Opposition Brief — Simmons v. Interstate Commerce Commission

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No. 85-438 |

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rae OL, dRe

Dig PER cede

Jn the Supreme Court of the Hnuited States

OCTOBER TERM, 1985

PATRICK W. SIMMONS, PETITIONER

Vv.

INTERSTATE COMMERCE COMMISSION, ET AL.

ON PETITION FOR A WRIT OF CERTIORARI TO

THE UNITED STATES COURT OF APPEALS FOR

THE SEVENTH CIRCUIT

BRIEF FOR THE FEDERAL RESPONDENTS

IN OPPOSITION

CHARLES FRIED

Solicitor General

Department of Justice

Washington, D.C. 20530

(202) 633-2217

ROBERT S. BURK

General Counsel

ELLEN D. HANSON

Associate General Counsel

SIDNEY L. STRICKLAND, JR.

Attorney

Interstate Commerce Commission

Washington, D.C. 20423

QUESTION PRESENTED

Whether the court of appeals properly affirmed the In-

terstate Commerce Commission’s interpretation that 49

U.S.C. 10905 does not permit the imposition of labor pro-

tection as a condition for the sale of rail lines that would

otherwise be abandoned.

(I)

TABLE OF CONTENTS

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TABLE OF AUTHORITIES

Cases:

American Paper Institute, Inc. v. American

Electric Power Service Corp., 461

ee eee ek eke da gu cee seee 0%

Rieck ¥. ICC, 737 F206 6430 citi Tae cc ccass

Blum vy. Bacon, 457 U.S. 132 ...........008-

Cadillac & Lake City Ry. — Acquisition &

I GO A wkisecudcccceeccs

Chevron U.S.A. Inc. v. Natural Resources

Defense Council, Inc., No. 82-1005

eee Lhe a eed eek ees eb anene

Chicago, M., St. P. & Pac. R.R., In re,

658 F.2d 1149, cert. denied, 455

REN eee er

Chicago & N.W. Transp. Co. — Abandonment,

363 I.C.C. 956, aff'd, 678 F.2d

Dect ECCChee a Da ea GS ev eCS be cnsacses 2-3, 4

Durango & S.N.G. R.R. — Acquisition &

Operations, 363 1.C.C. 292, aff'd

sub nom. Railway Labor Executives’

Assin v. United States, 697

RE RES ee

Page

Cases—Continued:

Grand Trunk Western R.R. — Abandonment —

In Montcalm & Gratiot Counties, MI,

No. AB-31 (Sub-No. 8) (ICC served

WE, CE cS aw R EAM UCE KA at Ns it oneevcess 4

Hayfield N. R.R. v. Chicago & N.W.

Transp. Co., No. 82-1579 (June 12,

SE chek we lavkckanhetnaweued ss rer eee

Illinois Central Gulf R.R. v. ICC,

ig FRR re ee rt eee 3

Mourning v. Familv Publications Service,

NE Me BE EE 6a 66 WAN KHER Oe 00 on 6004 00s 7

New York Dock Ry. — Control — Brooklyn

Eastern Dist. Terminal, 360 1.C.C.

60, aff'd sub nom. New York

Dock Ry. v. United States,

SE 6c Cah A Dubie en ad ekeewRAee Sane a 4

Oregon Short Line R.R. — Abandonment —

Se a OE kc dh aew cack sees C5 ace’ 3

Railway Labor Executives’ Ass'n v.

Ce te ES Srna re eee 9

Seaboard System R.R. — Abandonment —

In Chatham County, NC, No. AB-55

(Sub-No. 74) (ICC served Feb. 10,

SEE. rc ak paeeen eceeReaekeiueeneeiencws 4

KT Ee ee COS Oh a)

Unemployment Compensation Comm” v.

SE Fae i UE. Sake nb eAS iS ce maeR se Kes 7

Page

Statute:

Staggers Rail Act of 1980, 49 U.S.C.

10901 et seq. :

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OP Sar SE W665 66046 n 46 dens en 2, 4, 8,9

49 U.S.C. 10903(b)(1)(A)ii) 2.2 ee 8

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49 U.S.C. 10905(f(1((C) ........ wékGanes 2,8

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49 USA. CATRIONA) onc cccccccs veeunaeus 5

OF Wes ROE, WRK eae eAn ee deae RRROA 5

on the Supreme Court of the Hnited States

OcTOBER TERM, 1985

No. 85-438

PATRICK W. SIMMONS, PETITIONER

Vv.

INTERSTATE COMMERCE COMMISSION, ET AL.

ON PETITION FOR A WRIT OF CERTIORARI TO

THE UNITED STATES COURT OF APPEALS FOR

THE SEVENTH CIRCUIT

BRIEF FOR THE FEDERAL RESPONDENTS

IN OPPOSITION

OPINIONS BELOW

The petition for a writ of certiorari embraces two cases

that involve identical or closely related questions. The opin-

ion of the court of appeals in the first case (Simmons / )

(Pet. App. la-10a) is reported at 760 F.2d 126, and the

opinion in the second case (Simmons I] ) (Pet. App. 13a-

22a) is reported at 766 F.2d 1177. The Interstate Commerce

Commission’s underlying decision in Simmons [(Pet. App.

26a-32a) is reported at 366 I.C.C. 911; its decision in Sim-

mons II (Pet. App. 46a-52a) is unreported.

JURISDICTION

The judgments of the court of appeals in Simmons I and

Simmons II(Pet. App. 1 1a, 23a) were entered on March 15,

1985, and July 15, 1985, respectively. A petition for rehear-

ing in Simmons I was denied on May 2, 1985 ana the court’s

(1)

opinion was amended on that date. On July 11, 1985, Jus-

tice Stevens extended the time for filing a petition for a writ

of certiorari in Simmons / to and including August 30,

1985, and on August 21, 1985, further extended the time to

September 14, 1985. The petition for a writ of certiorari was

filed on September 13, 1985. The jurisdiction of this Court

is invoked under 28 U.S.C. 1254(1) and 2350(a).

STATEMENT

1. This case involves the provisions of the Staggers Rail

Act amendments to the Interstate Commerce «ct regulat-

ing the process by which rail carriers may abandon unpro-

fitable lines. Under 49 U.S.C. 10903, acarrier may abandon

a rail line (or discontinue rail operations on a line) only if it

obtains permission from the Interstate Commerce Com-

mission (ICC) and only if it provides certain protections to

its employees. 49 U.S.C. 10903(b)(2). That procedure does

not apply, however, when a financially responsible person

cores forward within ten days and offers to purchase the

line to provide continued rail service. In that event, 49

U.S.C. 10905(d) requires the ICC to postpone abandon-

ment authorization. The prospective purchaser then has 30

days in which to negotiate a sale agreement with the current

owner. If they fail to reach an agreement within that time,

either party may request the Commission to set the terms of

the sale. 49 U.S.C. 10905(e). The Commission must then do

so within 60 days (49 U.S.C. 10905(f)), establishing a pur-

chase price that is not below the “fair market value of the

iine.” 49 U.S.C. 10905(f)(1)(C). Unless the purchaser elects

to withdraw his offer within ten days, the Commission’s

decision is binding on both parties. 49 U.S.C. 10905(f)(2).

And, once a binding agreement exists (whether voluntary or

imposed by the ICC), the line cannot be abandoned and the

abandonment proceeding must be dismissed. 49 U.S.C.

10905(e). See Hayfield N. R.R. v. Chicago & N.W. Transp.

Co., No. 82-1579 (June 12, 1984). See also Chicago & N. W.

Transp. Co. v. United States, 678 F.2d 665, 666 (7th Cir.

1982); Illinois Central Gulf R.R. v. ICC, 717 F.2d 408,

409-411 (7th Cir. 1983); Black v. ICC, 737 F.2d 643 (7th

Cir. 1984).

2. The present proceedings involve the ICC’s dismissai of

two abandonment proceedings following the purchase of

the lines under Section 10905.' In boih cases the Commis-

sion had found the lines to be an economic burden and had

initially approved the abandonment, subject to the stand-

ard labor protective conditions required by Section

10903(b)(2).2 But the lines were not abandoned; instead

they were sold for continued rail service pursuant to Section

10905. (The terms of the sale were agreed upon voluntarily

in Simmons I, and were set by the Commission in Simmons

11.) Petitioner asked that the Commission’s dismissals of the

abandonment proceedings and authorizations of the sales

under Section 10905 be conditioned upon protection of the

affected employees.’ In both cases the Commission declined

‘In Simmons I, the Commission had dismissed, for the most part, No.

AB-43 (Sub-No. 92) (ICC Mar. |, 1983), when it approved a proposal

by Cairo Terminal Railroad Company (CTRC) to acquire all but

one-half mile of an 18 mile line owned by the Illinois Central Gulf

Railroad (ICG) (Pet. App. 24a-25a).

In Simmons I1, the Commission had dismissed No. AB-43 (Sub-No.

85) (ICC Mar. !2, 1984), when it ordered ICG to sell the line involved

there to Cisco Cooperative Grain Company (Cisco), a noncarrier (Pet.

App. 53a-54a).

?These are the labor protective conditions established in Oregon

Short Line R.R.—Abandonment— Goshen, 360 1.C.C. 91 (1979) (the

Oregon III conditions). They require, inter ali, that the abandoning

carrier give 90 days’ advance notice to its employees of the intended

transaction; negotiate an implementing agreement before consummat-

ing the transaction; and provide displaced employees with other posi-

tions and/or up to six years of salary protection.

31n Simmons I, the 1CG employees affected by the removal of the line

from ICG’s system were protected by the Oregon //i conditions, since a

half mile of the line was not purchased by CTRC but was abandoned by

on the ground that it lacks the authority to do so under

Section 10905 (Pet. App. 26a-32a, 47a).

In concluding that Congress did not intend to give it such

authority, the Commission noted (Pet. App. 28a-30a) that:

(1) Section 10905(e) expressly requires the dismissal of the

underlying abandonment application when a purchase is

made under Section 10905, and thus no conditions qualify-

ing Commission approval of the abandonment (including

labor protection) can survive; (2) Congress did not provide

for any labor protection in Section 10905 transactions even

though in the Staggers Rail Act of 1980 (which had

amended that section) Congress gave labor issues intense

scrutiny and enacted several provisions that either required

labor protection or gave the Commission discretion to

impose such protection in other contexts; and (3) although

the Commission has issued many decisions under Séction

10905, all without labor protection, Congress has not taken

any action to change this practice.‘

ICG pursuant to Section 10903. Petitioner had requested the Commis-

sion to impose the New York Dock conditions on the sale of the line.

These conditions were established in New York Dock Ry. — Control

— Brooklyn Eastern Dist. Terminal, 360 1.C.C. 60, aff'd sub nom. New

York Dock Ry. v. United States, 609 F.2d 83 (2d Cir. 1979), and are

virtually identical to the Oregon III conditions, except that the New

York Dock conditions are imposed on each of the carriers involved in a

merger or consolidation proceeding. Thus, petitioner wanted CTRC, as

well as ICG, to bear labor protection obligations.

In Simmons II, petitioner had requested that, in establishing the

terms of purchase, the Commission (1) “continue” the Oregon III

conditions imposed upon ICG in the abandonment decision, and (2)

provide that any carrier contracting with Cisco for operation of the line

be subject to the New York Dock conditions.

‘The first of these decisions reviewed by a court was Chicago & N. W.

Transp. Co.— Abandonment, 363 1.C.C. 956 (1981), aff'd, 678 F.2d 665

(7th Cir. 1982). More recent decisions include: Seaboard System

R. R.— Abandonment—In Chatham County, NC, No. AB-55 (Sub-No.

74) (ICC served Feb. 10, 1984); and Grand Trunk Western R.R.—

Abandonment—In Montcalm & Gratiot Counties, MI, No. AB-31

(Sub-No. 8) (ICC served May 18, 1984).

3. In Simmons I (Pet. App. la-10a) the court of appeals

affirmed the agency interpretation of Section 10905 as

neither requiring nor permitting labor protective conditions

to be imposed as a condition of sale. The court first noted

(id. at 4a) this Court’s “recent and emphatic directive” in

Chevron U.S.A. Inc. v. Natural Resources Defense Coun-

cil, Inc., No. 82-1005 (June 25, 1984), to give great weight to

an agency’s interpretation of the statutes it enforces. The

court then concluded (Pet. App. 4a) that the agency’s inter-

pretation was both reasonable and correct.

The court largely adopted the rationale articulated by the

Commission (see Pet. App. 4a-5a). The court noted that

Section 10905 gives the Commission the power to fix only

“the price and other terms of sale” (but not conditions

specifically protecting labor) and that in all other respects

the Commission has no discretion and “shall approve the

transaction.” Inco: trast, the statutes governing other kinds

of transactions expressly provide for either mandatory or

discretionary labor protection. See, e.g., 49 U.S.C.

10901(e), 10903(b)(2), 11103(c)(2) and 11347. The court

observed (Pet. App. 5a) that “[a]gainst this background, the

silence of section 10905 on the matter of conditions has a

certain eloquence, especially when we consider the active

participation of the railroad unions in revisions of the Inter-

state Commerce Act.”

The court rejected petitioner’s suggestion that labor pro-

tective provisions found elsewhere in the statute be

engrafted onto Section 10905. It explained (Pet. App. 5a):

a transaction under [Section 10905] cannot be an

abandonment, because when the Commission approves

a section 10905 sale it must dismiss the abandonment

proceeding. And it cannot be a line acquisition or a

railroad consolidation, as section 10905 requires the

Commission to act peremptorily if the conditions in

the section are satisfied, regardless of whether the crite-

ria used in evaluating other transactions are satisfied.

See 49 U.S.C. $§ 10901(a), 11344(d).

The Court found the ICC’s interpretation to be rea-

sonable and consistent with Congress’s objectives and

pointed out the practical difficulties that would arise if the

statute were interpreted in any other way (Pet. App. 8a):

if we held that section 10905 authorizes labor protec-

tion we would have the embarrassing task of deciding

without statutory guidance what protection it should

be: Oregon Short Line? New York Dock? Discre-

tionary protection as under section 10901? Good

argumenis could be made for all three and we are

disinclined to choose among them without a clearer

indication that Congress wanted us to do so. If the

Statute is to be supplemented, it should be done by

Congress or by the Commission, not by us. Having due

regard for the Commission’s considered refusal to do

so, we hold that there is no labor protection in a section

10905 sale.

4. In Simmons II, a different panel of the same court also

reaffirmed the ICC’s construction of the statute (Pet. App.

13a-22a), finding no basis for distinguishing between a

“voluntary” and “forced” sale in this regard (id. at 19a-

21a).° It concluded that the statutory phrase “price and

other terms of sale” does not embrace labor protective

conditions and that the ICC lacks authority to impose

‘The court also rejected petitioner’s attempt to distinguish Simmons

II from Simmons I because Cisco was not a “carrier.” It noted that

Section 10905 requires only that the purchaser be a “financially respon-

sible person” who will provide continued rail service on the line (Pet.

App. 17a n.4).

conditions on a sale under Section 10905 beyond the “price

and other terms of sale” (Pet. App. 20a). Finally, the court

rejected petitioner’s argument that Congress had ratified or

“acquiesced” in the agency’s pre-Staggers Act interpreta-

tion of former Section 10905 to allow imposition of labor

protective conditions. The court emphasized that the

Staggers Act fundamentally altered Section 10905 by pro-

viding for forced sales, mandatory dismissal of the aban-

donment proceeding, and mandatory approval os volun-

tary transactions (Pet. App. 21a). The court echoed the view

of the panel in Simmons / that (ibid.), “ ‘[i]f the statute is to

be supplemented, it should be done by Congress or by the

Commission, not by us.’ ”

ARGUMENT

The judgments below are correct and do not conflict with

the decisions of this Court or of any other court of appeals.

Further review is not warranted.

1. It is a familiar and well settled principle that “the

interpretation of an agency charged with the administration

of a statute is entitled to substantial deference.” Blum v.

Bacon, 457 U.S. 132, 141 (1982); see also Chevron U.S.A.

Inc. vy. Natural Resources Defense Council, Inc., No. 82-

1005 (June 25, 1984), slip op. 6. Accordingly, “[t]o sustain

[the agency’s decision], we need not find that [the ICC’s]

construction is the only reasonable one, or even that it is the

result we would have reached had the question arisen in the

first instance in judicial proceedings.” Unemployment

Compensation Comm'n vy. Aragon, 329 U.S. 143, 153

(1946); see Mourning v. Family Publications Service, Inc.,

411 U.S. 356, 371-372 (1973). “We need only conclude that

it is a reasonable interpretation of the relevant provisions.”

American Paper Institute, Inc. v. American Eiectric Power

Service Corp., 461 U.S. 402, 423 (1983) (emphasis in

original).

Petitioner suggests nothing that would justify overturn-

ing the agency’s interpretation, which is clearly reasonable

and consistent with the express terms of Section 10905 and

with the ove. all statutory scheme. Nor does the language of

Section 10905 offer any support for petitioner’s argument

that the Commission has authority to impose labor protec-

tion. Quite the contrary, the explicit language of Section

10905 compels the court of appeals’ conclusion: the statute

requires that all conditions qualifying the agency’s approval

of the abandonment under Section 10903 (which includes

labor protection) must be dissolved with the dismissal of the

abandonment application. Moreover, the Commission lacks

a separate general power to impose such conditions under

Section 10905. Compare Section 10903(b)(1)(A)(ii). It may

only “determine the price and other terms of sale.” 49

U.S.C. 10905(f)(1)(C). A condition requiring ICC-imposed

labor protection is clearly not a necessary or typical “term

of sale” related to the means of effecting the transfer of the

line under Section 10905. See, e.g., Pet. App. Sla.

As the court of appeals recognized, given the potentially

large costs associated with labor protections, imposing such

a condition could significantly affect the amount of com-

pensation that is paid by the buyer or received by the seller.

Since Section 10905(f)(1)(C) requires that “{iJn no case shall

the Commission set a price which is below the fair market

value of the line,” the additional burden of labor protection

would have anomalous results. If the selling carrier were

required to pay labor protection costs, as petitioner urges

here, the net amount it realized in the transaction would be

reduced correspondingly. On the other hand, if the labor

protection burden were placed on the buyer, it could sub-

stantially increase the buyer’s costs of the transaction and

discourage many purchases of lines for continued rail ser-

vice. Moreover, it would be contrary to other longstanding

policies, such as not imposing labor protection conditions

on newly formed acquiring carriers, such as Cisco.®

2. Petitioner can draw no support from those cases (cited

at Pet. 13-14) in which (prior to the enactment of current

Section 10905) the Commission, acting under Section

10901, authorized the acquisition of rail lines slated for

abandonment and (at times) imposed labor protective con-

ditions. Unlike the provision at issue here, Section 10901 (e)

expressly authorizes the agency, in its discretion, to impose

such conditions. Specific reference to labor protection

elsewhere shows that Congress knows how to provide for

such protection when it chooses. The omission of such

language from Section 10905 is therefore a strong indica-

tion that Congress did not intend to give the Commission

authority to impose labor protection in Section 10905

proceedings.’

Petitioner offers no more than policy arguments for a

different result. These arguments are more appropriately

addressed to Congress than to the courts.

®This policy has been consistently recognized and approved by the

courts. See, e.g., In re Chicago, M., St. P. & Pac. R.R., 658 F.2d 1149,

1171 (7th Cir. 1981), cert. denied, 455 U.S. 1000 (1982) (the burdens on

new operators are great enough without the additional costs of labor

protection); Durango & S.N.G.R.R.—Acquisition & Operations, 363

1.C.C. 292, 295 (1979), aff'd sub nom. Railway Labor Executives’ Ass'n

v. United States, 697 F.2d 285, 286 (10th Cir. 1983); Simmons v. ICC,

697 F.2d 326, 336-337 (D.C. Cir. 1982). See also Cadillac & Lake City

Ry.—-Acquisition & Operation, 320 1.C.C. 617 (1964).

Petitioner relies (Pet. 15-16) on Railway Labor Executives’ Ass'n v.

ICC, 735 F.2d 691, 700-702 (2d Cir. 1984) to support its contention that

the Commission misconstrued Congress’s silence in the wake of other

statutes specifically providing for labor protection. That case is inap0-

site because, as the court noted there, congressional conference commit-

tee reports specifically stated that legislative revisions to Section 10903

should not be read as requiring the Commission to depart from its

policy of not imposing labor protection on whole jine abandonments.

CONCLUSION

The petition for a writ of certiorari should be denied.

Respectfully submitted.