Petition for Writ of Certiorari — Simmons v. Interstate Commerce Commission

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IN THE an

Supreme Court of the United States

October Term 1990

PATRICK W. SIMMONS, McLAY GRAIN COMPANY,

and EDENFRUIT PRODUCTS COMPANY,

Petitioners

INTERSTATE COMMERCE COMMISSION, UNITED

STATES OF AMERICA, CHICAGO AND NORTH

WESTERN TRANSPORTATION COMPANY, and

CHICAGO-CHEMUNG RAILROAD CORPORATION,

Respondents.

PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE SEVENTH CIRCUIT

JOHN J. NAUGHTON

30 North LaSalle St. — Rm. 2100

Chicago, IL 60602

GORDON P. MacDOUGALL

(Counsel of Record)

1025 Connecticut Ave., N.W.

Washington, DC 20036

Tel: (202) 223-9738

Attorneys for Petitioners

DECEMBER 1990

CASILLAS PRESS. IN 1717 K STREET. N.W., DC. 20036

(1)

QUESTIONS PRESENTED

1. Whether a representative of rail carrier employees hav-

ing an interest in employee job protection, has standing to peti-

tion for review of Interstate Commerce Commission orders

upholding the validity of a rail line acquisition and a rail line

abandonment.

2. Whether rail shippers have standing to seek judicial review

of an Interstate Commerce Commission order upholding the

validity of a rail line abandonment where overturning the ICC

order will not in itself restore train service over the line.

(ul)

LIST OF PARTIES

The parties are listed in the caption. There are no parents

or subsidiaries of petitioner corporations. Rule 29.1.

TABLE OF CONTENTS

Page

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4. The Court of Appeals Decision ............... ei bus 7

ee ee we wee vets eneen’ 7

B. Dissent by Judges Cudahy & Ripple ............ 10

I CMO eee ee eee ea eee 12

REASONS FOR GRANTING THE WRIT ............... 13

I. THE DECISION OF THE COURT OF APPEALS

IN THE ACQUISITION CASE CONFLICTS

WITH THE DECISIONS OF THIS COURT AND

THE PRACTICE OF LOWER COURTS FOR

ne 14

Il. THE DECISION IN THE ABANDONMENT

CASE IS SUBJECT TO THE SAME INFIRMITY

AS THE ACQUISITION DECISION, AND IS

ALSO IN CONFLICT WITH THIS COURT’S

DECISION IN KALO BRICK ....2.........00055- 19

ese ss ba ene ts Fak ed wes. 70a SOR peal ees 21

MU cc ais vances set ueyN ere ones ca ruea anes la

APPENDIX A

Orders Extending Time To File Petition for Writ ....... la

APPENDIX B

Court of Appeals Opinion (Acquisition)

909 F.2d 186, decided April 16, 1990 with order

and dissent on rehearing, decided August 2, 1990 ...... 3a

Court of Appeals Opinion (Abandonment),

900 F.2d 1023, decided April 16, 1990 ............... 18a

APPENDIX C

Court of Appeals Order denying intervention

(Acquisition), filed December 13, 1989 ............... 27a

APPENDIX D

Decision of Interstate Commerce Commission.

Finance Docket No. 31110, Chicago-Chemung Rail-

road Corporation-Exemption, Acquisition and

Operation-Rail Line of Chicago and North Western

Company Between Harvard and Chemung in

McHenry County, IL, decided September 22,

1987 (served September 29, 1987) .................. 29a

Ibid., decided March 14, 1988 (served March

ie ee ae eee ete ers thew eae kes 35a

Ibid., decided September 12, 1988 (served

I coy cic etapwcnace se was 48a

Decision of Interstate Commerce Commission.

Docket No. AB-1 (Sub-No. 221X), Chicago and

North Western Transportation Company-

Abandonment Exemption-Boone County, IL,

decided November 10, 1988 (served November

PVE ee OGUCUL EH ViweE tery tur Gree wate es 56a

Ibid., decided April 27, 1989 (served May 8, 1989) .... 63a

APPENDIX E

Court of Appeals Order denying rehearing

(Abandonment), entered August 2, 1990 ............. 74a

APPENDIX F

Statutes:

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TABLE OF AUTHORITIES

Cases: Page

Amencan Trucking Assns. v. U.S.,

352 U.S. 816 (1956) and 355 U.S. 141 (1957) ...... 11, 14

Asbury v. Chesapeake and Ohio Ratlway Company,

Fee oe ee 20

Asbury v. United States,

yo PP me 8 RA | eee 20

Black v. ICC,

oes 8 ee RR Rie rea 7

Broth. of Ry. Carmen (Div. of UTU) v. ICC,

tee bie & Se Oe i ere 7

Chicago & N.W. Tr. Co. v. Kalo Bnck & Tile Co.,

Sr ee on a Fea eee c kee kha beewssss 19

Class Exemption-Acq. & Oper. of k. Lines

Under 49 U.S.C. 10901,

1 I.C.C.2d 810 (1985),

4 1.C.C.2d 309 (1988) and 4 I.C.C.2d 822

(1988) aff’d Illinois Commerce Com’n v. ICC,

EF Fie Weer ie, GE. TED oe cee ceenss 4,17

Clarke v. Securities Industry Assn.,

Rie ee fr ee 8, 15

Commission v. Sanders Radio Station,

a Me ee Meals AG 10

Exemption of Out of Service Rail Lines,

366 I.C.C. 885 (1983), 1 I.C.C.2d 55 (1984),

ee ee ee I sch dee o's Gan eee be sen ee 5

Vil

Illinois Commerce Com’n v. ICC,

787 F.2d 616 (D.C. Cir. 1986) and 848 F.2d

1246 (D.C. Cir. 1988), cert. den. 109 S.Ct. 783 ........ 5

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Regulations:

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IN THE

Supreme Court of the United States

October Term 1990

No.

PATRICK W. SIMMONS, McLAY GRAIN COMPANY,

and EDENFRUIT PRODUCTS COMPANY,

Petitioners

¥.

INTERSTATE COMMERCE COMMISSION, UNITED

STATES OF AMERICA, CHICAGO AND NORTH

WESTERN TRANSPORTATION COMPANY, and

CHICAGO-CHEMUNG RAILROAD CORPORATION,

Respondents.

PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE SEVENTH CIRCUIT

Petitioners, Patrick W. Simmons,! McLay Grain Company,

and Edenfruit Products Company,” respectfully pray that a writ

of certiorari issue to review the judgments and opinions of the

United States Court of Appeals for the Seventh Circuit,

entered in the proceedings on April 16, 1990, and August 2,

1990.3

‘Illinois Legislative Director for United Transportation Union.

2McLay Grain Company and Edenfru:t Products Company, are two

railroad shippers located at Poplar Grove, IL, each with a siding served

by respondent Chicago & North Western Transportation Company.

‘This petition for wnt of certioran embraces two cases that involve close-

ly related questions, and were decided simultaneously by the court below.

Rule 12.2.

OPINIONS BELOW

The opinions of the court of appeals are reprinted in the Ap-

pendix at App. B. The opinions, including that on petition for

rehearing, in the first case (Harvard-Chemung) (Acquisition)

are set forth (App. B, 3a-17a) and reported at 900 F. 2d 186:4

the opinion in the second case (Chemung-Poplar Grove (Aban-

donment) is set forth (App. B, 18a-26a) and reported at 900

F.2d 1023.

The decisions of the Interstate Commerce Commission are

set forth (App. D, 29a-73a) and are unreported.

JURISDICTION

The judgments of the courts of appeals in both cases were

entered April 16, 1990. Timely petitions for rehearing in both

cases were denied on August 2, 1990. (App. B, 12a-13a; App.

E, 74a).

The petitioners’ time within which to file this petition was

extended to November 30, 1990, and further extended to

December 14, 1990, by orders of Mr. Justice Stevens dated

October 20 and November 20, 1990. (App. A, 1la-2a).

The jurisdiction of this Court is conferred by 28 U.S.C.

1254(1). See also: 28 U.S.C. 2101(c), 2350(a).

STATUTES INVOLVED

The statutes primarily involved are 49 U.S.C. 10101a,

10328(a), 10505(a) & (g), 10901(e), 10903(b)(2), 11344(b)(1)

and 11347, and are set forth in the Appendix (App. F, 75a-79a).

‘Supersedes opinion reported at 900 F.2d 1018.

STATEMENT OF THE CASE

The court of appeals ruled that a raiiroad labor union lacks

standing to challenge orders of theInterstate Commerce Com-

mission (ICC) issued under the Interstate Commerce Act, 49

U.S.C. 10101, et seg., involving the acquisition by a newly-

formed non-carrier, Chicago-Chemung Railroad Corporation

(CCRC), of a 3.5-mile rail segment owned and operated by

Chicago and North Western Transportation Company (C&NW)

between Harvard and Chemung, IL. 909 F.2d at 190 (App.

B, 10a); and the court of appeals likewise found the union lack-

ed standing with respect to the abandonment of an adjoining

6.5-mile segment between Chemung and Poplar Grove, IL.

9(0 F.2d at 1026. The court below also ruled in the abandon-

ment case that shippers lacked standing to challenge the aban-

donment because the Chemung-Poplar Grove line segment

is inoperable due to a derailment, so that reversal of the ICC’s

abandonment decision would not address the shippers’ alleg-

ed injury. 900 F.2d at 1026 (App. B, 24a).

Judge Cudahy, joined by Judge Ripple, filed a vigorous dis-

sent on petition for rehearing en banc, in the Acquzsition case,

909 F.2d at 193 (App. B, 17a):

This case presents a very difficult and important

question — one which deserves the consideration

of the entire court.

1. Background. C&NW for a number of years has attemp-

ted to abandon its 23.4-mile line between Harvard and So.

Beloit, IL. On two occasions, in 1981 and in 1987, its applica-

tions for abandonment drew substantial protest, causing

C&NW to withdraw its applications. However, rather than file

a third application for abandonment, C&NW instituted a series

of transactions to trifurcate the line into three segments. These

efforts were (1) transfer of the eastern 3.5-mile Harvard-

Chemung segment for acquisition and operation by CCRC; (2)

use of the out-of-service class abandonment exemption for the

summary abandonment of the adjoining middle 6.5-mile

Chemung-Poplar Grove segment; and (3) announcement of

a forthcoming application to abandon the remaining western

13.4-mile Poplar Grove-Beloit segment. 909 F.2d at 187-88

(App. B, 4a-5a); 900 F.2d at 1024 (App. B, 19a).

The resulting Acquisition and Abandonment proceedings at

the ICC, and then in the court below, involve the eastern

Harvard-Chemung segment and the middle Chemung-Poplar

Grove segment. C&NW thus far has not filed for abandon-

ment of the western Poplar Grove-So. Beloit segment.

2. The ICC’s Acquisition Case. CCRC is closely affiliated

with Seegers Grain, Inc. (Seegers), the latter having grain

facilities proximate to Chemung, and which could be connected

to the Harvard-Chemung line. (App. B, 41a, 45a-46a). C&NW

and CCRC entered into an agreement for CCRC to acquire

C&NW’s 3.5-mile Harvard-Chemung segment by means of

the class exemption for line acquisitions, which permits a non-

carnier to acquire a line on 7-days notice. 49 CFR 1150.31-.35.

See: Class Exemption-Acq. & Oper. of R. Lines Under

49 U.S.C. 10901, 1 1.C.C.2d 810 (1985), aff'd Illinois

Commerce Com’n v. ICC, 817 F.2d 145 (D.C. Cir. 1987).°

The United Transportation Union (UTU), through its Illinois

Legislative Director, Patrick W. Simmons, sought a stay of

the acquisition, which was denied by the ICC. Finance Docket

No. 31110, Chicago-Chemung Railroad Corporation-

Exemption, Acquisition and Operatin-Rail Line of Chicago and

- 5The required notice period has been expanded for larger acquisitions

which would create a Class II or Class I rail carrier. See: Ibtd., 41.C.C.2d

309 and 4 1.C.C.2d 822 (1988).

North Western Transportation Company Between Harvard and

Chemung in McHenry County, IL (Sept. 29, 1987).®

UTU, joined by statements from Dean Foods Company, a

shipper on the Harvard-Chemung segment, and by statments

from McLay Grain Company (McLay) and Edenfruit Products

(Edenfruit), shippers on the Poplar Grove-Sc. Beloit segment,

petitioned to revoke the exemption. A number of objections

to the CCRC acquisition were raised, including the competitive

relations between grain shippers which would result from

Seegers’ control of CCRC, and the so-called ‘‘commodities

clause,’’ 49 U.S.C. 10746; the viability of CCRC as a substitute

for C&NW; and the impact upon C&NW shippers at Poplar

Grove in defending against C&NW’s anticipated abandonment

request for the western Poplar Grove-So. Beloit segment; and

restoration of the damaged Chemung-Poplar Grove segment.

The ICC on March 14, 1988 denied the petition to revoke

the acquisition exemption (App. D, 35a-47a), and the ICC on

September 12, 1988, denied reopening. (App. D, 48a-55a).

3. The ICC’s Abandonment Case. Some two weeks after

the ICC denied the request to reopen its decision in the Ac-

quisition case, C&NW on September 26, 1988 filed its notice

for automatic abandonment of the middle Chemung-Poplar

Grove segment. C&NW’s notice was filed under the class

abandonment exemption for so-called ‘‘out-of-service’’ lines.

49 CFR 1152.50 See: Exemption of Out of Service Rail Lines,

366 I.C.C. 885 (1983) and 1 I.C.C.2d 55 (1984), rem. Illinots

Commerce Com’n v. ICC, 787 F.2d 616 (D.C. Cir. 1986);

Exemption of Out of Service Rail Lines, 2 1.C.C. 2d 146 (1986),

aff'd Illinois Commerce Com’n v. ICC, 848 F.2d 1246 (D.C.

Cir. 1988), cert. den. 109 S. Ct. 783.

The ICC’s reference to the date of its decisions is by the “‘service’’

date, whereas the court of appeals often uses the ‘“‘decided’’ date.

References in this petition are to the court's date for the ICC decisions.

An ‘‘out-of-service’’ line does not mean that traffic is not

handled on the line segment, but only that no traffic originated

or terminated on the line segment. The exemption requires

only that no such local traffic has moved for at least two years,

and any overhead traffic can be rerouted over other lines, and

that no user of rail service has complained. 900 F.2d at 1024

(App. B, 20a).

McLay, Edenfruit, and UTU petitioned for stay of the aban-

donment on the ground that abandonment of the Chemung-

Poplar Grove segment would prejudice the ultimate disposi-

tion of the Harvard-Chemung acquisition proceeding, and the

forthcoming abandonment of the Poplar Grove-So. Beloit seg-

ment, and constitutes an abuse of the exemption provisions.

The ICC on November 10, 1988 denied the stay request by

a divided 3-to-1 vote, with a dissenting expression. Docket

No. AB-1 (Sub-No. 221X), Chicago and North Western

Transportation Company-Abandonment Exemption-Boone

County, IL (App. D, 56a-62a). The majority stated it was

unclear how the shippers would be prejudiced in the Harvard-

Chemung case or in the forthcoming Poplar Grove-So. Beloit

case. The dissenting commissioner stated the Poplar Grove

shippers face impending abandonment of the circuitous ser-

vice they now receive. 900 F.2d at 1025 (App. B, 21a); App.

_D, 56a-62a.

The ICC on May 8, 1989 denied the McLay-Edenfruit-UTU

petition to revoke the abandonment exemption, by a divided

3-to-2 vote. The majority concluded that even if C&NW re-

tained the Harvard-Chemung line, it would have no incentive

to repair the derailment in order to continue the Chemung-

Poplar Grove operation. 900 F.2d at 1025 (App. B, 21a-22a);

App. D, 63a-73a.’ The separate dissenting expressions of the

’This finding of no C&NW incentive to repair the derailment is in mark-

ed contrast with the ICC’s earlier finding to the contrary, ‘‘There is nothing

of record to suggest that CNW will not repair the track disruption.’’ (Ac-

quisition, App. D, 31a).

two commissioners highlighted the apparent purpose of C&NW

to abandon the entire remaining line. (App. D, 72a-73a).

4. The Court of Appeals Decisions. Although the petitions

to review the ICC’s Acquisition and Abandonment decisions

were briefed separately in the court of appeals, both cases

were argued the same day before the same panel. During the

briefing, no question was raised concerning the standing of

any petitioner in the Abandonment case; however, in the Ac-

quisition case, respondent ICC challenged the standing of UTU

insofar as UTU contested the ICC’s decision on the “‘com-

modities clause’’ (49 U.S.C. 10746) claim. However, the

ICC’s counsel did not contend that UTU lacked standing to

raise other claims. The statement by the court of appeals that

the ICC challenged UTU’s standing to petition for review, 909

F.2d at 189 (App. B, 7a), is incorrect.

The two cases were argued December 14, 1989. On Novem-

ber 28, 1989, a panel of the court of appeals for the D.C. Cir-

cuit decided United Transp. Union v. ICC, 891 F.2d 908 (D.C.

Cir. 1989) cert. den. 110 S.Ct. 32718 holding that UTU in that

case lacked the requisite injury under Article III of the Con-

stitution to challenge the ICC’s exemption of interlocking direc-

torates from 49 U.S.C. 11322(a). McLay, a party to the ICC’s

Acquisition case, then moved to intervene and to adopt UTU’s

brief, but was opposed by the ICC, and the court of appeals

on December 13, 1989 denied McLay’s intervention as un-

timely. (App. C, 27a).

A. Acquisition Decision. The court of appeals in No. 88-3207

reviewing the ICC’s Acquisition rulings, on April 16, 1990 con-

cluded that petitioner Simmons (UTU) lacked standing to

*Cf Broth. of Ry. Carmen (Div. of UTU) v. ICC, 917 F.2d 1136 (8th

Cir. 1990).

challenge the ICC’s order, and dismissed the petition for

review. 909 F.2d at 186 (App. B, 3a-11-a).° The court of ap-

peals held that an anticipated job loss to UTU members upon

transfer of the Harvard-Chemung line from C&NW to CCRC

met the U.S. Constitution Article III requirement for stand-

ing, for UTU members would be injured, but that the prudential

requirement with its ‘‘zone of interest’’ consideration was

another matter. 909 F.2d at 189 (App. B, 8a):

Simmons alleges that members of the UTU will lose

their jobs due to sale of the line. This injury satisfies

all three prongs of the Article III standing require-

ment. However, Simmons must also satisfy pruden-

tial limitations on standing.”’

The court of appeals held that UTU did not meet the pruden-

tial test because employee job protection is not within the

‘“zone of interests’ to be protected by the Interstate Com-

merce Act. 909 F.2d at 190 (App. B, 10a).

The court of appeals, relying principally upon Clarke v.

Securities Industry Association, 479 U.S. 388 (1987), stated

the presumption in favor of judicial review of agency action

is overcome whenever the congressional intent to preclude

judicial review is fairly discernible in the statutory scheme.

909 F.2d at 189-90 (App. B, 8a-9a). Here, the court below

found that the interest of rail employees in job protection is

not within the ‘‘zone of interests’’ under the Interstate Com-

merce Act, 49 U.S.C. 10101, et seg. The court looked to the

rail transportation policy, 49 U.S.C. 10101a, and noted that

it was mainly directed to maintaining a safe and competitive

%Although denying standing, the court of appeals stated any future review

actions by Patrick W. Simmons should be brought in the name of UTU,

rather than following the practice of naming the individual UTU official

directly involved and responsible under the organization’s constitution. 909

F.2d at 187 n.1 (App. B, 3a-4a n.1).

rail system, and that the only provision specifically dealing with

rail employees was contained in subsection 12 dealing with

fair wages and safe and suitable working conditions, not job

retention. 900 F.2d at 190 (App. B, 10a):

The issue in this case is whether the Interstate

Commerce Act, 49 U.S.C. § 10101 et seq., was

enacted to protect the zone of interests asserted in

this case; i.e., the interest of rail employees in re-

taining their jobs. 49 U.S.C. § 10505(g) states that

‘‘the Commission may not exercise its authority [to

exempt transactions] under this section. . . to

relieve a carrier of its obligation to protect the in-

terests of employees as required by this subtitle [the

Interstate Commerce Act].’’ Section 10505(a)

specifically refers to §10101(a), which lists the

overall interests which the Interstate Commerce Act

seeks to protect through its rail transportation policy.

The policy mainly concentrates on maintaining a safe

and competitive railroad system. In contrast to other

provisions of the Act, the only stated interest

specifically applicable to rail employees is contained

at subsection 12: ‘‘To encourage fair wages and safe

and suitable working conditions in the railroad in-

dustry ....’' The pertinent provisions of the In-

terstate Commerce Act clearly are not intended to

protect a rail employee’s interest in retaining his job.

Therefore the Act’s zone of interests does not en-

compass the only UTU members’ interest which

Simmons alleges the ICC’s action threatens. Sim-

mons has no standing to petition for review under

Clarke.

Finally, responding to whether UTU in attacking the ICC’s

Acquisition decision could raise ‘‘public interest’’ arguments

affecting the interests of others — a matter addressed to the

court by both UTU and ICC — the court of appeals ruled that

once a person has standing, he may argue the public interest

in support of his claim that the agency has failed to comply

with its statutory mandate;!° but since UTU has not established

its own standing, it cannot have standing as a representative

of the public interest. 909 F.2d at 190 (App. B, 10a-11a).

B. Dissent by Judges Cudahy & Ripple. UTU’s petitions for

rehearing, with suggestion for rehearing en banc, were denied

on August 2, 1990, 909 F.2d at 191 (App. B, 12a-13a; App.E,

74a). Judge Cudahy, joined by Judge Ripple, dissented from

the denial of rehearing en banc in the Acquisition case. 909

F.2d at 191-93 (App. B, 13a-17a).

Judge Cudahy observed the decision is of exceptional im-

portance and is the first known instance where standing has

been denied to railroad labor in a proceeding in which job

eliminaton is a consideration, and he noted there have been

many thousands of administrative proceedings and appeals to

the courts involving line abandonments, mergers, line sales

and the like in which employee representatives have par-

ticipated without question in both the agency and in court. To

assert that job protection lies outside the ‘‘zone of interests’’

arguably protected by the Interstate Commerce Act is to ig-

nore history, even if the principial mode of protection is the

imposition of conditions. 909 F.2d at 191 (App. B, 13a-14a):

To assert that job protection lies outside the ‘‘zone

of interests’ arguably protected by the ICA seems

to me to ignore the history of railroad regulation for

most of the twentieth century. The ICA certainly

‘Citing, Communssion v. Sanders Radio Station, 309 U.S. 470 (1940):

Scnpps-Howard Radio v. Comm'n, 316 U.S. 4 (1942): Sierra Club v. Mor-

ton, 415 U.S. 727 (1972).

recognizes loss of jobs as a crucial problem, even

if the principal mode of ‘‘protection’’ is the imposi-

tion of conditions of compensation.

The dissent cited the absolute nght of railroad represen-

tatives to intervene in any proceeding arising under the In-

terstate Commerce Act (49 U.S.C. Subtitle IV) by means of

49 U.S.C. 10328(a), and the decisions of the Court in Ratlroad

Trainmen v. B. & O. R. Co., 331 U.S. 519 (1947) and in

American Trucking Assns v. U.S., 355 U.S. 141, 144 (1957).

909 F.2d 191-92 (App. B, 14a-15a).

Judge Cudahy stated that the Interstate Commerce Act

makes specific provision for the protection of railroad workers

in a number of the restructuring schemes, and that it seems

implausible that Congress would guarantee employees a role

in ICC and in court proceedings, but deny them standing to

appeal from one to the other. 909 F.2d at 192 (App. B,

15a-16a):

As I have indicated, the ICA in fact makes specific

provision for the protection of railroad workers in

a number of railroad restructuring schemes. Further,

rail labor’s statutory right of intervention alone ought

to indicate that employees’ interests are not

‘‘marginally related to or inconsistent with the pur-

poses implicit in’’ the Interstate Commerce Act.

Clarke, 479 U.S. at 399. The whole court ought to

weigh the apparently implausible proposition that

Congress would by statute guarantee employees a

role in ICC proceedings and in the courts, but,

without any express provision to that effect, intend

to deny them standing to appeal from one to the

other.

The dissent concluded with reference to the unanimous

Court in United States v. Lowden, 308 U.S. 225, 234, 235-39

(1939) that the just and reasonable treatment of rail employees

is not only an essential aid to the maintenance of service

uninterrupted by labor disputes, but that it promotes efficien-

cy, which suffers through loss of employee morale when the

demands of justice are ignored.

C. Abandonment Decision. The court of appeals in its Nos.

88-3211 & 89-1961, reviewing the ICC’s Abandonment deci-

sion, on April 16, 1990 concluded that none of the petitioners

— UTU, McLay, or Edenfruit — has standing to challenge

the ICC’s abandonment exemption for the middle Chemung-

Poplar Grove line segment, and dismissed their petitions for

review. 900 F.2d 1023 (App. B, 18a-26a). The Court below

referred to the companion Acqutsttion decision, and said labor's

concern for job losses satisfied the injury requirement for Ar-

ticle III standing, but that such injury is not within the zone

of interests protected by the Interstate Commerce Act. 900

F.2d at 1027. (App. B, 25a-26a).

The court of appeals found that the shippers lacked stan-

ding because they did not provide evidence or allege that

C&NW would likely repair the derailment in the event the

abandonment were denied. C&NW has been serving the

Poplar Grove shippers by a circuitous route through Beloit,

WI to Harvard, IL, which could continue if the abandonment

of the Chemung-Poplar Grove were denied. Accordingly, the

court of appeals found the shippers do not satisfy the test for

standing that the injury is liely to be redressed through a favor-

able decision against the ICC. 900 F.2d at 1026. (App. B, 24a).

The court of appeals added that the petitoners had not alleg-

ed environmental damage — only that the ICC did not follow

proper administrative procedures — and such is insufficient

to establish standing. 900 F.2d at-4027. (App. B, 25a).

REASONS FOR GRANTING THE WRIT

The court of appeals in denying standing for rail employee

organizations to challenge ICC orders involving line sales and

abandonments has reversed over 40 years of unbroken

precedent.

This is the first known instance in a very long history of

employee participation where standing has been denied to

railroad labor in proceedings in which job elimination is a con-

sideration, as the dissent recognized. 909 F.2d at 191 (App.

B, 13a). The injury-in-fact requirement of the U.S. Constitu-

tion, Article III, is satisfied, yet the court of appeals holds that

UTU fails the ‘‘prudential’’ test because, in its view, Con-

gress did not intend employee job protection to be within the

‘zone of interests’’ covered by the Interstate Commerce Act,

U.S.C. 10101, et seg.

The implications of the decisions below are appalling. If rail

labor cannot challenge ICC decisions involving spin-off of lines

by major railroads to newly-formed carners, and cannot

challenge ICC abandonment decisions, then rail labor must

seek relief elsewhere. Further, the court of appeals also has

denied standing for shippers to challenge a line of abandon-

ment which threatens continuance of service to them.

The court of appeals’ mistaken holding ignores the history

of railroad regulation for most of the twentieth century.

I. THE DECISION OF THE COURT OF AP-

PEALS IN THE ACQUISITION CASE CON-

FLICTS WITH THE DECISIONS OF THIS

COURT AND THE PRACTICE OF LOWER

COURTS FOR DECADES.

1. It has been settled for over 40 years that representatives

of railroad employees have an absolute right to be heard in

any proceeding under the Interstate Commerce Act that af-

fects the employees. The statute, formerly 49 U.S.C. 17(11),

and recodified to its present 49 U.S.C. 10328(a), reads (App.

F, 77a).

Designated representatives of employees of a car-

rier may intervene and be heard in a proceeding aris-

ing under this subtitle that affects those employees.

This absolute nght to participation was confirmed by this

Court in Railroad Trainmen vy. B. & O. R. Co., 311 U.S. 519

(1947), and railway labor’s standing to sue was reaffirmed in

Amencan Trucking Assns. v. U.S., 352 U.S. 816 (1956) and

355 U.S. 141, 144 (1957).

Railroad employee representatives may participate in cases

before a reviewing court as well as before the ICC. Railroad

Trainmen, supra, 331 U.S. at 529-30.

In a situation where the requisite injury is present for stand-

ing under Article III of the U.S. Constitution, it strains credulity

to infer an intent by Congress to give railway labor statutory

standing before the ICC, and statutory standing before the

courts, but to deny railway labor standing to appeal from the

ICC to the courts. Moreover, adversely affected parties have

an independent nght to judicial review under the Administrative

Procedure Act, 5 U.S.C. 702, and also under the Hobbs Act

for judicial review of ICC orders. 28 U.S.C. 2342(5), 2344.

There are no known decisions of this Court, or cf any other

court, which would purport to limit or overrule Railroad

Trainmen, supra, 969 F.2d at 192 (App. B, 15a). Indeed, both

the panel and dissenting opinions recognize that UTU (Sim-

mons) frequently has instituted review actions in the court

below. 909 F.2d at 187 n.1 and 191 n.1 (App. B, 4a n.1; 13a

n.1).

The court of appeals offered no change of circumstances

which might warrant a change in judicial outlook from that which

has prevailed over the years with respect to the standing of

labor organizations.

2. The court of appeals has made a clear departure from

this Court’s ‘‘zone of interest’’ test as recently clarified in

Clarke v. Secunties Industry Assn., 479 U.S. 338 (1987).

There is a presumption in favor of judicial review of agency

action, 479 U.S. at 399. The test under ‘‘zone of interests”’

for prudential standing is not necessarily whether Congress

in the Interstate Commerce Act intended to benefit railroad

employees — job protection or otherwise — but whether Con-

gress intended to preclude a particular plaintiff from suing to

keep the agency in line with the Congressional enactment. In

the final two sentences which were not included in the passage

from Clarke quoted by the court below, 909 F.2d at 190 (App.

B, 9a), this Court made it clear that there need be no indica-

tion of congressional purpose to benefit the would-be plain-

tiff, Clarke, 479 U.S. at 399-400:

The ‘‘zone of interest’’ test is a guide for deciding

whether, in view of Congress’ evident intent to make

agency action presumptively reviewable, a particular

plaintiff should be heard to complaint of a particular

agency decision. In cases where the plaintiff is not

the subject of the contested regulatory action, the

test denies a right of review if the plaintiff's interests

are so marginally related to or inconsistent with the

purposes implicit in the statute that it cannot reason-

ably be assumed that Congress intended to permit

the suit. The test 1s not meant to be especially demand-

ing; in particular, there need be no indication of con-

gressional purpose to benefit the would-be plainttff.’’

(emphasis supp.)

Thus, the issue below should have been whether the UTU’s

interest in job protection is so ‘‘marginally related’’ or ‘‘in-

consistent’’ with the purposes implicit in the statute that it

cannot reasonably be presumed that Congress intended to per-

mit UTU to sue. However, instead of addressing this matter,

the court of appeal. said that the ‘‘pertinent provisions’’ of

the Interstate Cominerce Act are not intended to protect a

rail employee’s interest in retaining his job, therefore UTU’s

interest is not within the ‘‘zone of interests’’ for standing.

The court of appeals found only one ‘‘pertinent provision”’

— the ‘‘fair wages and safe and suitable working conditions’’

set forth as one of 15 criteria in the rail transportation policy,

49 U.S.C. 10101a(12). (App. F, 76a). 909 F.2d at 190 (App.

B, 10a). However, as pointed out in the dissent, having a job

is a necessary prerequisite to ‘‘fair wayes and safe and suitable

working conditions,’’ such that ’ 55 of employment would fall

within the zone of interests with which the Interstate Com-

merce Act is concerned. 909 F.2d at 192 (App. B, 16a).

Further, there are a number of other provisions in the In-

terstate Commerce Act which make specific provision for

employee job protection. Some of these are set forth in the

Appendix. For example, 49 U.S.C. 10901(e) deals with new

line construction. (App. F, 77a-78a); 49 U.S.C. 10903(b)(2)

deals with line abandonments (App. F, 78a); 49 U.S.C.

11344(b)(1)(D) deals with carrier mergers and control (App.

F, 78a-79a); and 49 U.S.C. 11347 deals with the minimum

job protection required for abandonments and all carrier con-

solidations covered by 49 U.S.C. 11343 (App. F, 79a).

Additional provisions directed to employee protection are

49 U.S.C. 11103(c)(2) (reciprocal switching); 49 U.S.C.

11125(b)(4) (directed service), 49 U.S.C. 10722 (free passes);

49 U.S.C. 10910(e) (feeder line sales), and 49 U.S.C.

11350(b)(7) (secretary of transportation reports).

The court of appeals should have looked at all of the job pro-

tection provisions of the Interstate Commerce Act — not just

‘‘fair wages and safe and suitable working conditions.’’ The

court below correctly noted the involved iCC proceedings

were ‘‘exemption’’ cases handled under 49 U.S.C. 10505, but

section 10505(g)(2) (App. F, 77a) requires that the ICC in an

exemption case not relieve a carrier of its obligations other-

wise applicable to the provisions from which exemption is

sought. Here, job protection is a consideration for the ICC

in a line acquisition under 49 U.S.C. 10901.! Job protection

is also a consideration in an abandonment case under 49 U.S.C.

10903 (App. F, 78a). Thus, job protection is neither inconsis-

tent nor marginally related to UTU’s interest in an acquisi-

tion or abandonment exemption.

Finally, the court of appeals erred in not relating job pro-

tection to other criteria of the rail transportation policy. Sec-

tion 10505(a), the exemption provision, refers to the entire

49 U.S.C. 10101la, which embraces safety, efficiency, com-

petition, sound economic conditions, etc. in railroad operations.

‘Where acquisition of an existing rail line is involved under 49 U.S.C.

10901, the ICC‘s consideration of employee protection stems from the

overall ‘‘public convenience and necessity’’ findings and conditions, of

which labor is one element. See: 1.C.C. v. Ratlway Labor Assn., 315 U.S.

373, 376-78 (1942); Black v. I1.C.C., 762 F.2d 106, 111 (D.C. Cir. 1985);

Class Exemption-Acq. & Oper. of R. Lines Under 49 U.S.C. 10901, 1

1.C.C.2d 810, 813-14 (1985).

(App. F, 75a-76a). The dissent below quoted from the opi-

nion of Justice Stone, wniting for a unanimous Court in United

States v. Lowden, 308 U.S. 225, 234, 235-36 (1939), that just

and reasonable treatment of railroad employees is not only

essential to the maintenance of service, but promotes safety

and efficiency. 909 F.2d at 192-93 (App. B, 16a-17a).

Clearly, rail labor’s interest in job protection is well within

the ‘‘zone of interests’’ as to establish prudential standing.

3. The effect of the ruling below may be to accord a union

limited standing to challenge the employee protective condi-

tions imposed or not imposed by the ICC, although this may

be an overly generous inference from the decision below. The

ICC’s argument below — that UTU could not raise the com-

modities clause (49 U.S.C. 10746) issue — seems directed

to limited standing. However, the ICC has a policy — con-

sistently maintained — of not imposing employee conditions

in line acquisition cases. The ICC so stated in the instant

Acquisition case. (App. D, 46a-47a). This Court also has

recognized the practice of the ICC not to impose employee

p tection in acquisition cases, and labor unions no longer even

waste their efforts in the attempt. Pittsburgh & Lake Ene R.

Co. v. R.L.E.A., 109 S.Ct. 2584, 2590-92 (1989).

Thus, the result of limiting a union’s stand to a challenge

of protective conditions would effectively deny standing to

challenge the ICC’s decision in any respect. Yet the validity

of an ICC decision involves elements of the rail transporta-

tion policy which are interrelated with employment security

See: United States v. Lowden, supra.

The short and complete answer to the ICC is that once

standing to challenge the decision of an administrative agency

is established, the petitioner may argue all aspects of the public

interest, as recognized below. 909 F.2d at 190 (App. B, 10a).

Sterra Club y. Morton, 405 U.S. 727, 737 (1972).

Il. THE DECISION IN THE ABANDOMENT

CASE IS SUBJECT TO THE SAME INFIR-

MITY AS THE ACQUISITION DECISION

AND IS ALSO IN CONFLICT WITH THIS

COURT’S DECISION IN KALO BRICK.

1. The court below denied UTU (Simmons) standing to

challenge the ICC’s Abandonment decision, for the same

reasons given in denying UTU standing in the companion

Acquisition case. 900 F.2d at 1027 (App. B, 25a-26a). The

same arguments in support of a grant of a wnit of certiorari

for the Acquisition case are equally applicable here for UTU’s

standing in the Abandonment case.

2. The court of appeals’ denial of standing for shippers to

challenge an ICC abandonment decision is unsupported by any

reported authority — ICC or court. The denial of standing was

made on the court of appeals’ own motion. The decision of

the court below is irrational, since it is not within the ship-

pers’ knowledge as to how C&NW will serve Poplar Grove

in the event the Chemung-Poplar Grove abandonment is

reversed and C&NW is required to resume service on the

Harvard-Chemung segment. Although the ICC opines that

C&NW would have no incentive to repair the derailment (which

is very minor), meaning that C&NW would operate a train

very circuitously to serve Poplar Grove, while at the same

time operating a train from Harvard to serve Chemung, which

is only 6.5 miles from Poplar Grove. C&NW did not make a

definitive statement on the record as to its contingency plans.

Moreover, on C&NW’s own data, it would be more economical

to serve Poplar Grove from the Harvard-Chemung segment.

(App. D, 65a-66a n.5).

The court of appeals decision is in conflict with this Court's

decision in Chicago & N.W. Tr. Co. v. Kalo Bnck & Tile Co.,

450 U.S. 311 (1981). The ICC’s processing of an abandon-

ment request is separate and apart from a shipper’s action

to recover damages for suspension of service owing to a line

washout, or an injunctive action by a public body to restore

service. Cf. 450 U.S. at 321-23 & n.9, 330 n.18.

It frequently occurs that a line is out of service pending an

ICC abandonment proceeding, and sometimes it makes little

sense to order a rail carrier to repair a line if an ICC decision

is anticipated. See: Asbury v. Chesapeake and Ohio Railway

Company, 264 F.Supp. 437 (D.D.C. 1967); Asbury v. United

States, 298 F.Supp. 589 (W.D.Va. 1969); I.C.C. v. Baltimore

and Annapolis Railroad Company, 398 F .Supp. 454, 461-63

(D.Md. 1975).

The shippers should not shoulder the burden of proof as

to what action C&NW will take if the Abandonment and

Acquisition agency decisions are set aside. The shippers have

standing to challenge the abandonment. Clearly, the evidence

of record indicates that service on the Poplar Grove-So. Beloit

segment was performed at a loss, whereas service on the

Harvard-Chemung-Poplar Grove line was performed at a pro-

fit. (App. D, 65a-66a n.5).

CONCLUSION

For the foregoing reasons, a writ of certiorari should issue

to review the judgments of the United States Court of Ap-

peals in these cases.

Respectfully submitted,

JOHN J. NAUGHTON

30 North LaSalle St. - Room 2100

Chicago, IL 60602

GORDON P. MacDOUGALL

(Counsel of Record)

1025 Connecticut Ave., N.W.

Washington, DC 20036

Tel: (202) 223-9738

December 14, 1990

APPENDIX A

Supreme Court of the United States

No. A-307

Patrick W. Simmons, McLay Grain Company and

Edenfruit Products Company,

Petitioners

Interstate Commerce Commission, et al.

ORDER

UPON CONSIDERATION of the application of counsel for

the petitioner,

IT IS ORDERED that the time for filing a petition for a writ

of certiorari in the above-entitled case, be and the same is

hereby, extended to and including November 30th, 1990.

/s/ John Paul Stevens

Associate Justice of the Supreme

Court of the United States

Dated this 20th

day of October, 1990.

SUPREME COURT OF THE UNITED STATES

No. A-307

PATRICK W. SIMMONS,

Petitioner,

INTERSTATE COMMERCE COMMISSION, ET AL.

PATRICK W. SIMMONS, ET AL..,

Petitioners.

INTERSTATE COMMERCE COMMISSION, ET AL.

ORDER

UPON CONSIDERATION of the application of counsel

for the petitioners,

IT IS ORDERED that the time for filing a petition for a

writ of certiorari in the above-entitled cases, be and the same

is hereby, extended further to and including December 14,

1990.

/s/ John Paul Stevens

Associate Justice of the Supreme

Court of the United States

Dated this 20th

day of November, 1990

In the

United States Court of Appeals

For the Seventh Circuit

No. 8&-3207

PATRICK W. SIMMONS,

Petitioner,

INTERSTATE COMMERCE COMMISSION and

UNITED STATES OF AMERICA,

Respondents,

and

CHICAGO-CHEMUNG RAILROAD CORPORATION,

Intervening Respondent.

On Petition for Review of an Order

of the Interstate Commerce Commission

ARGUED DECEMBER 14, 1989—DeEcIDED APRIL 16, 1990

Before CUMMINGS, FLAUM, and MANION, Circuit Judges.

MANION, Circuit Judge. Petitioner Patrick W. Simmons!

has asked this court to review the action of the Interstate

' Simmons is the Legislative Director of the United Transporta-

tion Union (UTU), some members of which are alleged to work

for C&NW. Simmons does not even have putative standing to sue

(Footnote continued on following pare)

Commerce Commission (ICC), which declined to revoke

a class exemption pertaining to the sale of Chicago

and North Western Transportation Company’s (C&NW’s)

Harvard-Chemung railroad line. For reasons which follow,

the petition is dismissed for lach of standing.

I. BACKGROUND

For a number of years, C&NW has sought to abandon

its Illinois line between Harvard and South Beloit, Wis-

consin, a distance of 23.4 miles. C&NW filed its first aban-

donment application on March 31, 1981, contingent upon

its acquiring track rights over a line owned by Chicago,

Milwaukee, St. Paul and Pacific Railroad Company (MILW)

between Clinton Junction and Beloit, Wisconsin. A number

of shippers filed protests. C&NW withdrew its applica-

tion when MILW indicated it would abandon the Clinton

Junction-Beloit line. C&NW next filed for abandonment

of the Harvard-South Beloit line on April 21, 1987, again

encountering substantial opposition. C&NW again with-

drew its application. In permitting C&NW to withdraw

its abandonment request for the second time, the ICC

stated that in the future C&NW would be required to

comply with the system diagram map provisions, and file

a notice of intent and updated evidence in any new aban-

donment application.

Rather than file a new application for abandonment of

the Harvard-South Beloit line, C&NW instituted a series

of transactions. These efforts were: (1) the transfer of the

eastern 3.5-mile Harvard-Chemung segment for operation

by Chicago-Chemung Railroad Corporation (CCRC); (2) use

' continued

as an individual; he apparently intended to sue on behalf of the

UTU. We therefore will treat Simmons as if he sued in an official

capacity. United Transportation Union v. ICC, 891 F.2d 908, 909

n.1 (D.C. Cir. 1989). Since Simmons frequently litigates these mat-

ters, in the future he should file in the name of the appropriate

party.

of the out-of-service class abandonment exemption to secure

automatic abandonment of the adjoining middle 6.5-mile

Chemung-Poplar Grove segment; and (3) announcement of

a forthcoming application to abandon the remaining west-

ern 3.4-mile Poplar Grove-South Beloit segment.

CCRC filed a notice with the ICC on September 16,

1987 that it intended to acquire the Harvard-Chemung

segment pursuant to an acquisitions exemption adopted

by the ICC in 1985. The ICC adopted the exemption pur-

suant to 49 U.S.C. §10505(a) for all §10901 sales of a rail

line to a new carrier. Class Exemption for the Acquisi-

tion and Operation of Rail Lines Under 49 U.S.C. 810901,

1 1.C.C.2d 810 (1985), affd sub. nom, Illinois Commerce

Commission v. ICC, 817 F.2d 145 (D.C. Cir. 1987). Patrick

Simmons, in his capacity as the Illinois Legislative Direc-

tor of the UTU, filed a petition on September 21, 1987

asking the ICC to stop the acquisition. Simmons made

allegations concerning the effect of the sale on C&NW

employees; he asserted inefficiency of a 3.5-mile operation;

CCRC’s viability; the impact on future service by C&NW

to shippers located at Poplar Grove; CCRC’s relationship

to the primary shipper on the line, Seegers Grain Company;

and Seegers’ concentration of market power vis-a-vis rival

grain elevators located on C&NW’s line beyond Chemung.

The ICC declined to issue an administrative stay, denied

Simmons’ discovery requests, and declined to revoke the

exemption for the line.

With respect to CCRC’s operation of the line, the ICC

observed that “the line is earning an operating profit, not-

withstanding its low traffic volume, and that the traffic

volume will increase, perhaps significantly’? due to See-

gers’ projected additional thousand carloads per year. The

Commission stated:

Simmon’s {sic} generalized challenge to the efficiency

and viability of short line railroads is not supported

by the history of the shortline railroad industry or

the facts of this case. It has been our experience that

the acquiring firm brings new vitality to the line.

Typically, the new operator has closer ties to local

communities, will provide better service, and works

closely with the line’s shippers.

Decision Denying Petition to Revoke, at 3 (March 14,

1988).

Next, the ICC considered Simmons’ argument that the

sale of the Harvard-Chemung segment would remove any

incentive for C&NW to repair the Poplar Grove-Chemung

segment, leaving the Poplar Grove shippers with a more

circuitous routing to Chicago than they have been using.

The ICC considered it unlikely that C&NW would repair

the Poplar Grove-Chemung segment whether or not it re-

tained the Harvard-Chemung segment, considering C&NW’s

operating losses on the Poplar Grove-Chemung segment.

Moreover, the ICC considered the increased mileage for

the Poplar Grove traffic to be modest and not likely to

jeopardize the quality of service.

The ICC saw no reason to believe that shippers on the

Harvard-Chemung line would be adversely affected by the

acquisition. The ICC dismissed Simmons’ argument that

Seegers’ control of CCRC would result in a concentration

of market power that would adversely affect rival off-line

shippers. The ICC noted that rival shippers will continue

to be served directly by C&NW and will look to C@NW

for competitive rates to Chicago. The ICC noted CCRC’s

affiliation with Seegers through a small group of common

stockholders, but further noted that the mere ownership

of a railroad by its principal on-line shipper is not pro-

hibited by 49 U.S.C. §10746, commonly referred to as the

“commodities clause.” While the statute would not permit

CCRC to operate as an alter ego of Seegers, the ICC

found no indication that this is the ease and saw no reason

to investigate further.

Finally, the ICC addressed Simmons’ claims that mem-

bers of the UTU would be injured by the sale:

Simmons claims that CNW employees will be ad-

versely affected and irreparably injured by the loss

of jobs, but he does not provide specific details as

to the number of employees affected, if any, or the

nature of the effect of the transaction on them. He

has not shown a likelihood to prevail on the merits

with respect to labor protection nor has he shown

that the employees could not be made whole in the

event that the Commission imposes labor protection

in any exemption revocation.

Decision Denying Administrative Stay, at 3 (Sept. 22,

1987). The ICC rejected Simmons’ arguments on behalf

of the C&NW employees and on behalf of the public in-

terest.

Simmons filed a petition to reopen, on the grounds that

the profitability of the Poplar Grove-Chemung line had not

been correctly calculated, that the ICC had applied an

unwarranted assumption that new short-line carriers pro-

vide better service than their prior owners, and that with-

out discovery concerning the relationship between Seegers

and CCRC the ICC could not properly assess the market

power argument. The ICC declined to reopen the case.

Simmons petitioned this court to review the agency ac-

tion pursuant to 28 U.S.C. §2321(a). CCRC and C&NW

have intervened.

Il. ANALYSIS

The ICC has challenged Simmons’ standing to petition

for review, arguing that the labor interests represented

by Simmons do not fall within the zone of interests pro-

tected by the Interstate Commerce Act. Although sub-

stantial evidence in the record appears to support the ICC

on the merits, we first must determine whether Simmons

has standing.

Simmons points to injuries that might be incurred by

shippers, competitors, and the public at large. However,

Simmons only represents labor interests, specifically the

interests of those UTU members adversely impacted by

the ICC’s decision.? These UTU members must have stand-

ing in their own right, for Simmons cannot rest his claim

on the interests of third parties. Warth v. Seldin, 422 U.S.

490, 499-500 (1975).

Standing is limited both by Article III requirements and

prudential concerns. The Seventh Circuit summarized the

Article III requirements in City of Evanston v. Regional

Transportation Authority, 825 F.2d 1121, 1123 (7th Cir.

1987), cert. denied, 484 U.S. 1005 (1988):

In order for a party to have standing to bring suit

in federal court, three requirements must be met: (1)

the party must personally have suffered an actual or

threatened injury caused by the defendant’s allegedly

illegal conduct, (2) the injury must be fairly traceable

to the defendant’s challenged conduct, and (3) the in-

jury must be one that is likely to be redressed through

a favorable decision.

Simmons alleges that members of the UTU will lose their

jobs due to the sale of the line. This injury satisfies all

three prongs of the Article II] standing requirement.

However, Simmons must also satisfy prudential limitations

on standing.*

One such requirement is the ‘“‘zone of interest” stand-

ing test first articulated in Association of Data Process-

ing Service Organizations v. Camp, 397 U.S. 150 (1970).

See Wright, Miller & Cooper, Federal Practice and Pro-

cedure: Jurisdiction 2d §3531.7. The Supreme Court ex-

plained the application of the zone of interest test to the

2 For the UTU (represented by Simmons) to have standing to

represent its members, it must show that UTU members would

have standing to sue in their own right, that the interests being

asserted are germane to the UTU’s purpose, and that individual

UTU members are not needed to participate. Hunt v. Washington

State Apple Advertising Comm'n, 432 U.S. 333, 343 (1977).

3 Prudential limitations “deny standing as a matter of judicial

prudence rather than constitutional demand.” Wright, Miller &

Cooper, Federal Practice and Procedure: Jurisdiction 2d §3531.7.

review of an agency action in Clarke v. Securities Indus-

try Association, 479 U.S. 388 (1987):

The zone of interest test is a guide for deciding whether,

in view of Congress’ evident intent to make agency

action presumptively reviewable, a particular plain-

tiff should be heard to complain of a particular agency

decision. In cases where the plaintiff is not itself the

subject of the contested regulatory action, the test

denies a right of review if the plaintiffs interests are

so marginally related to or inconsistent with the pur-

poses implicit in the statute that it cannot reasonably

be assumed that Congress intended to permit the suit.

Id. at 399. The Court noted that in past decisions it had

“recognized the presumption in favor of judicial review of

agency action, but held that this presumption is ‘overcome

whenever the congressional intent to preclude judicial re-

view is “fairly discernible in the statutory scheme” ’.”’ /d.,

quoting Block v. Community Nutrition Institute, 467 U.S.

340, 351 (1984), quoting Data Processing, 397 U.S. at 157.

Clarke involved a trade association representing securi-

ties brokers, underwriters, and investment bankers bring-

ing an action for review of an agency decision under the

National Bank Act.

In considering whether the zone of interest test pro-

vides or denies standing in this case, we first observe

that the Comptroller’s argument focuses too narrowly

on 12 U.S.C. §36, and does not adequately place §36

in the overall context of the National Bank Act. As

Data Processing demonstrates, we are not limited to

considering the statute under which respondent sued,

but may consider any provision that helps us to un-

derstand Congress’ overall purposes in the National

Bank Act.

Clarke, 479 U.S. at 401. The Court concluded that the

respondent in Clarke was within the zone of interests in-

tended to be protected by the National Bank Act.

————E~ ee

10a

The issue in this case is whether the Interstate Com-

merce Act, 49 U.S.C. §10101 et seq., was enacted to pro-

tect the zone of interests asserted in this case; i.e., the

interest of rail employees in retaining their jobs. 49 U.S.C.

§10505(g) states that “the Commission may not exercise

its authority [to exempt transactions] under this section

... to relieve a carrier of its obligation to protect the

interests of employees as required by this subtitle [the

Interstate Commerce Act].”’ Section 10505(a) specifically

refers to §10101(a), which lists the overall interests which

the Interstate Commerce Act seeks to protect through its

rail transportation policy. The policy mainly concentrates

on maintaining a safe and competitive railroad system. In

contrast to other provisions of the Act, the only stated in-

terest specifically applicable to rail employees is contained

at subsection 12: ““To encourage fair wages and safe and

suitable working conditions in the railroad industry ... .”

The pertinent provisions of the Interstate Commerce Act

clearly are not intended to protect a rail employee’s in-

terest in retaining his job. Therefore the Act’s zone of

interests does not encompass the only UTU members’ in-

terest which Simmons alleges the 'CC’s action threatens.

Simmons has no standing to petition for review under

Clarke.

Simmons argues he has standing as a representative of

the public, citing Scripps-Howard Radio v. Federal Com-

munications Commission, 316 U.S. 4 (1942), and Federal

Communications Commission v. Sanders Bros. Radio Sta-

tion, 309 U.S. 470 (1940). However, as the Supreme Court

noted in Sierra Club v. Morton, 405 U.S. 727, 737 (1972):

“Taken together, Sanders and Scripps-Howard . . . estab-

lished a dual proposition: the fact of economic injury is

what gives a person standing to seek judicial review under

the statute, but once review is properly invoked, that per-

son may argue the public interest in support of his claim

that the agency has failed to comply with its statutory

mandate. It was in the latter sense that the ‘standing’

of the appellant in Scripps-Howard existed only as a ‘rep-

resentative of the public interest.’ ’’ (Footnotes omitted.)

lla

Since Simmons has not established standing in his own

right (as representative of UTU members), he cannot have

standing as a representative of the public interest.

For these reasons Simmons’ petition for review is dis.

missed for lack of standing.

DISMISSED.

A true Copy:

Test ec:

Appeals for the Seventh Circuit

USCA 79004 Midwest Law Printing lr { Picig bot,

12a

In the

United States Court of Appeals

For the Seventh Circuit

No. 88-3207

PATRICK W. SIMMONS,

Petitioner,

INTERSTATE COMMERCE COMMISSION and

UNITED STATES OF AMERICA,

Respondents,

and

CHICAGO-CHEMUNG RAILROAD CORPORATION and

CHICAGO AND NORTH WESTERN TRANSPORTATION

COMPANY,

Intervening Respondents.

On Petition for Rehearing and Rehearing En Bane

2EHEARING and SUGGESTION for

REHEARING EN Banc Deniep—Aucust 2, 1990

Before BAUER, Chief Judge, CumMMINGS, Woop, JR.,

CuDAHY, Posner, CorrEY, FLAUM, EASTERBROOK, RIPPLE,

MANION and KANNE, Circuit Judges.

On May 1, 1990, the petitioner filed a petition for re-

hearing with suggestion for rehearing en bane. An answer

to the petition was requested and joint responses thereto

were filed by respondents Interstate Commerce Commission

13a

and United States of America as well as by intervening

respondents Chicago and North Western Transportation

Company and Chicago-Chemung Railroad Corporation. All

of the judges on the original panel voted to deny a rehear-

ing. A judge in regular active service requested a vote on

the suggestion for rehearing en bane and the majority of

the judges voted to deny an en bane rehearing. CUDAHY

and RippLe, Cirewit Judges, voted to grant rehearing.

Accordingly, the petition for rehearing is hereby DENIED.

CubpAHY, Cireuit Judge, with whom RuippLe, Cirewit

Judge, joins, dissenting from the denial of rehearing en

bane:

The present Simmons opinion denies standing to rail-

road labor to challenge the exempt acquisition of a rail

line under the Interstate Commerce Act (the “ICA”). This

is a decision of exceptional importance since it is the first

known instance in a very long history of employee partici-

pation where standing has been denied to railroad labor

in a proceeding in which job elimination is a considera-

tion. There have, of course, been many thousands of ad-

ministrative proceedings and appeals to the courts involy-

ing line abandonments, mergers, line sales and the like

in which employee representatives have participated with-

out question both in the agency and in court.! To assert

that job protection lies outside the “‘zone of interests’’

arguably protected by the ICA seems to me to ignore

the history of railroad regulation for most of the twen-

tieth century. The ICA certainly recognizes loss of jobs

' Patrick Simmons is the Illinois Legislative Director of the United

Transportation Union. Simmons has appeared quite recently before

this court. On these occasions, his claims were considered on the

merits; no attack was mounted to his standing to seek review of

ICC decisions affecting the railroad employees he represents. See

Simmons v. ICC, 871 F.2d 702 (7th Cir. 1989); Summons v. ICC,

760 F.2d 126 (7th Cir. 1985), cert. denied, 474 U.S. 1055 (1986):

Simmons v. ICC, 766 F.2d 1177 (7th Cir. 1985), cert. denied, 474

U.S. 1055 (19%6).

14a

as a crucial problem, even if the principal mode of “protec:

tion” is via the imposition of conditions of compensation.

The full court ought to consider whether the zone of

interests test has been applied too narrowly here and

without sufficient attention to congressional intent as in-

corporated in a number of the ICA’s provisions applicable

to various forms of restructuring rail service. See, e.7.,

49 U.S.C. §§ 11347, 10901(e), 10505(z). Rail employees,

through their representatives, have a statutory right to

participate in ICC proceedings affecting labor interests.

49 U.S.C. section 10328(a) provides:

(a) Designated representatives of employees of a car-

rier may intervene and be heard in a proceeding aris-

ing under this subtitle that affects those employees.

The affected employees’ right of intervention in both ICC

and judicial proceedings was declared more than four de-

cades ago in Railroad Trainmen v. Baltimore & Ohio R.R.

Co., 331 U.S. 519 (1947). Interpreting section 17(11) of the

ICA2—the predecessor to the current section 11328(a)—the

Supreme Court expressly rejected an argument that affected

employees could intervene only in proceedings before the

Commission but not in court proceedings. The Court said:

Here the meaning of § 17(11) is unmistakable on

its face. There is a simple, unambiguous reference

to “any proceeding arising under this Act” or, as the

House committee paraphrased it, to “any proceedings

arising under part I.” There is not a word which

would warrant limiting this reference so as to allow

intervention only in proceedings arising under § 17

or in proceedings before the Commission. The pro-

ceedings mentioned are those which arise under this

2 Section 1032&a) is virtually identical to the former section 17111),

which provided:

Representatives of employees of a carrier, duly designated as

such, may intervene and be heard in any proceeding arising

under this chapter and chapters 8 and 12 of this title affecting

such employees.

15a~

Act, an Act under which both judicial and adminis-

trative proceedings may arise... .

Nor do we perceive any reason of statutory policy

why the framers of § 17(11) should have wished to

confine the right of intervention by employee rep-

resentatives to proceedings before the Commission.

Occasions may arise, as in this case, where the em-

ployee representatives have no interest in intervening

in the original administrative proceeding, but where

they have a very definite interest in intervening in

a subsequent judicial proceeding arising under the

Act. When the framers have used language which

covers both proceedings, we would be unjustified in

formulating some policy which they did not see fit

to express to limit that language in any way.

331 U.S. at 529-30 (footnotes omitted). The Court reaffirmed

its view that employees have standing to intervene in any

proceeding arising under the Act in American Trucking

Ass’ns v. United States, 355 U.S. 141, 144, 146-47 (1957).

The present opinion cites no decision of the Supreme Court

or, indeed, of any other court that purports to limit or

overrule Baltimore’ & Ohio.

The panel’s opinion correctly notes that there is a pre-

sumption in favor of judicial review of agency action. Clarke

v. Securities Industry Ass'n, 479 U.S. 388, 399 (1987) (con-

struing section 10 of the Administrative Procedure Act,

5 U.S.C. § 702). Because of this presumption, the Supreme

Court declared in Clarke that the zone of interests test ‘‘is

not meant to be especially demanding; in particular, there

need be no indication of congressional purpose to benefit

the would-be plaintiff.” Jd. at 399-400 (footnotes omitted).

As [ have indicated, the ICA in fact makes specific provision

for the protection of railroad workers in a number of rail-

road restructuring schemes. Further, rail labor’s statutory

right of intervention alone ought to indicate that employees’

interests are not “marginally related to or inconsistent

with the purposes implicit in” the Interstate Commerce

Act. Clarke, 479 U.S. at 399. The whole court ought to

16a

weigh the apparently implausible proposition that Congress

would by statute guarantee employees a role in ICC pro-

ceedings and in the courts, but, without any express provi-

sion to that effect, intend to deny them standing to appeal

from one to the other.

There is certainly a strong possibility that the panel’s

construction of 49 U.S.C. section 10101a(12) undermines

Congress’s intention that the voice of labor be heard. Sec-

tion 10101a(12) provides that it is the policy of the United

States Government to encourage fair wages and safe and

suitable working conditions in the railroad industry. Hav-

ing a job is obviously a necessary prerequisite to ‘‘fair

wages and suitable working conditions.’ Loss of employ-

ment would therefore seem to fall squarely within the

zone of interests with which the ICA and other railroad

regulatory and deregulatory legislation is concerned.

Indeed, it has evidently gone unquestioned for decades

that the potential impact of ICC decisions upon railroad

employees falls within the zone of interests protected by

the ICA. More than fifty years ago—long before the coining

of the phrase ‘“‘zone of interests’’—Justice Harlan Fiske

Stone recognized that the “public concern,” as defined by

the ICA, encompasses the blow to railroad employees who

suffer displacement in the wake of a railroad consolidation.

Writing for a unanimous Court, Justice Stone observed:

One must disregard the entire history of railroad

labor relations in the United States to be able to say

that the just and reasonable treatment of railroad em-

ployees in mitigation of the hardship imposed on them

in carrying out the national policy of railway consoli-

dation, has no bearing on the successful prosecution

of that policy and no relationship to the maintenance

of an adequate and efficient transportation system.

The now extensive history of legislation regulating

the relations of railroad employees and employers

plainly evidences the awareness of Congress that just

and reasonable treatment of railroad employees is not

17a

only an essential aid to the maintenance of a service

uninterrupted by labor disputes, but that it promotes

efficiency, which suffers through loss of employee

morale when the demands of justice are ignored.

United States v. Lowden, 308 U.S. 225, 234, 235-36 (1939).

It appears that the panel in this case may have overlooked

this history lesson.

It may be that the ICA does not explicitly provide for

the preservation of jobs as a goal in and of itself. But

the procedures set up under the Act surely recognize that

loss of jobs is an inevitable and unfortunate result of rail-

road consolidations and abandonments, and, consequent-

ly, the Act provides that those affected have a right to

be heard. A hearing is all that has been asked of us here.

This case presents a very difficult and important ques-

tion—one which deserves the consideration of the entire

court. I therefore respectfully dissent from the court’s

denial of rehearing en banc.

A true Copy:

Teste:

Clerk of the United States Court of

Appeals for the Seventh Circuit

18a

In the

United States Court of Appeals

For the Seventh Circuit

Nos. 88-3211 & 89-1961

Patrick W. SIMMONS, MCLAY GRAIN COMPANY

and EDENFRUIT PRODUCTS COMPANY,

Petitioners,

INTERSTATE COMMERCE COMMISSION and

UNITED STATES OF AMERICA,

Respondents,

and

CHICAGO AND NORTH WESTERN TRANSPORTATION

COMPANY,

Intervenor-Respondent.

On Petitions for Review of the Orders of the

Interstate Commerce Commission

ARGUED DECEMBER 14, 1989—DecipED ApRIL 16, 1990

Before CUMMINGS, FLAUM, and MANION, Circuit Judges.

MANION, Circuit Judge. Petitioners Patrick W. Sim-

mons, McLay Grain Company, and Edenfruit Products

Company, have asked this court to review the action of

the Interstate Commerce Commission (ICC), which de-

clined to revoke the “‘out-of-service” class exemption for

—eeEEEEEEEEEEeEeEeEeEeEeEeEeEeeeEeEeEeEE

19a

the abandonment of Chicago and North Western Trans-

portation Company’s (C&NW’s) Chemung-Poplar Grove

line. For reasons which follow, the petitions are dismissed

for lack of standing.

I. BACKGROUND

For a number of years, C&NW has sought to abandon

its Illinois line between Harvard and South Beloit, a dis-

tance of 23.4 miles. C&NW filed its first abandonment

application on March 31, 1981, contingent upon C&NW

acquiring track rights over a line owned by Chicago, Mil-

waukee, St. Paul and Pacific Railroad Company (MILW)

between Clinton Junction and Beloit, Wisconsin. A number

of shippers filed protests. C&NW withdrew its applica-

tion when MILW indicated it would abandon the Clinton

Junction-Beloit line. A train derailed east of Poplar Grove

in November 1986. The resulting damage has never been

repaired. C&NW next filed for abandonment of the Har-

vard-South Beloit line on April 21, 1987, again encounter-

ing substantial opposition. C&NW again withdrew its ap-

| plication. In permitting C&NW to withdraw its abandon-

ment request for the second time, the ICC stated that

in the future C&NW would be required to comply with

the System Diagram Map provisions, and file a notice of

intent and updated evidence in any new abandonment

application.

Rather than file a new application for abandonment of

| the Harvard-South Beloit line, C&NW instituted a series

| of transactions. These efforts were (1) the transfer of the

eastern 3.5-mile Harvard-Chemung segment for operation

by Chicago-Chemung Railroad Corporation (CCRC); (2) use

of the out-of-service class abandonment exemption to secure

automatic abandonment of the adjoining middle 6.5-mile

Chemung-Poplar Grove segment; and (3) announcement of

a forthcoming application to abandon the remaining west-

ern 13.4-mile Poplar Grove-South Beloit segment. On March

14, 1988, the ICC denied Patrick Simmons’ petition to

revoke CCRC’s use of the class exemption for non-carrier

20a

acquisition of rail lines with respect to the eastern Har-

vard-Chemung segment. On September 12, the ICC de-

nied Simmons’ motion to reopen its decision not to revoke.

Simmons subsequently filed a petition for review in this

court. As to the 6.5-mile Chemung-Poplar Grove segment,

C&NW invoked the abandonment class exemption for out-

of-service lines. This class exemption was available not

on the basis of the derailment, but instead because all

traffic over the 6.5-mile segment within two years was

overhead bridge business. No local business ‘business from

shippers and receivers actually located on the segment)

operated on the 6.5-mile segment. The exemption requires

only that (1) no local traffic has moved for at least two

years; (2) any overhead traffic can be rerouted over other

lines; and (3) no user of rail service on the segment has

complained. 49 C.F.R. §1152.50 (1989 ed.).

C&NW’s notice of exemption asserted that no loca! traf-

fic was handled on the 6.5-mile segment during the past

two years, all overhead traffic was moving over an alter-

nate route over the past one and one-half years, and no

formal complaints regarding cessation of local service had

been filed. The ICC gave public notice of C&NW’s exer-

cise of the exemption, stating petitions for stay and for

reconsideration could be filed. McLay Grain Company,

Edenfruit Products Company, and Patrick W. Simmons!

filed a joint petition for stay of the abandonment exemp-

tion. McLay Grain Company, situated at Poplar Grove,

formerly shipped about 600 cars per year, but has not

shipped any traffic by rail since the 1970s. McLay claims

it would suffer competitive injury if Seegers Grain Com-

pany at Chemung should acquire and McLay should lose

rail service. Edenfruit Products Company has a private

rail side track and unloading facilities at Poplar Grove.

It shipped 15 carloads in 1978, 25 carloads in 1979, but

1 Simmons is the Legisla‘ive Director of the United Transporta-

tion Union (UTU), some members of which are alleged to work

for C&NW.

2la

only one carload in the past four years. Since the Novem-

ber 1986 derailment, C&NW has rerouted eastbound Pop-

lar Grove traffic to South Beloit and from there over

another route through Beloit, Wisconsin to Harvard, IIli-

nois, adding approximately 32 miles to its Poplar Grove

to Chicago operations. Neither Edenfruit nor McLay is

situated on the 6.5-mile segment; the two are located a

short distance to the west.

The petitioners claim that the abandonment of the Che-

mung-Poplar Grove segment would prejudice the ultimate

disposition of the ongoing Harvard-Chemung proceeding.

They also claim the stated use of the abandonment class

exemption for the Chemung-Poplar Grove segment consti-

tited an abuse of the class exemption because of its rela-

tionship with other C&NW claims for line disposition.

On November 3, 1988, the petitioners filed a petition

to revoke and/or for reconsideration of the Chemung-

Poplar Grove abandonment class exemption. The ICC de-

nied the stay request by a 3-1 vote. The ICC majority

stated that the use of the class exemption is fully consis-

tent with the rail transportation policy so as to allow

C&NW to abandon the least profitable segment, such as

the one which has been out of service, and that at this

point it is speculative whether C&NW will file an applica-

tion to abandon the Poplar Grove-South Beloit segment

or whether abandonment would be authorized. Moreover,

if the Poplar Grove-South Beloit abandonment is filed and

if it has environmental implications which carry over to

the area between Chemung and Poplar Grove, those impli-

cations can be addressed at that time. The ICC majority

stated it was unclear how petitioners would be prejudiced

by the class exemption in the Harvard-Chemung case or

a forthcoming South Beloit-Poplar Grove case. The ICC

majority also reasoned that the public interest arguments

had already been balanced in the class exemption itself.

(mn May 8, 1989, the ICC denied the petition for revo-

cation and/or reconsideration by a 3-2 vote. The ICC

majority concluded that even if C&NW retained the Har-

22a

vard-Chemung line, it would have no incentive to repair

the derailment in order to continue the Chemung-Poplar

Grove operation. The ICC’s decision faulted petitioners

for not showing how segmented handling of the Harvard-

South Beloit line could subject shippers to market abuse

since truck service is available and McLay Grain Com-

pany has not used C&NW since the 1970s. The ICC found

that the Poplar Grove complaints filed in the 1987 C&NW

abandonment case did not constitute a formal complaint

within the out-of-service regulations during the prior two-

year period because the complaints were against abandon-

ment of the entire Harvard-South Beloit line.

Finally, the ICC addressed the environmental issue. The

ICC stated that it may approve a single application with-

out first completing a comprehensive impact statement on

all environmentally interrelated regionwide proposals. The

ICC defended limiting its environmental review solely to

the Chemung-Poplar Grove segment rather than to the

Chemung-South Beloit line because Chemung and Poplar

Grove are logical termini, the segment is substantially in-

dependent in terms of its utility, and allowing the seg-

ment’s abandonment does not foreclose the opportunity

to consider an alternative treatment of subsequently pro-

posed segment abandonments.

Patrick Simmons, McLay Grain Company, and Edenfruit

Products Company now file a petition for review with this

court. The petitioners urge that we overturn the ICC's

orders on a number of grounds: the class exemption as

applied in a particular situation is subject to challenge on

public interest grounds; the ICC misconstrues the opinions

of the Seventh Circuit regarding line segments in ICC

abandonment proceedings; the ICC’s failure to render find-

ings for the entire Harvard-South Beloit line prior to per-

mitting abandonment of the Chemung-Poplar Grove seg-

ment is arbitrary and capricious agency conduct; the ICC's

finding regarding abuse of market power is arbitrary and

capricious; the ICC’s finding on track repairs is arbitrary

and capricious; and the ICC’s environmental analysis is

deficient and requires a remand.

23a

Ii. ANALYSIS

Although substantial evidence in the record appears to

support the ICC on the merits, we first must determine

whether petitioners have standing. No party raised this

issue in its briefs. Nevertheless, the court may consider

standing on its own motion since it impacts subject mat-

ter jurisdiction. United States v. Westinghouse Electric

Corp., 638 F.2d 570, 573 & n.2 (3d Cir. 1980). If the peti-

tioners have no standing, there is no case or controversy,

and the court does not have the power to entertain the

case under Article III of the Constitution. City of Evan-

ston v. Regional Transportation Authority, 825 F.2d 1121,

1123 (7th Cir. 1987), cert. denied, 484 U.S. 1005 (1988).

‘In order for a party to have standing to bring suit in

federal court, three requirements must be met: (1) the

party must personally have suffered an actual or threat-

ened injury caused by the defendant’s allegedly illegal con-

duct, (2) the injury must be fairly traceable to the defen-

dant’s challenged conduct, and (3) the injury must be one

that is likely to be redressed through a favorable deci-

sion.” Id., citing Valley Forge Christian College v.

Americans United for Separation of Church and State,

454 U.S. 464, 472 (1982).

The petitioners in this case allege that they will suffer

competitive injury by not being able to ship along the

abandoned line, whereas their competitors will be able to

utilize rail shipment. Furthermore, they challenge the

ICC’s environmental analysis. Finally, Patrick Simmons

alleges that members of the UTU (which he represents)

will lose their jobs due to the abandonment of the line.

An allegation of competitive injury is sufficient to satisfy

the first prong of the standing test. However, the injury

is not traceable to the ICC’s action in this case. Peti-

tioners challenge the ICC’s Notice of Exemption, its deci-

sion denying a stay of the abandonment, and its decision

denying petitions for reconsideration and revocation of the

abandonment exemption. These actions pertain only to the

question of whether C&NW may abandon the line; they

24a

are unrelated to the question of whether C&NW must

open the line for use by the petitioners. The November

1986 derailment damaged the 6.5-mile stretch of track

which C&NW hopes to abandon. Therefore no traffic used

that track for at least a year and one-half before the in-

stitution of this action before the ICC. The ICC has held

that C&NW would have no incentive to repair the derail-

ment on the track. The petitioners suggest that this find-

ing is inconsistent with the ICC’s previous statements

that repair of the derailment was merely unlikely. Even

if this is true, we note that the petitioners have the bur-

den to allege facts sufficient to support their standing.

United Presbyterian Church v. Reagan, 738 F.2d 1375

(D.C. Cir. 1984). There is no evidence in the record or

even any allegation that C&NW would likely repair the

derailment if the request to abandon were denied. Any

suggestion that C&NW would reopen the damaged track

is pure speculat’on, and “unadorned speculation will not

suffice to invoke the federal judicial power.” Simon v.

Eastern Kentucky Welfare Rights Organization, 426 U.S.

26, 44 (1976). See also Warth v. Seldin, 422 U.S. 490

(1975).

To summarize, the most this court can do in response

to petitioners’ request is to stop C&NW’s abandonment of

the track; we cannot foree C&NW to repair the damaged

line. Since only the repair of the damaged line will suf-

fice to redress the injuries alleged by petitioners, peti-

‘ioners have failed to meet the third prong of the stand-

ing test outlined in City of Evanston.

The petitioners also challenge the ICC's environmental

analysis. Injury to petitioners’ environmental interests is

sufficient to satisfy Article III’s requirement of an injury

in fact. “Aesthetic and environmental well-being, like eco-

nomic well-being, are important ingredients of the quality

of life in our society, and the fact that particular environ-

mental interests are shared by the many rather than the

few does not make them less deserving of legal protec-

tion through the judicial process.” Sierra Club v. Morton,

cei

25a

405 U.S. 727, 734 (1972). “But the ‘injury in fact’ test re-

quires more than an injury to a cognizable interest. It

requires that the party seeking review be himself among

the injured.” Jd. at 734-35. In Sierra Club, the United

States Forest Service decided to allow development of

Mineral King Valley in California for recreational pur-

poses. The Sierra Club, an organization interested in envi-

ronmental protection, sued the Secretary of the Interior

to stay approval of the project. The Sierra Club claimed

it had ‘‘a special interest in the conservation and the

sound maintenance of the national parks, game refuges

and forests of the country.” Jd. at 730. The Sierra Club

alleged the development “would destroy or otherwise ad-

versely affect the scenery, natural and historic objects and

wildlife of the park and would impair the enjoyment of

the park for future generations.” Jd. at 734. The Supreme

Court held that the alleged harm might be an injury in

fact to members of the public, but nevertheless denied

standing because the Sierra Club never alleged that any

of its members would be individually injured by the de-

velopment.

In this case, the petitioners have not alleged either at

the administrative level or on appeal that they will be ad-

versely affected by any environmental damage caused by

the abandonment. In fact, the petitioners have not alleged

any specific environmental damage; they only argue that

the ICC did not use the proper procedure in making its

environmental impact findings. Thus the environmental

issue cannot provide the basis for the petitioners’ stand-

ing in this case.

Finally, Patrick Simmons alleges that UTU members

will lose their jobs due to the abandonment. T is injury

satisfies all three prongs of the Article III standing re-

quirement. However, standing is also limited by pruden-

tial concerns.? One requirement of prudential standing is

the ‘zone of interest’’ test:

? Prudential limitations “deny standing as a matter of Judicial pru-

dence rather than constitutional demand.” Wright, Miller &

Cooper, Federal Practice and Procedure: Jurisdiction 2d §3531.7.

26a

The zone of interest test is a guide for deciding whether,

in view of Congress’ evident intent to make agency

action presumptively reviewable, a particular plain-

tiff should be heard to complain of a particular agency

decision. In cases where the plaintiff is not itself the

subject of the contested regulatory action, the test

denies a right of review if the plaintiff's interests are

so marginally’ related to or inconsistent with the pur-

poses implicit in the statute that it cannot reasonably

be assumed that Congress intended to permit the

suit.

Clarke v. Securities Industry Association, 479 U.S. 38%,

399 (1987). As this court holds in Simmons v. Interstate

Commerce Commission, No. 88-3207, the companion to

this case, rail employees’ interests in retaining their jobs

are not within the zone of interests protected by the In-

terstate Commerce Act.

Therefore none of the asserted interests—competitive,

environmental, or labor—can serve as a basis for the peti-

tioners’ standing in this case. For this reason, petitioners’

action is dismissed for lack of standing.

DISMISSED.

A true Copy:

Teste:

Clerk of the United States Court of

Appeals for the Seventh Circuit

27a

APPENDIX C

UNITED STATES COURT OF APPEALS

For the Seventh Circuit

Chicago, Illinois 60604

December 13, 1989

By the Court:

PATRICK W. SIMMONS,

Petitioner Petition for

Review of an

v. | order of the

Interstate

No. 88-3207 INTERSTATE COMMERCE Commerce

COMMISSION and UNITED Commission

STATES OF AMERICA,

Respondents

and

CHICAGO-CHEMUNG RAILROAD

CORPORATION,

Intervening-Respondent

This matter comes before the court for its consideration of

the following documents:

1. ‘‘MOTION FOR LEAVE TO INTERVENE” filed on

December 11, 1989, by McLay Grain Company.

2. “OPPOSITION OF INTERSTATE COMMERCE

COMMISSION TO MOTION TO INTERVENE” filed

December 12, 1989.

The proposed intervenor fails to set forth compelling reasons

to support his untimely motion. See Fed. R. App. P. 15 (d)

Accordingly,

28a

IT IS ORDERED that the MOTION FOR LEAVE TO IN-

TERVENE is DENIED as untimely.

*Counsel for the parties notified by telephone.

29a

APPENDIX D

INTERSTATE COMMERCE COMMISSION

SERVICE DATE

DECISION SEP 29 1987

Finance Docket No. 31110

CHICAGO-CHEMUNG RAILROAD CORPORATION —

EXEMPTION, ACQUISITION AND OPERATION — RAIL

LINE OF CHICAGO AND NORTH WESTERN

TRANSPORTATION COMPANY BETWEEN HARVARD

AND CHEMUNG IN MCHENRY COUNTY, IL

Decided: September 22, 1987

On August 31, 1987, Chicago-Chemung Railroad Corpora-

tion (CCRC) filed a notice of exemption under 49 CFR 1150.31

to acquire and operate a 3.5 mile line of the Chicago and North

Western Transportation Company (CNW) between milepost

64.0 near Harvard, IL, and milepost 67.5 near Chemung, IL.

The transaction includes 0.5 miles of incidental trackage nghts,

between milepost 64.0 and milepost 63.5. Assertedly this is

to enable CCRC to use CNW’s passing track for interchang-

ing trainloads of grain. On Sepember 4, 1987, Patrick W. Sim-

mons (Simmons), Illinois Legislative Director for the United

Transportation Union, filed a petition to reject, stay, revoke,

and/or investigate, and on September 11, 1987, the notice of

exemption was rejected for failure to contain a consummation

date.

On September 16, 1987, CCRC filed a new notice of ex-

emption and included a consummation date. Simmons did not

file a new pleading. However, with the exception of the re-

jection issue, his former pleading applies equally to the new

notice, and the time constraints require immedia‘e resolution

30a

of the former stay request. His request for revocation and

institution of an investigation will be handled at a later date.

To justify the grant of a petition for stay, a petitioner must

demonstrate (1) that there is a strong likelihood that he will

prevail on the merits; (2) that he will suffer irreparable harm

in the absence of a stay; (3) that other interested parties will

not be substantially harmed; and (4) that the public interest

supports the granting of the stay. See Washington Metropolitan

Area Tounst Commission v. Holiday Tours, Inc., 559 F.2d

841, 843 (D.C. Cir. 1977). Simmons has not demonstrated

the requisite justification for a stay under any of the above

criteria.

Simmons has not shown that he is likely to prevail on the

merits. He contends that CCRC has not shown itself capable

of conducting viable rail operations and alleges that the line

is too short for economical operation. Thus, he contends that

shippers will suffer poor service and the possible imposition

of branch line surcharges. These arguments are specula-

tive at best. The Commission’s rules, promulgated in Class

Exemption-Acq. & Oper. of R. Lines Under 49 U.S.C. 10901,

1 1.C.C.2d 810 (1986) (Class Exemption), do not require the

submission of detailed financial and operating data nor is there

anything to suggest that CCRC cannot run a viable operation.

To the contrary, if as alleged by Simmons, CCRC is owned

by or related to Seegers Grain, an operation of grain elevators,

then it would appear that CCRC has every incentive to serve

Seegers with viable rail operations.! Simmons’ allegation that

‘Simmons seems to suggest that the line’s primary commodity is grain,

and that the incidental trackage nghts may be used only for ‘‘grain trains.’’

On the other hand, he indicates that, while Seegers has elevators at

Chemung and Harvard, it has no facilities on the 3.5-mile segment that

are connected to the rail line, and he does not refer to the existence of

any other grain shippers on the line or using it. It is difficult, under the

circumstances, to reconcile the facts with his allegations.

3la

Federal or State funding is involved also suggests that there

is adequate funding for the transaction. Simmons notes that

the line operates profitably under CNW but offers no reason

why profitable operation cannot continue as a short line under

CCRC’s ownership.

Simmons contends that the transaction may adversely af-

fect shippers on the line as well as certain shippers to the west

of the line. Since CCRC may be related to Seegers Grain, and

the stated purpose of the 0.5 miles of trackage rights alleged-

ly is for the interchange of grain trains, Simmons contends

that CCRC has not shown that it would interchange non-grain

traffic for the line’s other shippers. Because grain may be the

line’s primary commodity and receive greater emphasis, there

is no reason to believe that CCRC will ignore its common car-

rier obligation to the line’s other shippers. To the contrary,

shippers usually benefit when a smaller, lower-cost, locally

managed carrier is substituted for a larger Class 1 carrier. In

any event, Simmons has not shown reason to believe that non-

grain traffic will even be excluded from the trackage nghts line.

Simmons also states that the CNW line west of Chemung

has been severed by a derailment. He questions whether CNW

will make the necessary repairs if it sells the eastern part of

the line to CCRC, and he contends that shippers on the CNW

line west of the derailment would be adversely affected if the

line is not repaired. In this regard, he also notes that CCRC

has not indicated whether it would interchange traffic with

CNW west of Chemung. There is nothing of record to sug-

gest that CNW will not repair the track disruption. Moreover,

this issue is not relevant to the instant transaction. In any

event, all shippers both east and west of the derailment, have

been receiving service, and there is no indication that any will

lose service.

Simmons contends that Seegers’ alleged ownership of the

32a

line will concentrate excessive market power in the grain com-

pany and will be unfair to competing grain elevators on the

CNW line west of Chemung. Simmons has not shown, nor

is there reason to suspect that CCRC will discriminate against

other affected shippers. However, Seegers’ relationship with

of CCRC may fall within the purview of 49 U.S.C. 10746, and

this issue will be considered by the Commission in connec-

tion with its consideration of Simmon’s revocation petition.

In any event, the likelihood of Simmons prevailing on this issue

is very small. See United States v. South Buffalo R. Co., 333

U.S. 771 (1948).

Simmons also contends that the presence of ‘‘Chicago”’ in

the new carrier’s name indicates that it plans to extend its

operations beyond the Harvard-Chemung line and that this

would lead to the further concentration of grain marketing.

This allegation is speculative and without any substantiation.

Moreover, any expansion of CCRC’s operations would be sub-

ject to Commission approval.

With respect to all of these allegations, appropriate remedies

such as a complaint alleging discrimination or failure to pro-

vide statutorily required common carmier service aS well as

petitions to revoke CCR’s exemption may be filed at any time.

In Class Exemption, supra, the Commission stated:

[A]ny transaction could be reversed in whole or in

part, and we specifically reserve the nght to require

divestiture to avoid abuses of market power result-

ing from the transaction, or to regulate in accordance

with the provisions of the rail transportation policy.

Simmons has failed to show exceptional circumstances that

make these remedies inadequate here.

Simmons claims that CNW employees will be adversely af-

fected and irreparably injured by the loss of jobs, but he does

33a

not provide specific details as to the number of employees af-

fected, if any, or the nature of the effect of the transaction

on them. He has not shown a likelihood to prevail on the merits

with respect to labor protection nor has he shown that the

employees could not be made whole in the event that the Com-

mission imposes labor protection in any exemption revocation.

See Class Exemption, supra, at 813-815.

While the absence of a stay is unlikely to cause irreparable

harm to rail employees and shippers, a stay of the effective

date of the exemption is likely to cause harm to CCRC and

the shippers it intends to serve. It would delay the start of

CCRC’s operations and prevent a smooth transition from CNW

to CCRC service on September 24, 1987.

Simmons has failed to show that the public interest supports

the grant of a stay. The purpose of the Class Exemption, supra,

is to permit the smooth transition of ownership and operation

of small lines to new operators. The public interest is better

served by permitting the proposed operation to commence

as soon as possible, on its scheduled consummation date.

Clearly it is not in the public interest to delay the transaction

merely because of speculation that some correctible harm may

occur.

Simmons has not demonstrated that a stay of the effective

date of the notice of exemption is warranted. The request for

stay will be denied.

Because of the prior rejection and refiling, CCRC and CNW

may not realize that Simmons’ petition to revoke is still under

active consideration. They will be permiited to file a response

within 20 days from the service date of this decision.

This decision will not significantly affect either the quality

of the human environment or energy conservation.

It ts ordered:

1. The petition for stay is denied.

2. This decision is effective on the date of service.

By the Commission, Chairman Gradison, Vice Chairman

Lamboley, Commissioners Sterrett, Andre, and Simmons.

Vice Chairman Lamboley and Commissioner Simmons would

have granted the stay request.

(SEAL)

Noreta R. McGee

Secretary

35a

INTERSTATE COMMERCE COMMISSION

DECISION SERVICE DATE

Finance Docket No. 31110 an

CHICAGO-CHEMUNG RAILROAD CORPORATION —

EXEMPTION, ACQUISITION AND OPERATION — RAIL

LINE OF CHICAGO AND NORTH WESTERN

TRANSPORTATION COMPANY BETWEEN HARVARD

AND CHEMUNG IN MCHENRY COUNTY, IL

Decided: March 14, 1988

Petitioner, Patrick W. Simmons (Simmons), Illinois Legisla-

tive Director for the United Transportation Union, seeks

revocation of the notice of exemption filed by Chicago-

Chemung Railroad Corporation (CCRC) on September 16,

1987. CCRC filed the notice of exemption under 49 CFR

1150.31, et seq., to acquire and operate a 3.5-miie line of the

Chicago and North Western Transportation Company (CNW)

from milepost 64.0 near Harvard, IL, where it connects with

the CNW mainline between Chicago, IL, and Madison, WI,

west to milepost 67.5 near Chemung, IL (Chemung line),! and

to operate 0.5 miles of incidental trackage nghts over the CNW

line between milepost 64.0 and milepost 63.5.

CCRC originally filed the notice on August 31, 1987. Sim-

mons petitioned to reject, stay, revoke,and/or investigate on

September 3rd, and on September 11th, we rejected the notice

'The actual purchaser was the McHenry State Bank (Bank), as Trustee

under Trust No. 4100. CCRC will be the beneficial owner and operator

of the line. The purchase price was $150,000, and the proposed consum-

mation date was September 24, 1987. CCRC states that the transaction

has been consummated.

36a

for failure to state a consummation date. See 4S CFR 1150.33

(e)(2). CCRC filed a supplemental notice on September 16th,

and Simmons renewed his pleading on September 21st. By

decision served September 29th, we denied Simmon’s request

to stay the notice’s effective date. CCRC responded to Sim-

mons’ petition on October 19th.

On September 29th, Simmons requested reopening of the

stay decision, contending that we had failed to consider his

September 21st pleading. Since we had considered all of Sim-

mons’ pleadings in that decision, we denied the reopening re-

quest in a decision served October 29th, and specifically noted

that all of Simmons’ pleadings had been considered in our

September 29th decision.

Simmons now contends that CCRC’s class exemption should

be revoked under 49 U.S.C. 10505(d), because application of

49 U.S.C. 10901 to CCRC and the proposed transaction is

necessary to carry out the rail transportation policy of 49

U.S.C. 1010la. He questions the viability of the proposed

operation and contends that: (1) the operation of the short

line will be inefficient; (2) shippers located west of the line

will be adversely affected; (3) market power will be concen-

trated in the hands of Seegers Grain, Inc. (Seegers), a grain

company that will control and be served by CCRC; and (4)

there will be an adverse impact on employees. Alternatively,

if the exemption is not revoked, Simmons requests that we

investigate the affiliation between CCRC and Seegers.

In support of his position, Simmons submitted statements

from a CNW employee; from Dean Foods Company (Dean

Foods), one of the two shippers presently served by the line;

and from two shippers at Poplar Grove to the west of

Chemung. (CNW service west of Cheumg was and continues

to be interrupted by a derailment between Chemung and

Popular Grove that occurred in the fall of 1986.)

——

37a

PROCEDUKAL MATTERS

On October 13, 1987, Simmons petitioned for the discovery

and production of Trust No. 4100, the purchase agreement

for the Chemung line, and any other agreements between

CNW and CCRC or the Bank with respect to the Chemung

line or any other CNW line. Simmons contends that the

documents are relevant to defining the relationship between

CCRC and Seegers but that CCRC has been unwilling to pro-

duce them.

On November 18th, CCRC replied to the discovery peti-

tion and requested that its reply be accepted as late-filed. It

States that, in the rush of preparing replies to Simmons’

previous pleadings, it overlooked the discovery request.

Assertedly it replied to the discovery request as soon as it

realized the oversight.

CCRC states that it furnished Simmons with a copy of the

purchase agreement. However, it argues that there is no valid

purpose for the production of the overhead trackage rights

and interchange agreement between CCRC and CNW because

it has already acknowledged its affiliation with Seegers through

common, closely-held stockholders. Similarly, it objects to the

production of the trust agreement. It contends that the trust

serves a legitimate non-transportation purpose and its pro-

duction would not add or lead to the discovery of new evidence.

On November 24th Simmons responded, indicating that he

would not oppose the late-filed reply as long as his discovery

petition could be supplemented with the information attached

to his response. The attachments included copies of: the pur-

chase agreement; the trackage rights and interchange agree-

ment; (which, Simmons noted it had obtained from other

sources, thus obviating that part of its discovery request); and

notices by CNW supervisory personnel indicating that CNW

considers the line to have been sold to Seegers. Simmons also

attached the statement of a CNW employee concerning traf-

38a

fic being handled on the Chemung line by alleged non-railroad

personnel of Seegers. CCRC does not oppose Simmons’

November 24th response. Accordingly, we will accept Sim-

mons’ evidence and also the late-filed reply of CCRC.

Simmons’ discovery request will be denied. To a large ex-

tent it has been satisfied as shown by the attachments to the

November 25th response. To the extent it has not, Simmons

has failed to show how information pertaining to other CNW

line segments is relevant to this petition to revoke. Further,

Simmons has not shown that an examination of Trust No. 4100

will reveal any relevant facts that are not already of record.

CCRC has acknowleged its affiliation with Seegers and in-

dicated that most of the line’s traffic will belong to Seegers.

The affiliation issue involves an allegation that there will be

a concentration of market power in violation of 49 U.S.C.

10101a(13) and the commodities clause, 49 U.S.C. 10746.

However, it is unlikely, nor has Simmons shown otherwise,

that the language of the trust agreement will provide additional

insight into the operational relationship between CCRC and

Seegers with respect to either section 10101a(13) or section

10746.

DISCUSSION AND CONCLUSIONS

Efficiency and viability of the CCRC operation. Simmons

challenges the viability of CCRC’s operations. Asserting that

a 3.5-mile rail operation is dubious at best, he suggests that

non-Seegers’ shippers undoubtedly will receive poorer ser-

vice and perhaps be subjected to branch line surcharges. He

notes that the requirement of a CCRC-CNW interchange is

an added cost that will affect viability. Under the rail transpor-

tation policy of 49 U.S.C. 10101a, he contends that the burden

is on CCRC to demonstrate its viability prior to its ‘‘substitu-

tion’’ for profitable CNW operations. Dean Foods also sup-

39a

ports an inquiry into the viability of CCRC’s proposed ser-

vice before the substition is permitted.

The Chemung line was part of a larger rail line extending

from milepost 64.0 near Harvard to milepost 87.4 near South

Beloit, IL. This line was subject of an abandonent application

filed April 21, 1987, in Docket No. AB-1 (Sub-No. 197) Chicago

& N.W. Transp. Co. — Aband. in McHenry, Winnebago, and

Boone Counties, IL.2 Because the derailment limited actual

rail operations to movements between Harvard and Chemung

and between Poplar Grove and South Beloit, CNW was re-

quired to and did submit financial operations data for the two

line segments as well as data for the Harvard-Poplar Grove

segment. Subsequently, however, CNW requested and on

August 13, 1987, it was granted permission to withdraw its

application.

In the abandonment proceeding, CNW showed that 37 cars

were received at Chemung in 1985 and 44 cars were receiv-

ed in 1986. The cars were received by two shippers: Dean

Foods, a receiver of plastic pellets used in the manufacture

of cortainers, and McHenry FS, Inc./Growmark, Inc.

(McHenry FS) a receiver of materials used to operate a fer-

tilizer blending plant. In addition, the line had an actual

operating profit of $14,438 and $21,334, respectively, in 1985

and 1986. A lower estimated base year operating profit of

$5,025 was attributed to increased maintenance expenditures

The line also was the subject of a previous abandonment application

in Docket no. AB-1 (Sub-No. 116F), Chicago & N.W. Transp. Co. --

Aband. — in McHenry, Boone, and Winnebago Counties, IL, filed March

31, 1981. That abandonment was contingent on CNW obtaining trackage

rights over the line owned by Chicago, Milwaukee, St. Paul & Pacific

Railroad Company (Milwaukee) between Beloit and Clinton Junction, WI.

When Milwaukee decided to abandon the Beloit-Clinton Junction line, CNW

requested and on July 21, 1981, was granted permission to retract its aban-

donment application.

40a

deemed necessary to keep the line at a FRA Class I operating

level. Although the consideration of opportunity costs in each

of these time frames would have resulted in avoidable losses,

CCRC emphasizes that the Chemung line operated profitably

on relatively small amounts of traffic. Assertedly, 1,000 addi-

tional carloads will be generated from Seegers’ two on-line

facilities and this new traffic will more than absorb the added

interchange costs between CCRC and CNW and result in pro-

fitable operations. CCRC also disputes the contention that

short-line operations are inherently inefficient and notes that

Simmons failed to show why the CCRC line will not be efficient.

In promulgating our rules governing the notice of exemp-

tion procedures, we specifically rejected a requirement for the

submission of the type of detailed financial and operating data

that is required under 49 CFR 1150.4, 5, and 6. See Class

Exemption — Acq. & Oper. of R. Lines Under 49 U.S C.

10901, 1 1.C.C.2d 810 (1986) (Exemption). Essentially, we

reviewed our experience with the many individual exemption

proceedings we had decided and concluded that the vast ma-

jority had been processed with far less financial and operating

information to the apparent satisfaction of the parties. Jd. at

812-813, and 817.

Here Simmons has not provided specific evidence to sup-

port his challenge to CCRC’s viability and there is no evidence

before us suggesting that CCRC will not be viable, financially

or otherwise. Rather, the evidence shows that the line is earn-

ing an operating profit, notwithstanding its low traffic volume,

and that the traffic volume will increase, perhaps significant-

ly. Simmons does not dispute CCRC’s contention that it will

Carry an increased traffic volume. To the contrary, he implicitly

appears to accept these projections when he argues that the

increased traffic volume, resulting from the relationship bet-

ween CCRC and Seegers, may adversely affect the line’s other

shippers.

4la

Simmons states that neither of Seegers’ facilities are con-

nected to the line by a siding. Seegers has a grain warehouse

100 yards northwest of the line at milepost 66.0 and an elevator

400 yards southeast of the line at milepost 65.0. How Seegers

plans to reach the line from these facilities is not shown on

the record. It is clear, however, that it intends to use the line

heavily.

In his September 21st petition, Simmons states that CCRC

has no locomotives or car equipment in the area and ques-

tions how it will provide service. This statement was made

only 6 days after the purchase agreement was executed. It

is contradicted by later evidence submitted by Simmons show-

ing that service to Dean Foods and McHenry FS has continued.

Apparently rail service is being performed by Seegers’ per-

sonnel temporarily until CCRC becomes fully operational. We

note that CCRC has already been substituted for CNW in the

applicable tariffs. For the long term, the issue of whether

CCRC will provide service by purchasing or leasing equipment

or by contracting for an operator is a matter left to its own

managerial discretion.

Simmon’s generalized challenge to the efficiency and viability

of short line railroads is not supported by the history of the

shortline railroad industry or the facts of this case. It has been

our experience that the acquiring firm brings new vitality to

the line. Typically, the new operator has closer ties to local

communities, will provide better service, and works closely

with the line’s shippers.

Impact on shippers west of Chemung. Simmons asserts that

shippers west of Chemung will be affected adversely by a more

circuitous routing to Chicago and that CNW will lose any in-

centive it might have had to repair the line segment between

Poplar Grove and Chemung. As a consequence, Poplar Grove

42a

traffic allegedly will not be able to be routed to Chicago over

the more direct CCRC routing.

Shippers at Poplar Grove generated 21 and 24 carloads,

respectively, in 1985 and 1986. CNW’s calculations show that,

if Poplar Grove had been served from Harvard, the Poplar

Grove to Chemung segment would have produced operating

losses of $12,017 in 1985 and $18,021 in 1986. Operation of

the Poplar Grove to South Beloit portion of the line would also

have resulted in operating losses of $19,421 in 1985 and

$26,361 in 1986. For base year 1987, the operating loss on

the Poplar Grove-Chemung segment would have been

$65,901, and the loss on the Poplar Grove-South Beloit seg-

ment would have been $82,628. In view of these unfavorable

financial projections, it is unlikely that CNW would have much

incentive to repair the Poplar Grove-Chemung segment

regardless of whether the Harvard-Chemung segment were

sold.

Only three shippers at Poplar Grove expressed any interest

in either the earlier abandonment proposa! or the proposed

acquisition by CCRC. Boone County Service Company

(Boone), an affiliate of Growmark and the operator of a fer-

tilizer blending plant, received 20 carloads of fertilizer materials

in 1985 and 22 carloads in 1986. Edenfruit Products Company

(Edenfruit), a food processor, generated no traffic in 1985 and

received one carload in 1986. McLay Grain Company (McLay)

operates a grain elevator at Poplar Grove but has used motor

carriage exclusively since 1975. If the derailment is not

repaired, their Chicago traffic, to the extent there is any, would

be routed through Beloit and Clinton Junction to Harvard. This

would add approximately 32 miles to their Chicago routing.

Neither they nor Simmons has shown that this modest increase

‘Other remedies are more appropriate should shippers seek to enforce

CNW’'s common carrier obligation. See 49 U.S.C. 11101(a) and 11701 (a).

43a

in mileage would jeopardize in the least the quality of service

to Poplar Grove Shippers.

Impact on Chemung Line shippers. Simmons suggests that

the acquisition will adversely affect Dean Foods. He contends

that, since Seegers does not have private sidings, it will use

the CCRC line to load its grain cars. Assertedly this will pre-

vent access to Dean Foods’ siding. This concern does not ap-

pear to be shared by Dean Foods. Its opposition appears to

be based on the viability of the new line and loss of service

by CNW; it said nothing about access. Nor do we see an ac-

cess problem. To the contrary, the evidence shows that since

November 25, 1987, Dan Foods had received at least three

rail shipments via CCRC. We are not aware of any other way

that the acquisition would adversely affect any on line ship-

pers. We have received no complaints in this regard.

Concentration of market power. Relying on 49 U.S.C.

10101a(13), Simmons contends that Seegers’ control of CCRC

will result in a concentration of market power that would

adversely affect rival grain elevators at Clinton, South Beloit,

and Poplar Grove. Simmons refers to only two competing grain

shippers, McLay of Poplar Grove and Demeter of South Beloit,

and we are not aware of any others. Simmons provides no

information about Demeter. As to McLay, Simmons submit-

tel a verified statement from Docket No. AB-1 (Sub-No. 197)

where McLay expressed concern that it would suffer a com-

petitive disadvantage if Seegers acquired the Chemung line

while it was confined to truck service.McLay indicated that

it would like to resume shipping grain by rail if it could obtain

competitive rates and that in June of 1986 it requested multicar

grain rates from CNW. CNW apparently obliged, but for

unrelated reasons McLay was unable to begin using rail ser-

vice. McLay renewed its objections here.

If Simmons is arguing that market power will be concen-

44a

trated in Seegers, his argument is misplaced. Section

10101a(13) of the rail transportation policy is directed at market

power of carners, not shippers. Simmon’s novel interpreta-

tion of section 10101a(13) would literally preclude shippers

from acquiring rail lines, even lines that are slated for aban-

donment, if there are competing shippers in the vicinity who

do not own their own carrier. While every case must be

reviewed on its own merits, we cannot agree that this was

the intention or even an implication of section 10101a(13). To

the contrary, as demonstrated by 49 U.S.C. 10905, the public

interest is better served if a line that is proposed for aban-

donment is acquired (by a shipper or other responsible per-

son), rail operations do not violate the statute. See also 49

U.S.C. 10910 and 49 CFRT 1150.21.

In any event, even if Seegers’ market power were a rele-

vant concern here, it is unclear how Seegers’ relationship to

CCRC will result in a concentration of market power vis-a-vis

its competitors to the west. These competitors all appear to

be served directly by CNW and are dependent on CNW for

competitive rates to Chicago. This is also true of Seegers,

notwithstanding its relationship with CCRC. CCRC is also

dependent on CNW to adopt and publish the joint, proportional

or combination rates that will permit its grain traffic to move

to Chicago. Moreover, CCRC’s rates must cover its operating

costs, and Seegers will have the additional expense of loading

rail cars without the convenience of direct access. On balance,

we do not see hov’ Seegers will obtain market power over

its competitors.

To the extent Simmons is arguing that market power Is be-

ing concentrated in CCRC, we must also disagree. It is unclear

how a carrier with a 3.5-mile line can exercise market power

over shippers it does not reach. Nor can we agree with Sim-

mons that the mere selection of the name Chicago-Chemung

45a

Railroad Corporation by itself suggests the new carrier has

additional expansion plans that would further the concentra-

tion of market power. This allegation is entirely speculative

and was denied by CCRC. In any event, any further acquisi-

tions would also be subject to Commisison review.

Commodities clause. In response to Simmons’ allegations

relating to concentration of market power and unfairness to

competing elevators west of Chemung, we noted in our

September 29th decision denying the stay that his revocation

request had not shown nor was their reason to suspect that

CCRC would discriminate against other affected shippers.

Nevertheless, we stated that in connection with Simmons’

petition for revocation and investigation we would review

Seegers’ relationship with CCRC as it pertains to section

10746.

~The mere ownership of a railroad by its principal on-line ship-

per is not prohibited by statute. See United States v. Lehigh

Valley R. Co., 200 U.S. 257 (1911). For there to be a viola-

tion, it must be shown that CCRC is operating as an ‘‘alter

ego’’ of Seegers. United States v. South Buffalo Ry. Co., 333

U.S. 771 (1948). :

CCRC acknowledges its affiliation with Seegers through a

small group of common stockholders. It observes that no con-

tention has been made that section 10746 will be violated by

the affiliation and asserts that a contention of this nature would

not be warranted because the affiliated entities will retain their

own corporate identities.

Simmons refers to Docket No. 30891, Paducah & Louisville

Ry., Inc. Acq. & Oper. Exemp. — Illinois Cent. G. R. Co.

(not printed), served May 11, 1987 (Paducah) where an alleg-

ed commodities clause violation is being investigated, but his

opposition to this acquisition is based primarily on the alleged

46a

violation of section 10101a(13). His petition neither asserts

nor contains any evidence to suggest that the separate cor-

porate identities of these affiliated entities will be breached.

Simmons’ showing in support of the requested investigation

is limited to his allegation that CCRC and Seegers have com-

mon stockholders and share the same address, and a memo-

randum from a CNW roadmaster and a general order from

a CNW division manager, both advising rail personnel that the

Chemung line was sold to Seegers. Moreover, his discovery

has not elicited any information that would shed further light

on this issue. In contrast to Paducah, where a shipper on the

acquired line competes with the shipper affiliate of the carrier

and raised this issue on its own behalf, we can find no indica-

tion of record to suggest that there is a possible section 10746

violation with respect to this transaction, and no basis to in-

stitute an investigation in this regard.

Impact on labor. As a further ground for revocation, Sim-

mons argues that the transaction will result in CNW person-

nel losing employment without being accorded protection.

However, even if CCRC were required to file an application

under section 10901, CNW personnel would not necessarily

be entitled to employee protection. The imposition of labor

protection under section 10901 is discretionary. We have a

long recognized and judicially approved policy of not imposing

labor protection in fledgling carners. The financial burden

associated with their institution of new operations should not

be exacerbated by costly labor protection provisions. See CMC

Real Estate Corporation v. ICC, 807 F.2d 1025 (D.C. Cir.

1986). In the absence of exceptional circumstances, we do

not impose these costs upon either the buyer or the seller.

Exemption, supra, at 815; Northwestern Pacific Acquinng Corp.

and Eureka S. R. Co. — Exemp. from 49 U.S.C. 10901 and

11301 (not printed), served January 8, 1988; and Finance

Docket No. 31205, FRVR Corp. — Exemption Acq. and Oper.

47a

— Certain Lines of C&NW Transp. Co. — Pet. for Clanifica-

tion (not printed), served January 29, 1988. Simmons has

neither alleged exceptional circumstances nor presented any

facts to suggest that they may exist.

This action will not significantly affect either the quality of

the human environment or energy conservations.

It 1s ordered:

1. The request for discovery, to the extent materials have

not already been provided, is denied.

2. The petition to revoke or, in the alternative, to investigate

is denied.

3. This decision will be effective on its service date.

By the Commission, Chairman Gradison, Vice Chairman An-

dre, Commissioners Sterrett, Simmons, and Lamboley. Com-

missioner Sterrett was absent and did not participate in the

disposition of this proceeding.

Noreta R. McGee

Secretary

(SEAL)

48a

INTERSTATE COMERCE COMMISSION

SERVICE DATE

SEP 16 1988

Finance Docket No. 31110

DECISION

CHICAGO-CHEMUNG RAILROAD CORPORATION — EX-

EMPTION, ACQUISITION AND OPERATION — RAIL

LINE OF CHICAGO AND NORTH WESTERN TRANSPOR-

TATION COMPANY BETWEEN HARVARD AND

CHEMUNG IN MCHENRY COUNTY, IL

Decided: September 12, 1988

Petitioner, Patrick W. Simmons (Simmons), Illinois

Legislative Director for the United Transportation Union,

seeks reopening of our March 18, 1988 decision in this pro-

ceeding, on the basis of material error. That decision denied

Simmons’ request to revoke or, in the alternative, to in-

vestigate the notice of exemption filed September 16, 1987,

by Chicago-Chemung Railroad Corporation (CCRC), under 49

CFR 1150.31, et seg. CCRC filed the notice of exemption to

acquire and operate a 3.5-mile line of the Chicago and North

Western Transportation Company (CNW) from milepost 64.0

near Harvard, IL, to milepost 67.5 near Chemung, IL, and

to operate 0.5 miles of incidental trackage rights over the CNW

line between milepost 64.0 and milepost 63.5. This line seg-

ment is part of a longer line extending west from Harvard

beyond Chemung to Poplar Grove and South Beloit, IL. A

derailment between Chemung and Poplar Grove in the fall of

1986 interrrupted CNW service west of Chemung up to the

time the notice of exemption was filed.

Simmons’ petition to revoke the exemption focused primarily

on the viability of the operation CCRC had proposed. He con-

49a

tended that (1) operation would be inefficient; (2) shippers

located west of the line would be adversely affected; (3) market

power would be concentrated in the hands of a single grain

company (Seegers Grain, Inc.) that would control CCRC; and

(4) there would be an adverse impact on employees.

In deriying Simmons’ petition, we addressed all of these

points. We concluded that Simmons had failed to support its

viability charge with specific evidence, and that the evidence

of record indicated the line was earning an operating profit

and would probably experience an increase in traffic volume.

Of shippers located west of the line, only three Poplar Grove

shippers expressed interest in CCRC acquisition; these had

littie or no recent rail traffic and would not have been inconve-

nienced by a slightly longer routing to Chicago, particularly

as the Poplar Grove-Chemung derailment might not be

repaired. Moreover, we found that considering operations west

of Chemung would have produced an operating loss for the

longer line. We concluded that it was unclear hov. seegers’

relationship to CCRC would increase Seegers’ market power

vis-a-vis its competitors to the west, and that, in any case,

the rail transportation policy is concerned with market power

of carriers, not of shippers. Finally, we stated that, even if

CCRC were required to file an application in lieu of receiving

an exemption, we would not have imposed labor protection

for CNW employees.

Simmons alleges that we erred in three respects: (1) fin-

ding that the segment west of Chemung, to Poplar Grove,

was unprofitable; (2) stating, in support of the line’s viability,

that short line railroads generally provide be#er service than

prior owners; and (3) denying his discovery request regar-

ding the relationship between CCRC and Seegers. He asks

that we reopen the decision, grant discovery, issue amended

findings, and revoke the exemption or institute an investigation.

REE

50a

In reply, CCRC urges denial of the petition to reopen. It

states that, under 49 U.S.C. 10505(d), an exemption cannot

be revoked except on a finding that application of a provision

of 49 U.S.C. Subtitle IV is necessary to carry out the transpor-

tation policy of section 10101a. CCRC alleges that Simmons’

first two points have no bearing on the propriety of :evoca-

tion and that discovery would not have produced relevant in-

formation not already admitted by CCRC.

Profitability of the Chemung-Popular Grove segment. \n his

petition to revoke, Simmons argued that shippers west of

Chemung would suffer because sale of the Harvard-Chemung

line would eliminate any incentive for CNW to repair the line

segment between Chemung and Poplar Grove. We conclud-

ed that the line segment from Harevard to Poplar Grove would

be unprofitable, and therefore that CNW would be unlikely

to make the repairs and continue service to Poplar Grove even

if Harvard-Chemung segment were not sold.

Simmons argues that we erred in our method of calculating

the unprofitability of the Chemung-Poplar Grove segment. He

notes that CNW had not calculated separately the financial data

reflecting the theoretical operation of the Poplar Grove-

Chemung segment. Accordingly, he objects to the use of finan-

cial results for that segment that, in his view, were determin-

ed merely by subtracting from the smaller Harvard-Poplar

Grove profits the Harvard-Chemung profits, thereby indicating

a loss for the Poplar Grove-Chemung segment. He also faults

'The financial data were taken from Docket No. AB-1 (Sub-No. 197),

Chicago & N.W. Transp. Co. — Aband. in McHenry, Winnebago, and

Boone Counties, IL, in which CNW sought to abandon its line between

Harvard and South Beloit, IL. CNW was required in that proceeding to

submut financial operations data for segments between Harward and

Chemung, Harward and Poplar Grove, and Poplar Grove and South Beloit.

That application, which was filed April 21, 1987, subsequently was

withdrawn by CNW.

5la

our consideration of the projected operating results for 1987,

including the normalized maintenance estimate for that year.

Simmons claims that the Harvard-Poplar Grove operations are

profitable but that this viable service is being undercut by the

sale of the Harvard-Chemung segment.

Although operations between Harvard and Poplar Grove

were profitable in 1985 and 1986, the profitability was at-

tributable to Chemung traffic rather than Poplar Grove traf-

fic. Traffic moving beyong Chemung to Poplar Grove produc-

ed revenues that were less than the additional costs of opera-

tion attributable to that traffic. The only reasonable assess-

ment is a comparison of the Harvard-Chemung operating

results with those of the Harvard-Poplar Grove segment. Con-

trary to Simmons’ assertion, we did not merely subtract the

Harvard-Chemung profits from the Harvard-Poplar Grove pro-

fits. Our analysis was a rational examination of the traffic and

financial data of the two segments.

In 1985, traffic moving on the Harvard-Poplar Grove seg-

ment amounted to 58 carloads (including 37 carloads that stop-

ped at Chemung). The 58 carloads produced revenues of

$51,332, and, adding $985 in other revenues, the Harvard-

Poplar Grove line had total revenues of $52,317. The 37

carloads that were delivered at Chemung produced revenues

of $41,330, and other revenues of $985 increased total

revenues to $42,315 for the Harvard-Chemung portion of the

Harvard-Poplar Grove line. Thus, the 21 cars that moved from

Harvard, through Chemung, to Poplar Grove produced

revenues of $10,002.

The avoidable costs associated with operation of the

Harvard-Poplar Grove segment totaled $49,896, of which

$27,877 were attributable to the Harvard-Chemung poriton

of the line. This means that operation of the portion of the

Harvard-Poplar Grove line beyong Chemung had avoidable

52a

costs of $22,019. Therefore, CNW’s operation of the line

beyond Chemung, to Poplar Grove, resulted in revenue of

$10,002, but its avoidable costs were $22,019. Consequently

the operation beyond Chemung resulted in an operating loss

of $12,017 in 1985. A similar analysis for 1986 showed an oper

ating loss of $18,021 for the Harvard-Poplar Grove operation

beyond Chemung.” Moreover, it was not improper to consider

the projected 1987 operation of the Chemung-Poplar Grove

portion of the line, including the cost of necessary increased

maintenance, because it provides an indication of what CNW

would be required to spend to continue the Poplar Grove

operation.

Simmons also alleges that CNW has twice failed in attempts

to abandon the Harvard-South Beloit line. He contends that

the line is viable but that the sale of the Harvard-Chemung

portion to CCRC threatens that viability. Simmons is in error

on both points.

As noted in the prior decision, CNW requested and was

granted permission to withdraw its application in both previous

abandonment proceedings. No decision was reached as to

whether the public convenience and necessity permitted aban-

donment of the line. Nevertheless, CNW’s evidence indicated

that the Harvard-South Beloit line had operating losses in 1985

and 1986 and the unprofitability was exacerbated by the

substantial economic costs. Simmons offered no figures to con-

tradict those of CNW on this issue.

General success of short line operations. In answer to ques-

tions raised by Simmons as to the likelihood of CCRC suc-

ceeding with its 3.5-mile operation, we pointed out that the

?These avoidable cost/operating loss figures only represent part of a

carner’s cost. Other costs may include normalized maintanance and op-

portunity costs.

53a

history of short line operations indicates that these carriers

generally are successful and typically provide improved ser-

vice to shippers. Simmons challenges this conclusion, stating

that he knows of no statistical study justifying that finding. We

did not assert that our statement was based on statistical

analysis. In part, that conclusion rests upon our experience

in reviewing short line sales by cariers (usually class I railroads)

seeking to divest themselves of the lines and new entities

(usually new entities that become class III carriers upon the

acquisition of the line) that desire to acquire and operate them.

It is also based on the comments of the users of the line in

those cases. These shippers and receivers usually support the

acquisition, often on the stated expectation of receiving bet-

ter service or at least avoiding abandonment. Most of the op-

position to short line sales has come from rail labor, rather

than from the users of the lines involved.

In addition, the Commission has conducted a study of the

acquisition of short lines by new operators. That study entitl-

ed New Short Line and Regiona! Railroads, was issued on

September 1987, and was the subject of Chairman Gradison’s

testimony, given October 20, 1987, before the Subcommit-

tee on Surface Transportation of the U.S. Senate Committee

on Science, Commerce, and Transportation. The study,

prepared by the Commission’s Office of Transportation

Analysis (OTA), suyrveyed all 183 short line carriers then in

existence, 30 of which operated 5 miles or less. The vast ma-

jority of these small carriers anticipated positive future pro-

psects for viability. Among the reasons they gave were (1)

development of new: business, (2) effective marketing, and (3)

services tailored to shippers’ needs. This study is available

to the public.

In any event, our references to our experience with short

line railroads were made only as a response to Simmons’

54a

generalized challenge to the viability of a 3.5-mile line. They

did not form the principal support for our finding that this par-

ticular line would be viable.

Discovery. Simmons requested discovery of certain materials

that he alleged would help define the relationship between

CCRC and Seegers. As indicated above, Simmons argued that

Seegers’ control of CCRC would create undue concentration

of market power. We denied Simmons’ discovery request

because CCRC had already acknowledged that it was closely

affiliated with Seegers, which will be the chief shipper on the °

line. We concluded that Seegers’ close relation with CCRC

would not create a potential for an abuse of market power from

CCRC’s operation of the line, and, therefore, that discovery

would not produce information leading to a different conclu-

sion with respect to market power.

Simmons contends that we erred in denying his discovery

request, because he was unable to determine who actually

owns and controls the line. He also argues that the denial

undercuts our findings of no potential abuse of market power.

Simmons raises no new argument here. CCRC’s admission

of close affiliation with Seegers obviates requiring production

of evidence that would lead to the conclusion that a contro!

relationship exists. Simmons’ argument about abuse of market

power ignores our conclusion that Seegers’ competitors are

not located on the Harvard-Chemung line and would not be

dependent on CCRC’s service.

Since Simmons has not shown that our decision of March

18, 1988, contains material error, his petition to reopen will .

be denied. ,

This action will not significantly affect either the quality of

the human environment or energy conservation.

It 1s ordered:

55a

1. The request for reopening is denied.

2. This decision will be effective on it service date.

By the Commission, Chariman Gradison, Vice Chairman An-

dre, Commissioners Simmons, Lamboley, and Phillips. Com-

missioner Simmons did not participate in the disposition of this

proceeding.

(SEAL) Noreta R. McGee

Secretary

56a

INTERSTATE COMMERCE COMMISSION

SERVICE DATE

DECISION NOV 10 1988

Docket No. AB-1 (Sub-No. 221X)

CHICAGO AND NORTH WESTERN TRANSPORTATION

COMPANY — ABANDONMENT EXEMPTION — BOONE

COUNTY, IL

Decided: November 10, 1988

The Chicago and North Western Transportation Company

(CNW) filed a notice of exemption on September 26, 1988,

under 49 CFR 1152 Subpart F — Exempt Abandonments, to

abandon its 6.5-mile line of railroad between milepost 67.5 near

Chemung and milepost 74 near Poplar Grove, in Boone Coun-

ty, IL.! The notice of exemption was served and published

in the Federal Register on October 14, 1988 (53 FR 40281)

and, unless stayed, is scheduled to becorne effective on

November 13, 1988.

On October 24, 1988, a petition to stay was filed jointly by

McLay Grain Company (McLay); Edenfruit Products Com-

pany (Edenfruit); and Patrick W. Simmons, Illinois Legislative

Director for United Transportation Union (Simmons) (collec-

tively petitioners).? Petitioners filed a petition for reconsidera-

tion and/or revocation of the exemption on November 3, 1988.

CNW replied to the stay petition on October 31, 1988.

'This line is a part-of a 23.4-mile rail line extending from milepost 64.0

near Harvard, IL, westerly through Chemung and Poplar Grove, to

milepost 87.4 near South Beloit, IL. In November 1986, direct service

between Harvard and Poplar Grove was terminated as a result of a derail-

ment between Chemung and Poplar Grove.

2The Village of Poplar Grove (Village) orginally joined with petitioners

but later submitted a withdrawal notice attributing its former inclusion to

a misunderstanding.

57a

To justify a stay, petitioners must demonstrate: (1) that

there is a strong likelihood that they will prevail on the merits;

(2) that they will suffer irreparable harm in the absence of a

stay; (3) that other interested parties will not be substantially

harmed by issuance of a stay; and (4) that the public interest

supports the granting of the stay. See Washington Metropolitan

Area Tounst Commission v. Holiday Tours, Inc., 559 F.2d

841, 843 (D.C. Cir. 1977). Petitioners have not demonstrated

the requisite justification for a stay under the above criteria.

Their petition will be denied.

Petitioners argue that they are likely to prevail on the merits

of their administrative appeal! and that the notice of exemp-

tion will be revoked. Their argument is not persuasive. Peti-

tionere argue that the criteria for an out-of-service line ex-

emption are not justified because Poplar Grove shippers op-

posed CNW’s attempt to abandon its entire Harvard-South

Beloit line in 1987.3 Assertedly, their opposition in 1987 should

be viewed as outstanding complaints here and as such should

preclude CNW’s use of the class exemption.

At issue here is the much shorter 6.5-mile line between

Chemung and Poplar Grove. It has been out of service for

the requisite 2-year period and therefore meets the basic class

exemption criteria. To qualify for the class exemption there

can be ‘‘no formal complaint filed by a user of rail service on

the line . . . regarding cessation of service over the line, 49

CFR 1152.50(b). However, a qualifying complaint must allege

that the ‘‘carrier has imposed an illegal embargo or other

unlawful impediment’’ to service. No such allegation was made

in the shipper protests in Docket No. AB-1 (Sub-No. 197)

which petitioners ask to be viewed as complaints. Indeed, peti-

‘Docket No. AB-1 (Sub-No. 197), Chicago & N.W. Transp. Co. —

Aband. — In McHenry, Winnebago and Boone Counties, IL., filed April

21, 1987, and withdrawn August 13, 1987 (Sub 197).

58a

tioners concede that, when service on the Poplar Grove-

Chemung segment was interrupted, CNW acted promptly to

provide service via an alternate route.

Petitioners argue that CNW is abusing the out-of-service

class exemption because the railroad is exercising it as part

of a broader strategy to abandon its entire Chemung-South

Beloit line. To the contrary, it is fully consistent with the rail

transportation policy, 49 U.S.C. 10101la, to permit CNW to

segment its lines and first move forward with the abandon-

ment of those that are the least profitable, such as the one

that has been out of service. Indeed, the courts have com-

pelled this approach on judicial review. See Indiana Sugars,

Inc. v. ICC, 694 F.2d 1098 (7th Cir. 1982).

Petitioners also argue that the Commission’s Environmen-

tal Assessment is faulty. However, petitioners’ quarrel goes

merely to the approach that the Commission followed. They

do not argue that the Commission has failed to take the re-

quisite hard look at the environmental consequences of aban-

doning the 6.5-mile segment. While petitioners argue that the

Commission should have focused on the environmental effects

of abandoning the entire Chemung-South Beloit line, the

broader abanaonment is not before the agency. At this point,

it is speculative whether CNW will file an applicaton to aban-

don the Poplar Grove-South Beloit segment or whether the

Commission will eventually authonze its abandonment.

Moreover, if the South Beloit-Poplar Grove abandonment is

filed and it is determined that it has environmental implica-

tions that carry over to the area between Chemung and Poplar

Grove, they can be addressed in that proceeding, Kleppe v.

Sierra Club, 427 U.S. 390, 414 (1976). Accordingly, it is not

likely that petitioners will prevail on the merits.

Although petitioners contend that the failure to stay the ex-

emption will result in irreparable injury, the fact is that there

—

59a

are no shippers on the line. overhead traffic has not moved

over the line since derailment caused the line to be severed

east of Poplar Grove, and CNW exercised its managerial

discretion to reroute the traffic. It is unclear how Edenfruit

and McLay, the only petitioning shippers, would be irreparably

injured if the exemption is permitted to become effective. As

noted by CNW, McLay has not shipped any traffic by rail since

the 1970's and Edenfruit has shipped one car in the last 4

years. Moreover, a decision granting abandonment is not ir-

reversible; parties who proceed with an abandonment assume

the risk that the agency decision may be reversed on appeal

and that service may have to be restored. Busboom Grain

Co., Inc. v. ICC, 830 F.2d 74, 75 (7th Cir. 1987).

On the other hand, plainly, CNW would be harmed by a stay.

To grant a stay would fly in the face of the Congressional policy

(as expressed in the Staggers Act) to expedite abandonments

and enable railroads such as CNW to more efficiently allocate

their limited resources. See Busboom Grain Co., Inc, supra,

830 F.2d at 75. Although it is not incurring operating deficits

on the line, CNW continues to incur opportunity costs from

the inability otherwise to dispose of it. Specifically, the Boone

County Conservation District is seeking to acquire the right-

of-way for other public purposes, and CNW seeks to use the

track to repair and rehabilitate other lines in its system. Until

the abandonment is consummated, CNW may not benefit from

either of these opportunities.See Abandonment of Railroad

Lines — Use of Opportunity Costs, 360 1.C.C. 571 (1979),

aff'd., Farmland Industnes, Inc. v. United States, 642 F.2d

208 (7th Cir. 1981).

Petitioners contend that the public interest warrants a stay.

Assertedly a denial of the stay request would prejudice both

the judicial review petitioners allegedly intend to seek with

regard to our decision authorizing the sale of the Harvard-

Chemung segment of the line, Finance Docket No. 31110,

60a

Chicago-Chemung R. Corp. — Exemp., Acq. and Oper. — Line

of C. & N.W. Transp. Co. Betw. Harvard and Chemung in

McHenry Cty., IL (not printed), served March 18, 1988, aff‘d.,

September 16, 1988, stay denied September 29, 1988

(Chemung) and the allegedly forthcoming abandoment of the

Poplar Grove-South Beloit segment.

Petitioners’ public interest arguments are not persuasive.

This abandonment was properly filed under the Commission's

class exemption procedures for out-of-service rail lines at 49

CFR 1152. In its class exemption decision, the Commission

has already balanced the various public interest issues and

come down in favor of exempting out-of-service rail lines. Ex-

emption of Out of Service Rail Lines, 2 1.C.C.2d 146 (1987),

aff'd., Illinots Commerce Com’n v. ICC, 848 F.2d 1246 (D.C.

Cir. 1988). Petitioners have offered no argument here , public

interest or otherwise, that warrants upsetting the balance

struck by the Commission in its class exemption.

It is unclear how judicial review in the Chemung case would

be prejudiced. Chemung is an acquisition. It must stand on

its own merits; it is not dependent on CNW’s continued opera-

tion of the entire South Beloit-Harvard line. Even in the unlike-

ly event that our decision in Chemung were to be reversed,

the abandonment of this unused 6.5-mile segment would not

be precluded. Petitioners have not presented cogent public

interest reasons to stay it. Similarly, it is unclear how the ex-

emption of this out-of-service line will prejudice our decision

if CNW does seek to abandon the South Beloit-Poplar Grove

segment. Overall, we find that the public interest does not

support a stay.

It is ordered:

1. The request for stay is denied.

2. This decision is effective on the date served.

6la

By the Commission, Chairman Gradison, Vice Chairman

Andre, Commissioners Simmons, Lamboley, and Phillips.

Commissioner Lamboley dissented with a separate expression.

Commissioner Simmons did not participate in the disposition

of this proceeding.

(SEAL) Noreta R. McGee

Secretary

COMMISSIONER LAMBOLEY, dissenting:

I would grant the petition for stay.

In my view, this proceeding may be inappropriate for the

out-of-service exemption. The actions of CNW itself are

responsible for the fact that there has been no service over

this line since 1986. Subsequent to a derailment, CNW chose

not to repair the line, but instead to operate circuitously over

another line to serve shippers from the west instead of

from the east. Then CNW strategically further cemented the

fragmentation of the Harvard to Poplar Grove subsegment of

the line by sale of the Harvard to Chemung portion to a new

operator.

These prior actions combined with this notice of exemption

may force shippers located at Poplar Grove to face impen-

ding abandonment of the circuitous service that they now

receive because their traffic cannot support service over the

longer (and previously unprofitable segment), when for the

years immediately prior to the imposition of this circuitous

route, 1985 and 1986, petitioners maintain that there was an

operating profit on the Chemung to Poplar Grove segment. '

the present economics of service over this segment, 1.e., cost of rehabiliis-

tion, maintenance, revenues, etc

62a

Obviously petitioners would not have filed a complaint for ser-

vice over the embargoed line when the CNW provided a

substitute service. Thus the fact that there has been no traf-

fic over this segment for the last 2 years and no complaint

for service is entirely due to the actions of CNW and should

not be used to bootstrap this phase of the apparent planned

abandonment of the entire line.

63a

INTERSTATE COMMERCE COMMISSION

SERVICE DATE

DECISION MAY 8 1989

Docket No. AB-1 (Sub-No. 221X)

CHICAGO AND NORTHWESTERN TRANSPORTATION

COMPANY — ABANDONMENT EXEMPTION — BOONE

COUNTY, IL.

Decided: April 27, 1989

The Chicago and North Western Transportation Company

(CNW) filed a notice of exemption on September 26, 1988,

under 49 CFR 1152 Subpart F — Exempt Abandonments,' to

abandon its 6.5-mile line of railroad between milepost 67.5 near

Chemung and milepost 74 near Poplar Grove, in Boone Coun-

ty, IL. The notice of exemption was served and published in

the Federal Register on October 14, 11988 (53 FR 40281) and

became effective on November 13, -1988.

On November 3, 1988, McLay Grain Company (McLay),

Edenfruit Products Company (Edenfruit), and Patrick W. Sim-

mons, Illinois Legislative Director for United Transportaton

Union (Simmons) (collectively petitioners) jointly filed a peti-

'See Exemption of Out of Service Rail Lines, 366 1.C.C. 885.(1983) (Ex-

emption 1); partially remanded I|linois Commerce Com'n v. ICC, 787 F.2d

616 (D.C. Cir. 1986) (/ilinots I); reconsidered in Exemption of Out of Ser-

vice Rail Lines, 2 1.C.C. 2d 146 (1986) (Exemption 11); aff'd Illinots Com-

merce Com'n v. ICC, 848 F.2d 1246 (D.C. Cir. 1988), cert. denied 102

L. Ed. 2d 775 (1989) (llinoas: 1]).

. — EE ———— 1 eee

64a

tion for reconsideration and/or revocation of the exemption.?

CNW replied on November 23, 1988. We will deny the

petition.

This line is the middle segment of a longer CNW rail line,

(one of two routes between Harward, IL and Beloit, WI), ex-

tending from milepost 64.0 near Harvard, IL, westerly through

Chemung and Poplar Grove, to milepost 87.4 near South

Beloit, IL. The longer line (the southern route) was the sub-

ject of two prior abandonment applications, bo*h of which were

voluntarily withdrawn by CNW.? Petitioners claim that his pro-

ceeding is part of a CNW scheme to ni itself of the entire

southern Harvard-South Beloit line, which consists of three

segments: (1) a 3.5-mile Harvard-Chemung line; (2) this middle

segment line between Chemung and Poplar Grove; and (3)

the remaining 13.4-mile Poplar Grove-South Beloit line, which

is identified on the carrier’s system diagram map as a can-

didate for abandonment.

In November 1986, a derailment occurred between

Chemung and Poplar Grove, on the middle segment. There-

fore, traffic moving between Harvard and Poplar Grove was

routed off the line, westerly to Beloit, WI, and then back over

2On November 10, 1988, we denied a stay petition filed by petitioners,

who have sought judicial review of our decision in Patnck W. Simmons,

McLay Grain Company and Edenfruit Products v. Interstate Commerce

Commission and United States of Amenca, U.S.C.A., 7th Cir., No.

88-3211, filed on November 15, 1988. The Village of Poplar Grove, which

originally had joined with petitioners, later submitted a withdrawal notice,

attributing its former inclusion to a misunderstanding. The court proceeding

has been held in abeyance pending the issuance of this decision.

*Docket No. AB-1 (Sub-No. 116F), Chicago & N.W. Transp. Co. —

Aband. — in McHenry, Boone, and Winnebago Counties, IL, filed March

31, 1981, and withdrawn July 21, 1981; and Docket No. AB-1 (Sub-No.

197), Chicago & N.W. Transp. Co. — Aband. in McHenry, Winnebago,

and Boone Counties, IL., filed April 21, 1987, and withdrawn August 13,

1987.

65a

the northern route through South Beloit to Harvard, adding

about 32 miles to the Poplar Grove-Chicago service.

On September 16, 1987, in Finance Docket No. 31110,

Chicago-Chemung R. Corp. — Exemp., Acq., and Oper. —

Rail Line of Chicago & N.W. Transp. Co. Between Harvard

and Chemung, in McHenry County, IL (Acquisition), the

Chicago-Chemung Railroad Corporation (CCRC) filed a notice

of exemption, under 49 CFR 1150.31 et seg., to acquire and

operate the 3.5 -mile segment of the longer line between

milepost 64.0 near Harvard and milepost 67.5 near Chemung

(and to operate ().5 miles of incidental trackage rights over

the CNW line between milepost 64.0 and milepost 63.5).4

As grounds for revocation of the abandonment exemption,

petitioners contend that the abandonment constitutes market

abuse by CNW and that regulation is therefore necessary to

carry out the rail transportation policy (RTP) of section 10101a.

Pursuant to 49 U.S.C. 10505(d), the Commission may revoke

an exemption, in whole or in part, where necessary to carry

out the RTP. |

Petitioners argue that the carrier’s trifurcation of the line

will result in market abuse, since the Harvard-Poplar Grove

operation was allegedly profitable prior to the derailment.°

‘On September 29, 1987, Simmons’ request to stay the acquisition ex-

emption was denied; on October 28, 1987, his request to reopen the stay

denial was denied; on March 18, 1988, his petition to revoke the acquisi-

tion exemption was denied; and, on September 16, 1988, his petition to

reopen was denied. Judicial review of the Commisson’s decisions is pen-

ding in Simmons v. ICC, No. 88-3207, U.S.C.A, 7th Cir., filed November

15, 1988.

5The alleged profitability of the Harvard-Poplar Grove line is based upon

data submitted in the Sub-No. 197 proceeding, in which CNW showed

that the entire line suffered operating losses of $11,639 in 1985 and $11,968

in 1986. CNW submitted data that showed the Harvard-Chemung opera-

tion realized a profit of $14,438 in 1985 and $21,334 in 1986; the Harvard

Poplar Grove operation realized a profit of $3,507 in 1985 and $3,313 in

66a

The present abandonment will leave Poplar Grove shippers

with rail service only via the Poplar Grove-South Beloit seg-

ment, which CNW already has argued is unprofitable. See the

application, in Sub-No. 197 and Acquisition, March 18, deci-

sion, slip op. at p. 4. Therefore, petitioners argue that,

although Poplar Grove shippers will be able to protest the

possible future abandonment of the Poplar Grove-South Beloit

line, if and when an application is filed, they will be penalized

by the sequential disposition of the line segments.

Petitioners have not explained how CNW’s segmented handl-

ing of the Harvard-South Beloit line could subject shippers to

a market power abuse here. In Exemption I, at p. 2892, we

concluded that regulation of rail lines that have been out of

service for 2 years is not necessary to protect shippers from

market abuse, and the court upheld this conclusion in //linots

IT, 848 F.2d at 1254-55. Market abuse contemplates a car-

rier’s acting to the detriment of shippers where that carrier

has a dominant position in the market, but there is ample motor

1986; and the Poplar Grove-South Beloit operation lost $19,421 in 1985

and $26,361 in 1986.

In Acquisition, Simmons argued that the Harvard-Poplar Grove line was

profitable but that the sale of the Harvard-Chemung line to CCRC would

terminate CNW’s incentive to repair the derailment between Chemung

and Poplar Grove, thus eliminating access to Poplar Grove via Harvard.

As we explained in our March 18 and September 16 decisions in Acqutst-

tion, the Harvard-Poplar Grove profitability was illusory, since it was the

result of Harvard-Chemung traffic. Traffic moving beyond Chemung to

Poplar Grove produced operating Icsses of $12,017 in 1985 and $18,021

in 1986. Since the Poplar Grove-South Beloit line also operated at a loss,

it is clear that Poplar Grove traffic produced operating losses, whether

the operation was considered in conjunction with Harvard or with South

Beloit. The only profitable operation on the Harvard-South Beloit line was

the operation between Harvard and Chemung. We concluded that, even

if CNW retained the Harvard-Chemung line, it would have no incentive

to repair the derailment in order to continue the money-losing Chemung-

Poplar Grove operation.

67a

carner competition here. In the Sub-No. 197 proceeding, CNW

listed 23 regulated motor carriers serving the shippers on the

line, and it seems clear that Poplar Grove shippers are using

these motor carriers to full advantage. McLay has not used

CNW since the 1970's, and Edenfruit has shipped only one

carload in the past 4 years. Petitioners claim that there are

other Poplar Grove shippers that will be affected, but none

of these shippers has opposed this abandonment. This sug-

gests that they do not feel the need for reinstitution of ser-

vice on the line to the extent petitioners contend. See Exemp-

tion IT, 21.C.C.2d at 156, and Illinois I], 848 F.2d at 1254-55.

In addition, petitioners ignore the fact that CNW does no

longer have a line between Harvard and Chemung since its

sale to CCRC. It is difficult to see how CNW can abuse a

market on a line which it no longer owns or operates. In sum,

we find no merit to petitioners’ market abuse assertion.

Furthermore, petitioners argue that CNW’s use of the class

exemption to abandon 6.5 miles of the 19.9-mile South Beloit-

Poplar Grove line is an abuse of the class exemption pro-

cedures. They assert that, since CNW’s ultimate plan is to

rid itself of the entire Harvard-South Beloit line, we should

revoke the consummated sale to CCRC,® and consider its dis-

position together with the proposed abandonment, on a con-

solidated basis. This we will not do. In rationalizing its system,

a carrier may ordinarliy select the means best suited to its

needs and which will produce the most benefits, and it may

generally choose the sequence and timing of its requests for

approval. Having found a willing purchaser for the profitable

‘Petitioners present no basis for their contention that we should revoke

the exemption in Acquisition. The merits of that exemption were fulls

discussed in pnor decisions and need not be reviewed again. Moreover,

this abandonment proceeding is not the proper forum for turther reviéw

of the Acquisition exemption.

68a

Harvard-Chemung line, CNW was free to sell that line, sub-

ject to our review.

Nor will we consider the potential abandonment of the Poplar

Grove-South Beloit line before an application (or exemption

request) has been filed. In the November 10 stay denial, we

rejected petitioners’ argument that CNW is abusing the class

exemption because it was part of its broader strategy to aban-

don the entire Chemung-South Beloit line. We noted that it

is fully consistent with the RTP to permit a carrier to seg-

ment its lines and first move forward with the abandonment

of those that are the least profitable, slip op. at 2.” Petitioners’

position would require a carrier to continue operating a clear-

ly unprofitable and, as here, unused and unneeded portion of

a line while it decided if, and when, it will seek to abandon

the remaining line segment. Such a requirement would foster

a wasteful use of carrier resources, which clearly is contrary

to the RTP.

Petitioners allege further that regulation of this abandon-

ment is necessary to carry out other aspects of the RTP.*®

They contend that routing Poplar Grove traffic via South Beloit

is ‘‘vastly circuitous’’ since it is three times longer and con-

travenes the RTP goals of: safe and efficient transportation

{section 10101a(3)]; sound transportation [section 10101a(4)];

sound economic conditions [section 10101a(5)]; efficient

management [section 10101a(10)]; and energy conservation

{section 10101a(15)!}.

’This approach has been consistently judicially endorsed. See, e.g., People

of State of Illinois v. ICC, 751 F.2d 903, 904-05 (7th Cir. 1985); People

of State of Illinois v. ICC, 615 F.2d 743, 749 (7th Cir. 1979); People of

State of Illinots v. ICC, 604 F.2d 519, 528 (7th Cir. 1979). See also In-

diana Sugars, Inc. v . ICC, 694 F.2d 1098, 1101 (7th Cir. 1982) (court

recognized efficacy of line segmentation for abandonment purposes).

®We have already concluded, with affirmance of the court, that regula-

tion of lines that have been out of service for at least 2 years is generally

unnecessary to carry out the RTP.

69a

The 32-mile circuity is not excessive and petitioners have

not presented any justification for their assertion that the ex-

istence of such circuity in and of itself is sufficient to require

revocation of the exemption as contrary to RTP goals.’ To

the contrary, repairing the derailment and reinstituting the

money-losing Chemung-Poplar Grove operation would seem

to be neither an efficient use of carrier resources nor good

management; nor is it necessary to foster sound transporta-

tion or sound economic conditions in transportation. Even if

the circuitous route were assumed to be somewhat less energy

efficient (and we have no evidence so to find), the other RTP

considerations addressed above which militate against reinstitu-

tion of the Chemung-Poyplar Grove operation would outweigh

any extra energy use connected with operating over the South

Beloit alternate route. Moreover, cumulating traffic over one

of two routes between two points creates certain economic

efficiencies even if the route selected is the longer of the two.

Finally, petitioners raise two procedural matters. First, they

contend that use of the class exemption is inappropriate here

because, they allege, there have been complaints filed within

the past 2 years. They are in error. The ‘‘complaints”’ to which

petitioners refer are the protests filed in the Sub-No. 197 aban-

donment proceeding. Under 49 CFR 1152.50(b), a railroad

may use the class exemption, if ‘‘no formal complaint filed by

a user of rail service on the line . . . .regarding cessation of

service over the lines either . . . is pending with the Commis-

sion or any United States District Court. . . .’’ These com-

9The circuity issue was raised by Simmons in Acquisition, but we con-

cluded that neither the shippers (McLay, Edenfruit, and Boone County

Service Company) nor Simmons had shown that the increased mileage

would jeopardize the quality of service on Poplar Grove traffic. See March

16 decision, slip op. at 4. We also note that a route involving CCRC would

require two interchanges. Petitioners have not submitted any energy data

regarding the interchanges, and thus overstate any potential energy loss

due to circuity.

70a

plaints must have specifically alleged that the ‘‘carrier has im-

posed an illegal embargo or other unlawful impediment to ser-

vice.’’ 49 CFR 1152.5C(b).

There have been no such formal complaints filed here alleg-

ing an illegal embargo or other unlawful impediment to ser-

vice. As the record shows, and petitioners acknowledge, CNW

has continued to serve Poplar Grove via South Beloit after

the derailment.

Nor were such allegations made in the shipper protests fil-

ed in the Sub-No. 197 proceeding. Rather, the shippers ob-

jected to a proposed cessation of existing service over the

entire Harvard-South Beloit line. Since the abandonment ap-

plication was withdrawn, these objections cannot be viewed

as pending complaints. Therefore, we reject petitioners’ sug-

gestion that they should be viewed as constructive complaints

because it would have been redundant for shippers to have

filed complaints with the Commission together with the pro-

tests filed in:the abandonment proceeding.

As a second procedural issue, petitioners argue that the en-

vironmental assessments (EAs) issued by our Section of

Energy and Environment on October 24 and 31, 1988,!° should

not have been limited to the Chemung-Poplar Grove segment,

but should have evaluated the environmental efffects associated

with abandonment of the entire Chemung-South Beloit line.!!

10In a decision served November 13, 1988, the proceeding was reopened

for imposition of environmental conditions and a 180-day public use

condition.

1Petitioners cite four cases in support of their argument: Swain v.

Bnnegar, 542 F.2d 364, 370 (7th Cir. 1976); Patterson v. Exon, 415 F.

Supp. 1276, 1283-85 (D. Neb. 1976); Daly v. Volpe, 514 F.2d 1106 (9th

Cir. 1975); and Taxpayers Watchdog, Inc. v. Stanley, 819 F.2d 294, 298-99

(D.C. Cir. 1987). In all four decisions cited by petitioners, the courts have

recognized that segmentation 1s appropriate in certain circumstances,

where four factors are satisfied. See Swain, 542 F.2d at 369; Patterson,

7la

Under the National Environmental Policy Act, the Commis-

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