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

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Petition for Writ of Certiorari
- **Published:** January 1, 1991
- **Citation:** 499 U.S. 919

## Text

90-9 59 Supreme Coun, UX
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No. «OES
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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

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(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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I ea 3
ee ee ee 4
eee ma © Peenemt CASE ..... «2... eee eee 5
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

IV

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

Vv

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:
a I OCE os Paton ccs Crea aes 75a
these: EES Siren Sed bc seh a gk wet Sern 77a
oe ee a et reenter eA AM 77a
Oe ees NO hs acs b cacinds as Beha ee oes 77a
tS eee 4 a eee 78a
Se Ua TREES ca coke OE ce ee 78a
Oe Sek: SURE eae sols eae eee 79a

vi
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

U.S. Constitution:

Article I] te RE rey ee ee ee eee ee passim
Statutes:

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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.

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.

3

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-

4

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).

5

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.

6

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).

7

7

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).

8

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).

9

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

10

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).

11

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

12

(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).

13
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.

14

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.

15

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

16

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

17

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).

18

(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).

19

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-

20

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).

21
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

la

APPENDIX A
Supreme Court of the United States
No. A-307

Patrick W. Simmons, McLay Grain Company and
Edenfruit Products Company,

Petitioners
v.

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.

2a
SUPREME COURT OF THE UNITED STATES
No. A-307
PATRICK W. SIMMONS,

Petitioner,
V.

INTERSTATE COMMERCE COMMISSION, ET AL.

PATRICK W. SIMMONS, ET AL..,
Petitioners.

V.

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

3a
In the
United States Court of Appeals

For the Seventh Circuit

No. 8&-3207
PATRICK W. SIMMONS,

Petitioner,
v.
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)

4a

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.

5a

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.

6a

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

7a

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

8a

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.

9a

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,
v.
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,
v.
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

EE

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

ee

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

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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-

a

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

OE

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

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385020_3268%3A1. Public record. Not legal advice.