2d 207 (1962). ‘The dissent’s vehe'nent protestations about the “procompetitive pur- pose of the trackage rights approval are wide of the mark. For the question is Whether the issue of crew selection somehow goes to that “pro-competitive purpose.” ICC has never given the faintest hint of a reasoned explanation why crew selection is so essential to that purpose that the otherwise ap- plicable provisions of the Railway Labor Act must be waived. Indeed. as discussed above. the evidence in the record indicates otherwise. Als sections of the Interstate Commerce Act. which we assume were meant to be read in concert rather than in conflict. and we need not com- ment on the unlikely event that the two sections may pose a genuine conflict in some later case.’ We thus vacate the 1983 orders and remand the case to fhe Com- mission. The Commission is not empowered to rely mechanically on its approval of the underlying transaction as justification for the denial of a statutory right. On remand. to exercise its exemption authority. the Commission must explain why termination of the asserted right tO participate in crew selection is necessary to effectuate the pro- competitive purpose of the grant of trackage rights or some other pur- pose sufficiently related to the transaction. Until such a finding of necessity is made. the provisions of the Railway Labor Act and the Interstate Commerce Act remain in force. So ordered. MacKinnon. Senior Circuit Judge (dissenting): This case involves the consolidation of the Union Pacific Rail- road Company (“UP”). the Missouri Pacific Railroad Company (“*Mis- souri Pacific’), and the Western Pacific Railroad Company (““WP’’). thus forming one of the nation’s largest railroads. In an October 20. 1982 decision, the ICC granted specified trackage rights, over two sections of the Missouri-Pacific lines, to two railroads that would be harmed by the consolidation, the Missouri-Kansas-Texas Railroad Company (“Katy”) and the Denver and Rio Grande Western Rail- road Company (“Rio Grande”). The Commission authorized these two railroads to use their own crews to operate their own trains while exercising such trackage rights. My colleagues rule that the Com- mission has failed to find that it was “necessary” to the approval of the trackage rights applications and the underlying Union Pacific- Missouri Pacific-Western Pacific consolidation to waive any applica- ble protective labor conditions. In my view, the majority has ignored *The unions have argued that the Railway Labor Act and § 11347 rights are largely coextensive in this case. and we thus view the Railway Labor Act argument as dispositive. To the extent that there is a meaningful differ- ence between the Railway Labor Act and § 11347 protections, the unions have not argued it. and we need not address the issue. In any event, we note that our decision vacates the ICC decisions in their entirety. Al9 the clear import of the record and, in a decision that pays lip service to our prescribed standard of review, substituted its judgment for that of the ICC. I therefore respectfully dissent. The majority holds first that the claims of the petitioning unions are not barred for being untimely because the October 20, 1982 ICC decision was not final and thus did not make the issue of crew selec- tion ripe for review. I cannot agree with the majority's analysis. This case began on September 15, 1980, when the UP, the Mis- souri Pacific, and the WP filed jointly for approval to consolidate. After the application was made public, 45 Fed.Reg. 68484 (1980). various parties entered the fray either to support or oppose the appli- cation. On January 13, 1981, the Katy and the Rio Grande opposed the consolidation and filed separate applications seeking protective trackage rights and other compensatory rights they alleged were neces- sary in order both to ameliorate the anticompetitive harms of the pro- posed consolidations and to protect them from revenue losses necessary to continue essential services. The Katy sought trackage rights to operate over Missouri Pacif- ic’s tracks between Kansas City, Kansas, and Omaha, Nebraska, a distance of approximately 200 miles. The proposed operating agree- ment, as submitted to the ICC for approval. specified the operating conditions for the joint trackage rights and specifically stated: MKT [Katy]. with its own emplovees, and at its sole cost and expense, shall operate its engines, cars and trains on and along Joint Track. Finance Doc. No. 30,000 (Sub-No. 25) 1, Exh. No. 2 at 5 (emphasis added). The Rio Grande was harmed by the merger both at the Utah und the Pueblo, Colorado gateways. It sought joint trackage rights to Operate over Missouri Pacific's tracks between Pueblo, Colorado. und Kansas City, Missouri, a distance of 619 miles. Its trackage rights application submitted for ICC approval stated: Rio Grande may, at its option, elect to employ its own crews for the movement of its trains. locomotives and cars to points on or over the Joint Track. A20 Id. (Sub-No. 18). Rio Grande Proposed Agreement §6(c)(3) (emphasis added). Thus. both railroads express/v requested ICC authority to use their own crews while operating their own “trains. locomotives and cars” over joint trackage with the Missouri Pacific. On February 20. 1981. the Katy and the Rio Grande filed veri- fied statements with the ICC in support of their applications for joint trackage rights. These statements indicated further that if the track- age rights were granted. the railroads would use their own crews. Veri- fied Statements of Adolf Nance and Harold Hacker. quoted in J.A. at 165. In ruling on the applications. the implicit issue for the ICC was the degree of anticompetitive harm to which the Katy and Rio Grande would be subjected and accordingly what amount of com- pensatory rights would be necessary to protect the Liability of the ap- plicant railroads and to guarantee that they would furnish the necessary competition to the merged railroads. The petitioning unions. the Brotherhood of Locomotive Engineers (““Engineers” or “union™) and the United Transportation Union (*“UTU” or “union”). participated in the ICC proceeding and submitted evidence in opposition to the joint trackage rights applications. Hearings proceeded for eleven months, ending in January, 1982. There is no indication, however. that petitioners ever contended that UP or Missouri Pacific employees had a right to participate in the crew selection decision. On October 20, 1982. the ICC approved the consolidation of the UP. the Missouri Pacific, and the Western Pacific and made the con- solidation subject to the usual labor protective conditions set forth in New Yerk Dock Ry. — Control — Brooklyn, Eastern Dist. Termi- nal, 360 1.C.C. 60 (1979). As part of the consolidation, while disap- proving other requested compensatory conditions, the LCC specifically approved the applications of the Katy and the Rio Grande for the track- age rights described above, subject to the labor protection conditions specified in Norfolk & Western Ry. Co. — Trackage Rights — Burling- ton Northern, Inc. , 354 1.C.C. 605 (1978), as modified by Mendocino Coast Ry., Inc. — Lease and Operate, 360 1.C.C. 653, 665 (1980). Union Pacific Corp., Pacific Rail System, Inc., and Union Pacific R.R. Co. — Control — Missouri Pacific Corp. and Missouri Pacific R.R. Co., 366 L.C.C. 459, 654 (1982). Though these labor protec- tions were held to be applicable in general, I think it is clear that they were to be inapplicable to the crew selection issue since the crew selection provisions constituted part of the trackage rights applica- A2l tions approved by the final order of the Commission. Moreover, un- like other trackage rights-related requests by the Katy and Rio Grande which the Commission denied, see Majority Opinion at 724-725, there was no express denial of the crew selection requests. Therefore, the labor unions were on notice that the ICC had authorized the Katy and the Rio Grande to use their own crews in the operation of their own trains in the exercise of their joint trackage rights. It was not until April 4, 1983, approximately five and one-half months after the ICC’s decision approving the consolidation, that the Engineers filed a petition with the ICC seeking clarification of the October 20, 1982 decision. The ICC denied the Engineer's petition on the procedural grounds that crew selection had been an issue in the consolidation proceedings, that petitioners introduced no new evi- dence or arguments setting forth any issue in need of clarification, and that the issues involved had been decided in the Commission's October 20, 1982 decision. Following this denial, the UTU joined the Engineers in moving for reconsideration of the denial of the mo- tion for clarification. Time deadlines for requesting review of agency decisions are juris- dictional and cannot be enlarged by a reviewing court. National Resources Defense Council v. NRC, 666 F.2d 595, 602 (DC. Cir. 1981): Microwave Communications, Inc. v. FCC, 515 F.2d 385, 388-389 (DC. Cir. 1974). The Hobbs Act prescribes that judicial review must be sought within 60 days of a final order. 28 U.S.C. §2344 (1982). An action of the Commission is final on the date on which it is served, and exhaustion of further administrative remedies is not required. 49 U.S.C. $10327(i) (Supp. V 1981). The Commission's decision here was served on October 20, 1982. In this case. then, the statutory time period expired December 20, 1982. No judicial review was sought before that date. We have also recognized that a party who had the opportunity to participate in the underlying proceedings is a party “aggrieved” under 28 U.S.C. §2344. See Simmons v. ICC, 716 F.2d 40, 42 (DC. Cir. 1983). Yet I find no indication in the record or briefs that the Engineers or the UTU ever objected to the proposed crew provisions on the grounds that labor protections would be violated by granting them. Whatever caused petitioners not to seek timely review, it was not any ambiguity in the ICC decision of October 20. 1982. Petition- Azz es Dlainly slept on whatever rights thai they contend they possessed. Determined to reach the contentions raised by this petition. however. my colleagues accept the labor union’s argument that the crew selection issue was not ripe for review when the ICC served its decision. Petitioners contend that the issue was not ripe because the ICC’s general pronouncement that the New York Dock and Nor- folk labor protection provisions would apply somehow nullified the express statements in the applications regarding crew selection. The unions claim that they petitioned for clarification of the October 1982 decision as soon as it became apparent that the railroads intended to use their own crews, i.c., when the railroads began to file their trackage rights agreements with the ICC. Brief of BLE at 719.' This claim should not be accepted as extending the time to appeal. The railroads at that time were doing nothing more than exercising the rights clearly granted them by the October 20, 1982 decision. The unions had been on notice since the day the applications for trackage rights were filed on January 13. 1981, that the railroads intended to use their own crews to operate their own trains if their applications for trackage rights were approved. The ICC's October 1982 decision approved those applications and authorized the use of the applicant's own crews in the operation of their own trains. Moreover, I find the majority's analysis particularly difficult to swallow in light of Eagle-Pitcher Industries, Inc. v. EPA, 759 F.2d 905 (D.C. Cir. 1985) (Opinion by Edwards, J.). In Eagle-Pitcher this court emphasized that “[a]s a general propositior . . . if there is any doubt about the ripeness of a claim, petitioners must bring their challenge in a timely fashion or risk being barred.” /d. at 914. **[P]eti- tioners who delay filing requests for review on their own assessment of when an issue is ripe for review do so at the i.sk of finding their claims time-barred.” Jd. at 909. “Consequently,” this court concluded, except where events occur or information becomes available after the statutory review veriod expires that essentially creates a challenge thar did not previous- 'This contention imposes on the credulity of the court. The unions, if they ever looked at the applications of the Katy or the Rio Grande, and with their interest and the competency of their lawyers they must be presumed to have done so, must have known perfectly well that if trackage rights were granted the applicants intended to use their own J A24 the majority has clearly erred in its dec:sion on ihe merits. It decides that because the ICC did not make an express finding that the waiver of any labor protections applicable to the crew selection provisions in the trackage rights applications was “necessary” to approval of the transaction. it exceeded its authority under the Interstate Commerce Act. 49 U.S.C. §11341(a) (Supp. IV 1981). in excepting those provi- sions from any labor protections. Why the lack of an express “necessity” finding in and of itself require © the court to vacate the ICC’s approval regarding crew selec- tion on this record is puzzling. The whole basis for granting the track- age rights, which included the crew selection provisions, was the implicit conclusion that the granting of such rights was necessary to the approval of the merger. Presumably. the majority senses a con- flict between the approved crew selection provision and the unions asserted rights. The majority. however, if it knows, does not indicate what the parameters of the unions’ claimed rights might be and simi- larly fails to state where. if anywhere. these rights and applicable labor protections intersect. For all the majority indicates, they may not con- flict at all. Indeed, this was the conclusion reached by the IC” (J.A. 163-104). Obviously. if there is no conflict, there is no need to vacatc the Commission's decision on crew selection. Yet. in the absence of any evidence supporting the uniens’ claims, and in the face of justifi- cations for the ICC's decision, the majority, without further inquiry, leap frogs the Commission's findings and completely nullifies the authority of the ICC to provide for crew selection in trac\age rights agreements imposed to ensure that consolidations are :n the public interest. The majority's reasons for doing so are inexplicable. The arguments of the Engineers and the UTU, and the majority decision itself, are based on the fundamental assertion by the unions that they enjoy by custom and by collectively-bargained agreements a right to crew all irains passing over the Missouri Pacific’s tracks. This is tantamourit to a declaration that the unions, in effect, have a proprietary interest in the tracks of their employer — an astonish- ing contention. Also implicit in the unions’ assertion is the claim that the unionized employees of the consolidated railroads (the Missouri Pacific, UP, and WP) have coiorable right to bargain with the Katy and the Rio Grande over who will cre. the trains of the latter rai!- roads. There is no basis in law or fact for such an absurd conclusion. It is basic contract law that one cannot be bc und by agreements be- A25 tween third parties. Even assuming such rights might exist, the ICC found that “the record contains no evidence to support the conten- tion of UTU and BLE that UP-MP employees have rights under col- lective bargaining agreements to participate in the crew selection process’ of foreign railroads operatings under trackage rights (J.A. 168). In my opinion the court errs partly because it confuses the issue in this case. It states that “‘[t]he dispute is not over whether the rail- roads could use their own crews; [the dispute] ... is whether they could use their own crev 5 subject to the requirements of the [statuto- ry] labor protection con. ition.”” Maj. Op. at 722. The ICC’s October 20, 1982 decision stated chat the labor protections would apply to the transaction. As previously explained, the ICC saw no apparent con- flict between the protective labor conditions and its decision to per- mit crew selection by the railroads who operate the trains. But in its 1983 decisions, in an effort to meet the unicns’ scattered arguments, the Commission ruled in the aiternative that the crew selection process was exempt from any labor protection conditions that might apply. in my view the issue in this case, assuming that the applicable labor provisions in the Act conflict with the proposed ICC action, is mere- ly whether the ICC had the authority to so exempt the crew selection process from applicable labor protection conditions, and if so, whether it properly exercised that authority. In all other respects. the statuto- ry labor protections still apply, The Interstate Commerce Act in Section 11341(a) provides: The authority of the Interstate Commerce Commis- “won under this subchapter is exclusive... A carri- er. corporation, or person participating in that transaction is exempt from the antitrust lays and from all other law, including State and municipal law. as necessary to let that person carry out the transac- *See Brotherhood of Maintenance of Way Employees v. ICC. 698 F.2d 31S. 317 n. 6 (7th Cir. 1983) ("The adoption of standard conditions, routine- ly imposed, ofte results in incorporation of superfluous provisions having no application to the particular case under consideration.”). Because the majority digi not reach the tissue of whether the labor protections under 49 U.S.C. $11347 can be exempted through $11341(a)’s exempuon power, | too express no view on that issue. However. it seems to me that in thr case A26 tion, hold. maintain, and operate property, and ex- ercise control or franchises acquired through the transaction... . 49 U.S.C. §11341(a) (emphasis added). The authority granted the ICC under this statute is very broad. To the extent necessary fo approve a transaction — the merger in this case — the ICC may exempt the carrier involved from “al/ other law.” This is plain language. and there is nothing on which to base any contention that it does not mean ex- actly what it says. or that the Railway Labor Act. 45 U.S.C. §$I5] et seq. (1982)? is not a “law” subject to the exemption authority un- der §11341(@). In Brotherhood of Locomotive Engineers v. Chicago & North Western Ry. (“North Western”), 3)4 F.2¢ 424 (8th Cir.), cert. denied, 375 U.S. 819, 84 S.Ct. 55, Il L.Ed.2d 53 (1963), the court held that §5(11) of the Interstate Commerce Act (now §11341(a)) conferred ex- clusive and plenary jurisdiction upon the ICC to approve mergers and exempt the carrier from all other restraints of federa! law, including the Railway Labor Act (“RLA”)}. /d. at 429, 431-432. In that pre- Staggers Act case, the court affirmed the order of the ICC that ap- proved a stipulation by the carriers that overrode the RLA. The court rejected the union’s c’aim, which is similar to that made here, that the ICC lacked jurisdiction because it failed to find express/y that the provisions of the Railway Labor Act were rendered inoperative. Id. at 432. Rather. the court agreed with the Commission’s finding, as expressed in another proceeding, that “*[t}he terms of this para- graph are self-executing, and there is no need for this Commission expressly to order or declare that a carrier be relieved from certain restraints.” Jd. (quoting Chicago, St. Paul, Minneapolis & Omaha Ry. Lease, 295 1.C.C. 696 (1958)). In the present case the Commission similarly noted that the pro- visiens of §11341(a) provide “se/f-executing immunity on all material where the trackage rights applicutions were approved specifically to offset the anticompetitive harms of the consoiidation, the unions’ rights under N&W Art. I §4 exist vis-a-vis the consolidating railroads and not against either the Katy or the Rio Grande. 45 U.S.C. §152, Seventh, for example. forbids generally a carrier's change in pay, rules, or working conditions contrary to labor agreements, without resort to negotiation. A27 terms of the agreement. . . to the extent necessary to. .. implement[ ] the agreement” (J.A. 171) (emphasis added). Granted, North Western, supra, involved a stipulation by the carriers which required arbitra- tion in a manner similar to that provided by the RLA. The majority, however, refuses to recognize the clear breadth of the ICC’s authori- ty expressed in North Western. Rathe-. it attempts to distinguish the case by noting how similar it is to the present case, see Maj. Op. at 724. n.. a novel technique that substantially broadens the ability to reach the result desired by the majority“ The apparent ease by which the majority arrives at its conclu- sion is attributable in large part to its mischaracterization of Supreme Court precedent. Through the majority’s misreading of these cases, it has manufactured a wholly new and more difficult ICC waiver stan- dard. The majority claims support from “one line of cases” that as- sertedly permits ICC waiver “only if those state laws pose an obstacle to the transaction.” Maj. Op. at 723 (emphasis added). No such “line” exists. The principal case the majority cites for its cuntention, Calla way v. Benton, 336 U.S. 132, 140-141, 69 S.Ct. 435, 440441, 93 L.Ed. 553 (1949), set forth the majority's quote in dicta. Callaway involved a railroad reorganization under §77 of the Bankruptcy Act, Il U.S.C. $205, and under the “narrow facts” there present (336 U.S. at 150, *Citv of Palestine, Texas v. United States, 559 F.2d 408 (Sth Cir. 1977), cert. denied, 435 U.S. 950, 98 S.Ct. 1576, 55 L.Ed.2d 800 (1978). relied on »y the majority, does not support its position. In that case. the ICC was found to have exceeded its authority when it voided an agreement with the city of Palestine to maintain a certain number of emplovees there. which was “not germane to the success of the approved . . . transaction.” /d. at 414 (emphasis added). In the present case. not only does the record support the fact that the crew selection provision was important to ameliorate the anticompetitive aspects of the proposed consolidation, the Commission it- self tound the provision “material” to and “related to the transportation ef- fects” of the transaction (J.A. 170. 171). Similarly. Texas & New Orleans R.R. v. Board of Railroad Trainmen, 307 F.2d 151 (Sth Cir. 1962). cert. de- nied, 371 U.S. 952, 83 S.Ct. 508, 9 L.Ed.2d 500 (1963). is not relevant to this case. That case involved the union’s power to strike under the Norris- La-Guardia Act. 29 U.S.C. §§101 ef seg.. and the court in fact stated that “Section [SUL]. now $1134l(a).] relieves the carriers of the restraints and limitations of other /awy, but i* does not. on its face. relieve them from the auctions of other parties. Le.. the union’s economic threat of a strike.” /d. at 156 (emphasis added). A28 69 S.Ct. at 445). raised the question whether a bankruptcy court could enjoin a state court suit leading to a determination of the requirements of state law with respect to the sale of the entire assets of the lessor railroad. In its limited two paragraph discussion of §5(11) of the In- terstate Commerce Act (now §11341(a)). the Court expressly rejected an’, reliance on that section of the Act and. furthermore, distinguished the Bankruptcy Act from the Interstate Commerce Act. /d. at 139-140. 69 S.Ct. at 440 (“[T]hat Section [| §5(11)] relates to voluntary merg- ers. not to the purchase of a leased line as part of a plan of reorgani- zation.”’) (“That power [under §77] flows from a different source than the power over consolidations under the Interstate Commerce Act.”). In its only comment relevant to this case. the Court merely reiterated that nothing in its opinion should be read to derogate its prior opin- ions upholding the ICC's power “to override state laws interposing obstacles in the nath of otherwise lawful plans of reorganization.” Id. at 140-141, 69 S.Ct. at 441 (emphasis added) (footnote omitted). The remaining cases cited by the majority similarly fail to sup- port the proposition for which they are cited. In Seaboard Air Line R. Co. v. Daniel, 333 U.S. 118, 68 S.Ct. 426, 92 L.Ed 580 (1948). a South Czrolina statute forbade the operation of foreign railroads in that state. The ICC approved a transaction and exempted the rail- road from the strictures of the state law. The South Carolina Supreme Court held that the ICC lacked power under §5 to relieve the carrier from the state law requirements. The Court reversed, explaining: _.. Furthermore. since that case [Texas v. United States, 292 U.S. 522. 54 S.Ct. 819, 78 L.Ed. 1402 (1934)] was decided Congress has given additional proof of its purpose to grant adequate power to the Commission to override state laws which may inter- fere with efficient and economical railroad operation. By §5(11) of the Interstate Commerce Act, as amended by the Transportation Act of 1940, 54 Stat. 908, 49 U.S.C. §5(11), Congress granted the Commission “ex- clusive and plenary” authority in refusing or approv- ing railroad consolidations, mergers, acquisitions, etc. The breadth of this grant of power can be understood only by reference to § 5(2)(b) which authorizes the Commission to condition its approval upon “such terms and conditions and such modifications as it A29 shall find to be just and reasonable.” All of this power can be exercised in accordance with what the Com- mission may find to be “consistent with the public interest.” The purchaser of railroad property with Commission approval is authorized by §5(I1) “to own and operate any properties. . . acquired through said transaction without invoking any approval under State authority,” and such an approved owner, according to that paragraph, is “relieved from the operation of the antitrust laws and of all other restraints, limita- tions, and prohibitions of law, Federal, State, or municipal, insofar as may be necessary to enable them to carry into effect the transaction so ap- proved... and to hold, maintain, and operate any properties... acquired through such transaction.” This language very clearly reposes power in the Commission to exempt railroads under a §5 proceed ing from state laws which bar them from operating in the state or impose conditions upon such operation. fd. at 125-126, 68 S.Ct. at 430 (emphasis added). Thus, the Court did not adopt an “obstacle” standard: rather it articulated the stan- dard as being the “public interest” goal of the statute. The third case cited by the majority, Texas v. United States, 292 U.S. 522. 54 S.Ct. 819, 78 L.Ed. 1402 (1934). concerned the ICC's upproval of a transaction that had exempted a railroad from the prescriptions of a Texas statute which required a railroad operating in the state to maintain offices there. The Commission had found that requiring the railroad in question to maintain such offices would en- tail “unnecessary” and “burdensome” expenditures and waived com- pliance therewith. /d. at 533, 54 S.Ct. at 825. In upholding the ICC the Supreme Court noted: Title I of the Emergency Railroad Transportation Act, 1933, in amending §5 of the Interstate Commerce Act. curries its own provision as to immunity trom state requirements which would stand in the way of the execution of the policy of the Congress through the Commission's orders. A30 .... The scope of the immunity must be measured by the purpose which Congress had in view and had constitutional power to accomplish. As that purpose involved the promotion of economy and efficiency in interstate transportation by the removal of the bur- dens of excessive expenditures. the removal of such burdens when imposed by state requirements was an essential part of the plan... . Id. at 534. 54 S.Ct. at 825. The granting of full trackage rights here is also an essential part of the plan to permit the merger and to com- pensate — in the public interest — for some of its anticompetitive effects. Finally. in what can charitably be attributed to oversight. the majority fails to mention in its line of precedent and relegates to a footnote Schwabacher v. United States, 334 U.S. 182. 68 S.Ct. 958. 92 L.Ed. 1305 (1948). which contradicts the majority's position by stating that the “public interest” is the controlling consideration * In Schwabacher, the ICC approved, again under §5(11), the voluntary merger of three railroads. Intervening dissenting shareholders of one of the merging railroads alleged that the terms of the merger would deprive them of charter rights granted by their company’s state of in- corporation. The Commission, however, disclaimed jurisdiction to pass on the claims of the shareholders and stated that the railroads were free to settle such controversies “through negotiation and liti- gation in the courts.” /d. at 188, 68 S.Ct. at 962. The Supreme Court reversed. It held that the Commission erred in renouncing its authority to determine finally the rights of the dissenting shareholders, and spe- cifically held that ... no rights alleged to have been granted to dissent- ing stockholders by state law provision concerning liquidation survive the merger agreement approved by the requisite number of stockholders and approved by the Commission as just and reasonable. 5Compare Callaway v. Benton, 336 U.S. 132, 141 n. 10, 69 S.Ct. 435, 441. n. 10, 93 L.Ed. 553 (1949) (“Seaboard Air Line R. Co. v. Daniel, 333 U.S. 118, 68 S.Ct. 426, 92 L.Ed. 580: Schwabacher v. United States, 334 U.S. 182 [68 S.Ct. 958, 92 L.Ed. 1305]; Texas v. United States, 292 U.S. §22 [54 S.Ct. 819, 78 L.Ed. 1402].”) (emphasis added), with maj. Op. at 723. A3l Id. at 201, 68 S.Ct. at 968 (emphasis added). The Court reasoned that it would be “inconsistent to allow state law to apply a liquida- tion basis . . . for continued public service.” /d. at 200, 68 S.Ct. at 968. Regarding the waiver authority, the Court reaffirmed that **Con- gress has long made the maintenance and development of an eco- nomical and efficient railroad system a matter of primary national concern. Its legislation must be read with this purpose in mind. ™ Id. at 193-194, 68 S.Ct. at 964 (quoting Seaboard Air Line R. Co. v. Daniel, 333 U.S. 118, 124-125, 68 S.Ct. 426, 430, 92 L.Ed. 580 (1948)). The Court noted that “*[t}he tenor of all. . . [its prior decisions under the Transportation Act of 1920, 41 Stat. 456] was to confirm the power and duty of the Interstate Commerce Commission, regardless of the state law, to control rate and capital structures, physical make-up and relations between carriers, in the light of the public interest in an ef- ficient national transportation system.” /d. at 192, 68 S.Ct. at 963 (emphasis added). Similarly, “*[t]he Transportation Act of 1940 [54 Stat. 908, 49 U.S.C. §5(11)]. . . authorized approval by the Commis- sion of carrier-initiated, voluntary plans of merger or consolidation if, subject to such terms, conditions and modifications as the Com- mission might prescribe, the proposed transactions met with certain tests of public interest, justice and reasonableness, in which case they should become effective regardless of state authority.” Id. at 193, 68 S.Ct. at 964 (emphasis added) (footnote omitted). In sum, not only did the Supreme Court nor adopt the rigorous “obstacle” standard which the majority today requires, the Court en- © visioned that the legislative purpose was to grant the Commission greater authority than the majority suggests to override state laws where needed to approve transactions “consistent with the public interest” and to ensure that they are “just and reasonable.” Schnwabacher, 334 U.S. at 194-195. 68 S.Ct. at 965. The majority would admonish us that the ICC’s exemption authority under section 11341(a) must operate “according to necessi- ty. not according tc whim or caprice” and that in exercising this *The majority's citation to County of Marin v. United States. 356 U.S. 412. 78 S.Ct. 880. 2 L.Ed.2d 879 (1958) in this discussion is misleading. That case held only that the transaction involved was not within § 5(2)(a) because one party in the acquisition was not a ‘carrier.’ The case had noth- ing to do with the scope of the Commission to approve transactions that are within the Commission's jurisdiction or with its waiver “uthority. A32 authority. “ICC must do more than shake a wand to make a law go away.” Maj. Op. at 723. However. in this case it is not the ICC but the majority of the panel which relies on occult powers. For it is the majority who has made the ICC’s Section 11341(a) exemption authority completely disappear and who has used its opinion to obscure the basis for the ICC’s decision to exempt the crew selection process from any protective labor conditions. There is no dispute here that the approval of the Katy and Rio Grande trackage rights was “necessary” to the approval of the UP- Missouri Pacific-Western Pacific consolidation. The ICC specifical- ly found that the trackage rights were needed to offset the anticom- petitive harms created by the consolidation. 366 1.C.C. 459, 566-579. This court has affirmed this aspect of the ICC's decision. Southern Pacific Transportation v. ICC, 736 F.2d 708 (DC. Cir. 1984) (per curi- am). cert. denied, ____ U.S. ___.. 105 S.Ct. 1172. 84 L.Ed.2d 322 (1985). But the ICC did not approve the trackage rights in the ab- stract: rather. it approved. pursuant to this “necessity” finding. the trackage rights as applied for by the Katy and the Rio Grande. The ICC cannot bootstrap any exemption to its approval of trans- actions without justification. But this is far from such a case, since the necessity for the waiver is clear. The whole point of granting the trackage rights applications was to reduce the anticompetitive effects of the consolidation (J.A. 169). Under the ICC’s decision the Katy and the Rio Grande will be handling traffic for their own accounts, not for the consolidated UP-Missouri Pacific-Western Pacific (/d. ). Thus, the trackage rights operations were meant to be conducted in competition with the merged UP-Missouri Pacific-Western Pacific oper- ations, /d., and to offset to some extent the monopolistic effects of that enormous consolidation.’ The majority opinion gives short shrift to these essential reasons for the ICC’s decision. To be sure, the Com- mission's goal of preservation of competition through the grant of track- age rights might well be frustrated by the prospect of requiring the railroads granted those rights to negotiate with the union represent- ing the employees of its competitors. It is no surprise the Commis- sion did not feel compelled to spell out specifically such a proposition. Moreover, the majority's self-styled definition of “trackage rights.” upon which the opinion depends, reduces that term to nothing more than a railroad’s right only to have its traffic run over another's tracks. A33 See Maj. Op. at 718 n. 2. The majority assumes, with no justifica- tion whatsoever, that this cannot include a railroad’s right to use its own Crews in operating its own trains. This bespeaks an ignorance of what trackage rights might involve and ignores the crew selection provisions that are an integral part of the applications in this case. The majority, in fact, has pulled its definition out of its magic hat. Indeed, even UTU counsel at oral argument conceded that whether a railroad’s “trackage rights” include a railroad’s right to use its own crews “is really a very generic term subject to subsequent specific negotiations.” The sole evidence of the meaning of the trackage rights that are here involved is found in the trackage rights applications and the decisions granting them.’ Those applications stated in express terms that the Katy and Rio Grande would exercise their trackage rights by operating their own trains with their own employees and crews. But the majority decides in the teeth of the specific crew provisions themselves that trackage rights in this case do not include a railroad’s right to use its own crews, even though such method of operating its trains was specifically applied for and authorized by the ICC. That the ICC specifically left open for later negotiation between the railroads such terms as trackage compensation is no reason to infer that crew selection. which was specifically covered in the trackage rights applications, was not decided. Approval of crew selection had ’For example. the [CC found that the UP-Missouri Pacific-WP consoli- dation itself, within the areas where the merged lines overlap. will reduce Missouri Pacific traffic on the Pueblo-Kansas City line by 18.7% in the years following the consummation of the merger. Granting the Rio Grande track- age rights will, as the ICC found. contribute substantially to the economic viability of the Pueblo-Kansas City line. 366 L.C.C. at 572. Moreover, the ICC found that gran:ng the Rio Grande “independent access” to Kansas City through trackage nghts would enable it to provide new competitive routes to compensate for the loss of traffic at the Utah gateway which the Rio Grande previously derived from its relations with the WP. /d. at 576. Thus. the ICC found a substantial public benefit realized by enhancing the stimulating com- petition in the central corridor. /d. Both the merged lines and the Rio Grande would benefit. ‘Other cases have attempted to define “trackage rights.” See. ¢.g., Chica- go. Rock Island & Pacific R.R. v. Chicago. Burlington & Quincy R.R.. 437 F.2d 6. 10 (7th Cir.) (*Trackage rights” are continuing or permanent ease- ments or licenses granted by one railroad to another r [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385012_0418%3A02. Public record. Not legal advice.