Petition for Writ of Certiorari — Pennsylvania v. United States

~

71+ 1696 Paano

Supreme Court of the United, States.s.«:

No. 71-

COMMONWEALTH OF PENNSYLVANIA, et al.

Petitioners,

V.

UNITED STATES OF AMERICA, et ai.,

Respondents.

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS FOR

THE THIRD CIRCUIT

J. SHANE CREAMER, Atty. General

Commonwealth of Pennsylvania

238 Main Capitol Building

Harrisburg, Pa. 17120

GORDON P. MacDOUGALL,

Spec. Asst. Atty. General

Commonwealth of Pennsylvania

705 Ring Building

Washington, D.C. 20036

PHILIP P. KALODNER, Counsel

EDWARD MUNCE, Asst. Counsel

ALFRED N. LOWENSTEIN, Asst. Counsel

Pennsylvania Public Utility Commission

118 North Office Building

Harrisburg, Pa. 17120

THOMAS P. SHEARER

711 Frick Building

Pittsburgh, Pa. 15219

June, 1972 Attorneys for Petitioners

NTT TT. ccc

(i)

TABLE OF CONTENTS

OPINIONS BELOW

JURISDICTION

QUESTIONS PRESENTED:

I. Whether an order of the Interstate Commerce

Commission, authorizing a railroad in reorgan-

ization to abandon a portion of its line, is

reviewable in a plenary actiori before a three-

judge district court under the Urgent Defi-

ciencies Act (28 U.S.C. 2321-25), or must the

I.C.C.’s decision be reviewed either by or upon

consent of the reorganization court in the rail-

road’s reorganization proceeding? ............

II. Whether a railroad reorganization court may

direct the temporary suspension of railroad

operations for a portion of the railroad pend-

ing final decision by the Interstate Commerce

Commission on the carrier’s application to

abandon the portion of railroad

STATUTES INVOLVED

STATEMENT

Proceedings in the District Court

SS ee ee a ee ee a i a a ee

a 2.64.6 626 6 6 eu 6 6 & 6 6 2 8.6 eS 8 *

She 2 Ses 2S SE SS 4S 0.8 6 we 8S. 6 O68 0 0 8 4 3 0 oe OD

Proceedings in the Court of Appeals

Proceedings in the Supreme Court

ORS

I. THE REORGANIZATION COURT IS WITH-

OUT JURISDICTION TO REVIEW ABAN-

DONMENT DECISIONS OF THE INTER-

STATE COMMERCE COMMISSION OR TO

PREVENT REVIEW BEFORE A STATUTORY

THREE-JUDGE DISTRICT COURT.............

Il. THE REORGANIZATION COURT IS WITH-

OUT JURISDICTION TO DIRECT THE

TEMPORARY SUSPENSION OF PART OF

A RAILROAD’S OPERATIONS

eo as O86 2 6 © 2s © 4.2 © 9

See ewanesea dees ne & @

os: «3. ee es 2 6 6 8S 6S wo 4. d- 26'S. 8 © 0.0 4-88

CONCLUSION

APPENDIX A

Order No. 445 of CNJ Reorganization Court......

Order No. 451 of CNJ Reorganization Court......

Opinion of U.S. Court of Appeals re Order

I MS ght ee Oe a a ee aaa Gee wee

NL MN ai a aye elite: whip eae telle te Wd Seam tae ae cg

1.C.C. Announcement of Lehigh Valley Tempor-

aty AMROUNY 2. ce ccc cect ween.

Judgment of U.S. Court of Appeals re Order

I i Sa ie Na ee a ae a na te

NP als oe Ee ae tas ee oe ge ag: i

TABLE OF CITATIONS

Cases:

Baker v. Pennsylvania, 401 U.S. 902 (1971)

Callaway v. Benton, 336 U.S. 132 (1949)

Carroll v. President and Commissioners of Princess

Ann, 393 U.S. 175 (1968) ......------ eee ees

Chesapeake & O. Ry. Co.—Control—Western Mary-

land Ry. Co., 328 I.C.C. 684 (1967) ...........

Chicago & N.W. Ry. Co. v. United States, 52 F. Supp.

65 (ND. Ill. 1943), Aff'd 320 U.S. 718 (1943) ....

-Commonwealth of Pennsulvania v. Interstate Com-

mission and United States (Civil No. 71-416,

eer a lta lia ilar agt ate ean

El Dorado Oil Works v. United States, 328 U.S.

ee eee eee eee ee ee

In Re Boston and Maine Corporation, 317 F. Supp.

1249 (D. Mass. 1970) ......... eee e eee cene

sa eee oe CS Us: BRO OO eS OS Oe SU COs

‘eo 2 2 2.6 8's.”

(iii)

In Re Fonda, J. & G.R. Co., 95 F.2d 397 (2d Cir.

RA craks Rie GOL sce wy de oie Sud RES 8

In Re Missouri Pac. R. Co., 93 F. Supp. 852 (E.D.

OE Se eee y Oats ig wekhe be. 9

In Re New York, New Haven & Hartford Railroad

Co., 289 F. Supp. 451-(D. Conn. UF eT aso x eke 1]

In Re Penn Central Transportation Company, 329

F. Supp. 387 (ED. Pa. 1971) ................... 9

In Re Penn Central Transportation Company, 325 F.

F. Supp. 302 (E.D. Pa. 1971) ................... 1]

In Re Penn Central Transportation Company, 446

F.2d 1109 (3rd Cir. 1971), cert den. — BS.

___, 92 S.Ct. 943, 30 L.Ed.2d 787 i Ae 9

Moore v. Ogilvie, 394 U.S. 814 Sree 12

Myers v. Jay Street Connecting R.R., 259 F.2d 532

EC be Se ee ey er i 11

New Haven Inclusion Cases, 399 U.S. 392 (1970) ..... 9,11

New York Central Railroad Company v. United

States, 201 F. Supp. 958 (S.D.N.Y. , ee ll

Palmer v. Massachusetts, 308 U.S. 79 es 9,11

Pennsylvania v. United States (No. 70-1156, W.D.

Pa.) vacated as moot 401 U.S. 902 SOMOEE os ceed ees 9

Pennsylvania R. Co.—Merger—New York Central R.

emer MCA. SIS CIPO... ............,0.... 6

Penn Central Merger Cases, 389 U.S. 486 ae 6

Reading Co.—Purchase—Lehigh & S.R. System, 317

i ik NU ee 6

Schwartz v. Bowman, 244 F. Supp. 51 (S.D.N.Y.

1965), aff'd sub nom. Annenberg v. Allegheny

Corp. 360 F.2d 211 (2d Cir. 1966), cert. den.

sub nom. Schwartz v. Eaton, 385 U.S. 921,

eae iene et a eS | 8

(iv)

Southern Pacific Terminal Co. v. I.C.C., 219 U.S.

er rr rr eer ee ee, eee 12

Tampa Phosphate R. Co. v. Seaboard Coast Line R.

Co., 418 F.2d 387 (Sth Cir. 1969), cert. den. 398

Cte ene i 8

Thompson v. Texas Mexican R. Co., 328 U.S. 134

IN THE

Supreme Court of the United States

No. 71-

COMMONWEALTH OF PENNSYLVANIA, et al,,

Petitioners,

v.

UNITED STATES OF AMERICA, er al.,

Respondents.

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS FOR

THE THIRD CIRCUIT

The Petitioners, Commonwealth of Pennsylvania,

Pennsylvania Public Utility Commission, and United

Transportation Union,' respectfully pray that a writ of

certiorari issue to review the judgments and opinions of

the United States Court of Appeals for the Third Circuit,

entered in this proceeding on March 10, 1972.

OPINIONS BELOW

Orders No. 445 and 451 of the reorganization court

for The Central Railroad Company of New Jersey

"A labor organization representing the majority of train service

employees of The Central Railroad Comypany of New Jersey (CNJ).

2

(CNJ),? are not reported. (App. la-4a). The opinions of

the U.S. Court of Appeals for the Third Circuit, entered

March 1@, 1972, are not reported. (App. 5a-8a). The

judgments of the Court of Appeals are set forth in the

Appendix (App. 10a-13a).

JURISDICTION

The judgments of the U.S. Court of Appeals for the

Third Circuit were entered March 10, 1972. (App. 10a-

13a). This Court’s jurisdiction is invoked under 28 U.S.C.

1254(1), 2101(c).

QUESTIONS PRESENTED

1. Whether an order of the Interstate Commerce

Commission, authorizing a railroad in reorganization to

abandon a portion of its line, is reviewable in a plenary

action before a three-judge district court under the

Urgent Deficiencies Act (28 U.S.C. 2321-25), or must the

1.C.C.’s decision be reviewed either by or upon consent of

the reorganization court in the railroad’s reorganization

proceeding?

2. Whether a railroad reorganization court may direct

the temporary suspension of railroad operations for a

portion of the railroad pending final decision by the

Interstate Commerce Commission on the carrier’s applica-

tion to abandon the portion of railroad.

2No. B 401-67, U.S.D.C.-D.N.J. In Re The Central Railroad

Company of New Jersey. Order No. 445 was filed December 20,

1971; Order No. 451 was filed January 11, 1972.

3

STATUTES INVOLVED

The statutes involved are section 1(18)-(20) of the

Interstate Commerce Act, 49 U.S.C. 1(18)-(20), section

77/0) of the Bankruptcy Act, 11 U.S.C. 205(0}, and

seciions 1398(a) and 2325 of the Judicial Code, 28

U.S.C. 1398(a), 2325, and are set forth in Appendix B.

STATEMENT

This petition involves two orders of a railroad re-

organization court which were affirmed by the U.S.

Court of Appeals. The Central Railroad Company of New

Jersey (CNJ), a railroad in reorganization under section

77 of the Bankruptcy Act in the U.S District Court for

the District of New Jersey, on May 25, |97] filed 30

applications with the Interstate Commerce Commission

(I.C.C.) for permission to abandon various lines situated

in the Commonwealth of Pennsylvania and in the State of

New Jersey. The 30 applications? were filed under

section 1(18)}(20) of the Interstate Commerce Act, 49

U.S.C. 1(18)-(20). Together, the Proposals embrace

375.59 miles of CNJ operations, of which 235.75 miles

are in Pennsylvania (constituting CNJ’s entire operations

in Pennsylvania), and 139.84 miles are in New Jersey.

Ten of these applications—5 in New Jersey and 5 in

Pennsylvania—were summarily approved by the I.C.C. on

August 20, 1971. An action for judicial review of these

10 abandonments was instituted pursuant to the three-

judge court provisions of 28 U.S.C. 1336(a), 2284,

2321-25, in the U.S. District Court for the Middle

District of Pennsylvania by Commonwealth of Pennsyl-

vania, Pennsylvania Public Utilities Commission, and

, Finance Docket No. 26659 and Sub-Nos. ]-29.

4

various labor organizations.* The operation of these 10

abandonment orders was stayed pending agency recon-

sideration, which petitions for reconsiderations were

denied by final orders dated November 23 and served

December 15, 1971.

The remaining 20 line abandonment applications were

the subject of oral hearing by the I.C.C., which concluded

December 14, 1971.

Proceedings in the District Court

The CNJ reorganization court held a hearing on

December 15, 1971. The court directed CNJ’s trustee to

temporarily suspend on April 1, 1972 all operations in

the Commonwealth of Pennsylvania, pending final deci-

sion by the I.C.C. on the abandonment applications. In

addition, the court enjoined all state government agencies

and other nersons from instituting or maintaining any

action or proceeding affecting the abandonment of

operations in Pennsylvania in any other court, or without

first obtaining leave of the CNJ reorganization court to

do so. The court’s formal order, No. 445, was filed

December 20, 1971. (App. 1a-3a).

Later, on January 11, 1972, the CNJ reorganization

court entered Order No. 451, authorizing CNJ’s trustee

to implement the 10 abandonment orders of the I.C.C.

(App. 3a-4a).

Proceedings in the Court of Appeals

The Court of Appeals stayed the operation of Order

No. 451. which otherwise would have permitted the 10

abandonments, and consolidated the appeals from both

4Civil No. 71-416, Commonwealth of Pennsylvania, et al. ¥.

United States and Interstate Commerce Commission (US.DC--

M.D Pa.), filed September 24, 1971.

—

5

orders with two other orders. There were a number of

participants below.®

The Court of Appeals heard extensive argument. Its

opinions and judgments were entered March 10, 1972,

affirming the district court decisions in all respects. (Apn.

Sa-8a).

Proceedings in the Supreme Court

The Court of Appeals on March 22, 1971, denied

motions for stay of CNJ’s temporary suspension of

operations in Pennsylvania, scheduled to become effec-

tive April 1, 1972, and also denied a stay of the 10

abandonments earlier authorized by the IL.C.C. There-

after, applications were presented on March 23, 1971 to

Mr. Justice Brennan by petitioners (A-987) and by

Reading Company (A-988).

The I.C.C. the following day, March 24, 1972. issued

emergency orders authorizing Lehigh Valley Railroad

Company temporarily to take over all operations of CNJ

throughout Pennsylvania as of April 1, 1972.7 (App. 9a).

*Order No. 441 of the CNJ reorganization court, and Order No.

61 of the Lehigh Valley reorganization court. (Bank. No. 70-432

US.D.C.-E.DPa.)

®Parties filing briefs or memoranda in the U.S. Court of Appeals

included CNJ, United States of America, 1.C.C. (amicus), Reading,

Lehigh Valley, State of New Jersey, Lehigh Coal & Navigation

Company, Tenneco Chemicals, Inc. (amicus), Manufacturers Han-

over Trust Company, 3%% Mortgage Bondholders’ Protective

Committee, United Transportation Union, and jointly by Com-

monwealth of Pennsylvania and Pennsylvania Public Utility Com-

mission.

>

” Lehigh Valley has an application on file to acquire all of CNJ’s

Operations in Pennsylvania upon abandonment by CNJ. Similar

applications have been filed by Reading Company, owner of the

~—

6

The Applications for Stay were referred to Mr. Justice

Stewart, and by him denied on March 27, 1972.

ARGUMENT

The Third Circuit has decided important questions of

federal law which conflict with applicable decisions of

this Court, and which should be settled by this Court. A

number of major eastern railroads are in reorganization

under section 77 of the Bankruptcy Act, within the Third

Circuit. Among these railroads are Penn Central Transpor-

tation Company (Bank. No. 70-347, E.D.Pa.), Lehigh

Valley Railroad Company (Bank. No. 70-432, E.D.Pa.),

Reading Company (Bank. No. 71-828, E.D.Pa.), and CNJ,

the carrier involved in this petition for certiorari.

fee of CNJ’s line in Pennsylvania. Reading Co. —Purchase— Lehigh &

S.R. System, 317 LCC. 633 (1963). Lehigh Valley is 2 subsidiary

of Penn Central, the latter being required to maintain Lehigh

Valley operational as a condition to consummation of the

Penn-Central merger. Pennsylvania R. Co. —Merger—New York

Central R. Co., 327 LCC. 475, 554-55 (1966). Lehigh Valley

petitioned for reorganization following Penn Central's entry into

reorganization, pursuant to section 77(a) of the Bankruptcy Act.

11 US.C. 205(a), and requested reorganization as part of Penn

Central’s plan of reorganization, under the supervision of US.

many years, and is itself part of the C&O-B&O system. Penn

Central Merger Cases, 389 US. 486, 519 (1968); Chesapeake & O.

Ry. Co.—Control—Western Maryland Ry. Co., 328 LC.C. 684,

707-9 (1967). Commonwealth of Pennsylvania and Pennsylvania

Public Utility Commission oppose withdrawal by CNJ from

Pennsylvania, but if such abandonment is permitted, prefer

Reading’s applications and strongly oppose that of Lehigh Valley.

C/E

I THE REORGANIZATION COURT IS WITHOUT

JURISDICTION TO REVIEW ABANDONMENT

The CNJ reorganization court’s order requires that

persons (other than federal agencies) seek its permission

before suing to set aside I.C.C. line abandonment orders. ®

Yet it is clear from decisions of this Court that Congress

did not give reorganization courts exclusive jurisdiction

over all controversies that in some way may affect the

debtor’s estate. Callaway y. Benton, 336 U.S. i132, 142

(1949); Thompson v. Texas Mexican R. Co., 328 US.

134 (1946).

The Commission’s decision to allow the 10 abandon-

ments was entered under the provisions of the Interstate

Commerce Act, and review of its decision must be in a

Statutory court composed of three judges. 28 U.S.C.

2321-25. Indeed, the Supreme Court decided this ques-

tion in Thompson v. Texas Mexican R. Co., supra, a case

involving a railroad in reorganization under section 77 of

the Bankruptcy Act. The Court Stated, 328 U.S. at 151,

fn. 11:

If the [abandonment] order of the Commission

were challenged, its review could of course be had

only in the manner Provided by statute. See £/

Dorado Oil Works v. United States, 328 U.S. 12.

(emphasis supplied )

*The Court in fact denied permission to maintain the action in

the Middle District of Pennsylvania on January 10, 1972, the day

Prior to entry of Order No. 451 which implemented the 10 I.C.C.

abandonment orders.

—

Reference to the El Dorado case clearly indicates that

orders of the I.C.C. are to be reviewed by a district court

of three judges. 328 U.S. 12 at 19.

A statutory three-judge court is the exclusive and sole

method for review of I.C.C. abandonment orders entered

under section 1(18}(20) of the Interstate Commerce Act.

Tampa Phosphate R. Co. v. Seaboard Coast Line R. Co.,

418 F.2d 387, 398-400 (Sth Cir. 1969), cert. den. 398

U.S. 910; Schwartz v. Bowman, 244 F. Supp. 51, 64-68

(S.D.N.Y. 1965), aff’d sub nom. Annenberg v. Allegheny

Corp., 360 F.2d 211 (2nd Cir. 1966), cert. den. sub nom.

Schwartz v. Eaton, 385 U.S. 921.

Section 77(o) of the Bankruptcy Act provides that the

trustee initially determine whether to apply for a line

abandonment. The reorganization court is concerned

solely with the financial advantages or disadvantages to

the debtor. Public interest questions are for the regula-

tory agency. Jn Re Fonda, J. & G. R. Co., 95 F.2d 397,

400 (2d Cir. 1938):

_..the District Judge need only consider the finan-

cial advantages or disadvantages to the debtor

corporation’s estate in the event that permission to

abandon shall be granted by the appropriate regula-

tory bodies.

The court stated in Jn re Boston and Maine Corpora-

tion, 317 F. Supp. 1249, 1252 (D. Mass. 1970), that the

reorganization court should be “concerned only with the

economic effect of the abandonment on the debtor’s

estate and reorganization, and that questions of the effect

on public interest are to be left to the Interstate

Commerce Commission.”

In an analogous situation, involving passenger train

abandonments, the Third Circuit stated that “matters

relating to train discontinuances are not ordinarily heard

by the reorganization court.” Jn re Penn Central Trans-

9

portation Company, 446 F.2d 1109, 1113 (3rd Cir.

1971),certden. = U.S.__—« (1972). The District Judge

in that case had distinguished orders of the 1.C.C., which

require review in a statutory three-judge court, from the

situation under Rail Passenger Service Act of 1970.9

where an order of the I.C.C. is not involved. Jn Re Penn

Central Transportation Company, 329 F. Supp. 387, 389

(E.D. Pa. 1971). Further, a three-judge district court in

the Third Circuit denied a motion by Penn Central’s

trustee to transfer a passenger train abandonment case to

the Penn Central reorganization court. Pennsylvania y.

United States (W.D. Pa. Civi! No. 70-1156), vacated as

moot sub nom. Baker v. Pennsylvania, 401 U.S. 902

(1971).

An exception to the rule that I.C.C. abandonment

orders are reviewed in three-judge courts, is where the

abandonments are considered by the I.C.C. together and

as part of the plan of reorganization under section 77(e)

and 77(f) of the Bankruptcy Act. Chicago & N.W. Ry.

Co. v. United States, 52 F. Supp. 65 (N.D. Ill. 1943),

aff'd 320 U.S. 718; New Haven Inclusion Case, 399 U.S.

392, 429 (1970); In Re Missouri Pac. R. Co., 93 F. Supp.

852, 863 (E.D. Mo. 1950): cf. Palmer vy. Massachusetts,

308 U.S. 79, 88 (1939). At the request of CNJ, the

‘Commission has deferred hearings on CNJ’s plan of

reorganization, and has declined to consolidate the

abandonments with the plan of reorganization.

Abandonment decisions of the I.C.C. have a national

and widespread interest, and are not confined to the

particular railroad proposing the abandonment. This is

because the Nation’s railroads offer a unified system of

fail transportation, with standard track gauge, joint

through rates, and interchange of traffic without transfer

45 U.S.C. 501.

—

10

of lading. Accordingly, the abandonment of a segment of

CNJ in Pennsylvania will affect the national rail network.

If the ruling below is not reversed, it is anticipated that

the Third Circuit will accord similar treatment to line

abandonment decisions of the I-C.C. for other railroads.

This would seriously impair the effective workings of the

LC.C., and would deprive the Commonwealth of Pennsy!-

vania of an independent tribunal for review of line

abandonment decisions.

The question presented is of pressing importance to

the orderly administration of line abandonments between

reorganization courts and the Interstate Commerce Com-

mission, and the respective spheres of responsibility.

I. THE REORGANIZATION COURT IS WITHOUT

JURISDICTION TO DIRECT THE TEMPORARY

SUSPENSION OF PART OF A RAILROAD’S

OPERATIONS.

The CNJ reorganization court was without authority

to order CNJ’s trustee to temporarily suspend operations

in Pennsylvania on April 1, 1972. Such a suspension

occurred on April 1. 1972, and was highly prejudicial! to

the outcome of the LCC. proceedings’® The court's

order was an attempt to dictate the .C.C. decision.

It is settled that a discontinuance of operation is 2n

abandonment within the meaning of section 1{13)}(20)

of the Interstate Commerce Act. and requires prior 1.C.C.

approval. Smith v. Hoboken R. Co.. 32% US. 123. 130

(1946). Warren ». Palmer. 310 US. 132. 137-38 (1940):

1 The LCC. on May 26. 1972 (served June 2) concluded t

authonze CNJ's abandomment m Pennsylvania. subyect to conc:

tions. The LCC. order is not yet effective. is subject to petitions

for recomsaderation. and ultumate jodacal renew.

Thompson v. Texas Mexican R. Co., 328 US. 134.

144-45 (1946).

The courts will enjoin attempts to “temporarily

suspend”’ on the ground of financial poverty. Myers v

Jay Street Connecting R.R., 259 F.2d 532 (2d Cir.

1958); New York Central Railroad Company vy. United

States, 201 F. Supp. 958 (S.D.N.Y. 1962). To the extent

that a temporary suspension of Operation is governed by

State law, the reorganization court cannot evade such law

except as part of a complete plan of reorganization.

Palmer v. Massachusetts, 308 U.S. 79, 88 (1939).

There is no finding below of an unconstitutional taking

of property, but even if a finding were made. it would

not authorize the suspension of a portion of a railroad

operation, for that decision rests with the Interstate

Commerce Commission. Questions of an unconstitu-

tional taking of Property are decided in connection with

the plan of reorganization. In Re Penn Central T. rans por-

lation Company, 325 F. Supp. 302 (E.D. Pa. 197] ). The

threatened shutdown of the former New Haven was made

im connection with a motion to dismiss the proceeding.

Pursuant to section 77(e) and 77(z) of the Bankruptcy

Act. In Re New York. New Haven & Hartford Railroad

Co., 289 F. Supp. 451, 459 (D. Conn. 1968). However.

this Court warned of the risks an investor takes in

railroad securities. New Haven Inclusion Cases, 399 U.S.

392, 491 (1970).

The CNJ reorganization court has attempted to decide

the line abandonments in advance of the final LCC.

determination. As such, the court interferes with the

agency functions. This Court Stated in Smith » Hoboken

R Co. 328 US 123, 130 (1946)-

12

The point is that if the reorganization court decrees

a forfeiture in advance of consideration of the

problem by the Commission, it interferes with the

functions entrusted to the Commission under sec-

tion 77.

The question of a reorganization court’s power to

order a “temporary suspension”’ of operations is of great

importance to the administration of railroads in reorgani-

zation. We believe one commentator has summed up a

real danger:

The other possibility is that the roads will simply

stop operating. Now that Judge Augelli has shown

how to get around I.C.C. and state restrictions, rail

analysts are wondering what would happen if Judge

J. William Ditter, who has responsibility for the

Reading, should tell it to stop operating unprofit-

able routes and Judge Fullam should say the same to

the Lehigh and the Penn Central. The chaos that

would result would be enormous.

The question presented is substantial and is likely to

recur. Southern Pacific Terminal Co. v. LC.C., 219 US.

498, 515 (1911); Carroll v. President and Commissioners

of Princess Ann, 393 U.S. 175, 179 (1968); Moore v.

Ogilvie, 394 U.S. 814 (1969).

"! Business Week, No. 2230, May 27, 1972, at pp. 72-73.

13

CONCLUSION

For these reasons, the Court should issue a writ of

certiorari to review the judgments and opinions of the

Third Circuit.

Respectfully submitted,

J. SHANE’ CREAMER, Atty. General

Commonwealth of Pennsylvania

238 Main Capitol Building

Harrisburg, Pa. 17120

GORDON P. MacDOUGALL,

Spec. Asst. Atty. General

Commonwealth of Pennsylvania

705 Ring Building

Washington, D.C. 20036

PHILIP P. KALODNER, Counsel

EDWARD MUNCE, Asst. Counsel

ALFRED N. LOWENSTEIN, Asst. Counsel

Pennsylvania Public Utility Commision

118 North Office Building

Harrisburg, Pa. 17120

THOMAS P. SHEARER

711 Frick Building

Pittsburgh, Pa. 15219

Attorneys for Petitioners

June, 1972

la

APPENDIX A

UNITED STATES DISTRICT COURT FOR THE

DISTRICT OF NEW JERSEY |

In the Matter of )

THE CENTRAL In Proceedings for

RAILROAD COMPANY _ ) the Reorganization of

OF NEW JERSEY a Railroad

No. B 401-67

Debtor. as

)

ORDER NO. 445

[Filed December 20, 1971]

R. D. TIMPANY, Trustee of the property of the

Debtor, having filed a verified petition seeking instruc-

tions; and the matter having come on for a hearing which

was duly noticed; and the Court having considered the

verified petition, the affidavits of the Trustee and Robert

Frederickson, other evidence offered by the parties at the

hearing, and matters of record in the proceeding; and all

parties in interest having been given the opportunity to

cross-examine, to introduce evidence and to be heard;

and good cause appearing,

IT IS, on this 20th day of December, 1971,

ORDERED, that the Trustee be and he hereby is

directed to temporarily suspend on April 1, 1972 all

operations of the Debtor in the Commonwealth of

Pennsylvania pending final decision by the Interstate

Commerce Commission on the abandonment application

in Finance Docket No. 26659, et al.; and it is

EIST ORL arene SOR AERO I UE LIL ER REN ME PE Ae RL A

2a

FURTHER ORDERED, that in the event the afore-

mentioned abandonment application is denied by the

Interstate Commerce Commission or any court in whole

(or in any respect which this Court shall find, after

application on 10 days notice and hearing, shall not be in

the best inerest of the Debtor’s estate) the Trustee be and

he hereby is directed to cease all operations of the

Debtor; and it is

FURTHER ORDERED, that all parties and all other

persons including therein all firms, corporations, state

and local (but not federal) governmental entities (their

departments, agencies, officers, agents and employees)

and anyone in privy, concert or participation with any

such parties or persons having notice or knowledge of the

entry of this Order are severally enjoined and restrained

from instituting or maintaining any action or proceeding

affecting the operations (or the cessation or abandon-

ment thereof) of the Debtor in the Commonwealth of

Pennsylvania in any court other than this Court, or

without first obtaining leave of this Court to do so;

except that nothing contained herein shall be construed

in any manner whatsoever (a) to affect the right of

anyone to institute or proceed with any proceeding in

any other railroad reorganization pending in any other

jurisdiction and (b) to affect the right of anyone to seek

any proper appeal or other review of the within Order in

the United States Circuit Court of Appeals for the Third

Circuit; and it is

FURTHER ORDERED, that the Trustee be and he

hereby is authorized to draw down as needed the

$1,000,000 referred to in the aforementioned Petition

for Instructions and to utilize such funds for operations

in accordance with the above directions; and it is

a

3a

FURTHER ORDERED, that this Court hereby re-

serves jurisdiction of the subject matter of the within

Order; and it is

FURTHER ORDERED, that a copy of this Order be

served upon all intervenors in this Reorganization Pro-

ceeding, all persons participating in the hearing on the

Petition for Instructions, and all persons party to the

aforementioned abandonment proceedings before the

Interstate Commerce Commission.

/s/ Anthony T. Augelli

CJ. US.D.C.

ORDER NO. 451

ORDER AUTHORIZING ABANDONMENT OF

CERTAIN LINES AND OPERATIONS

[Filed January 11, 1972]

R. D. TIMPANY, Trustee of the property of the

Debtor, having filed on May 7, 1971 a verified petition

for Authority to Abandon Certain Lines and Operations

and To Sell; and the Court by Order No. 408 having

directed notice with respect to same; and the Court by

Order No. 410, after hearing on the aforementioned

petition, having authorized the Trustee to verify and file

with the Interstate Commerce Commission an abandon-

ment application, the Court reserving jurisdiction: and

the Interstate Commerce Commission having entered

orders bearing service date of August 24, 1971 with

respect to ten of the lines and operations involved: and

the Trustee having on September 7, 1971 filed a further

verified petition seeking an order authorizing the aband-

onment of those ten lines and operations as detailed in

5 — ms wea, A

TERRES TN pe oi beta ah ae Ate ae

4a

the petition and the orders of the Interstate Commerce

Commission attached thereto; and the Interstate Com-

merce Commission subsequently having by order bearing

service date of November 26, 1971 modified one of the

ten orders attached to the aforementioned verified

petition of the Trustee of September 7, 1971; and the

matter having come on for hearing which was duly

noticed; and all parties in interest having been given the

opportunity to cross examine the Trustee, to introduce

evidence and to be heard; and the Court having con-

sidered the record before it and the arguments of counsel;

and good cause appearing, it is on this 11th day of

January, 1972,

ORDERED that the Trustee be and he hereby is

authorized to abandon the lines and operations set forth

in his verified petition of September 7, 1971 and

specifically referred to in the orders of the Interstate

Commerce Commission attached thereto and as modified

by the Interstate Commerce Commission order bearing

service date of November 26, 1971; and it is further

ORDERED that the Trustee be and he hereby is

authorized to take any and all steps necessary to Carry

out the foregoing. :

ANTHONY T. AUGELLI,

C.J.U.S.D.C.

/s/ Anthony T. Augelli

C.J.U.S.D.C.

Sa

UNITED STATES COURT OF APPEALS

For THE THirp Circuit

Nos. 71-2163, 72-1050 and 72-1051

——

In the Matter of

THE CENTRAL RAILROAD COMPANY OF

NEW JERSEY, Debtor

COMMONWEALTH OF PENNSYLVANIA

and PENNSYLVANIA PUBLIC UTILITY

COMMISSION,

Appellants in No. 71-2163

READING COMPANY,

Appellant in No. 72-1050

UNITED TRANSPORTATION UNION,

Appellant in No. 72-1051

———

(Appeals from D. C. Order No. 445)

(D. C. No. B-401-67 In Bankruptcy )

APPEALS From THE Unitep States District Court

For THE District o— New Jersey

Argued March 9, 1972

Before McLauGHtin, Van Dusen and ALpisert. Circuit Judges

SHE PORES eS KM PIES PT ME AIS ES

OPINION OF THE COURT

(Filed March 10, 1972)

Per CuRIAM:

We have carefully considered all the contentions pre-

sented by the various Appellants by briefs and oral argu-

ment in these expedited appeals. We do not find them

persuasive to require that Order No. 445 of the Bankruptcy

Court be vacated.

The Order No. 445 of the Bankruptcy Court will be

affirmed.

o

A True Copy:

Teste :

Clerk of the United States Court of Appeals

for the Third Circuit

7a

UNITED STATES COURT OF APPEALS

For tHE TuHirp Circun

No. 72-1023

——

In the Matter of

THE CENTRAL RAILROAD COMPANY OF

NEW JERSEY, Debtor

COMMONWEALTH OF PENNSYLVANIA and

PENNSYLVANIA PUBLIC UTILITY COMMISSION.

Appellants

(Appeal from D. C. Order No. 451)

(D. C. No. B-401-67 In Bankruptcy)

ApPpeat From tHe Unitep States District Court

For tHE District of New Jersey

Argued March 9, 1972

Before McLauGuuin, Van Dusen and ALpisert, Circuit Judges

OPINION OF THE COURT

(Filed March 10, 1972)

Per Curiam:

We have carefully considered all the contentions pre-

| sented by the various Appellants by briefs and oral argu-

ment in this expedited appeal. We do not find them

8a

persuasive to require that Order No. 451 of the Bankruptcy

Court be vacated.

The Order No. 451 of the Bankruptcy Court will be

affirmed.

A True Copy :

Teste -

Clerk of the United States Court of Appeals

for the Third Circuit.

9a

INTERSTATE COMMERCE COMMISSION

WASHINGTON, D.C. 20423

For Release: Immediate

Friday, March 24, 1972 No. 120-72

LEHIGH VALLEY GIVEN EMERGENCY AUTHORITY TO

TAKE OVER CNJ OPERATIONS IN PENNSYLVANIA

The Commission today issued an emergency service

order (No. 1094) authorizing the Lehigh Valley Railroad

Company to take over all operations of the Central

Railroad of New Jersey throughout Pennsylvania as of

April 1, 1972. Today’s order was made necessary by an

embargo imposed by the CNJ preliminary to cessation of

operations in Pennsylvania as of April 1. The purpose of

this order is to insure continuous service to, from and

through Pennsylvania over the lines now being operated

by the Central of New Jersey.

The Commission has under active consideration an

application of the Central Railroad of New Jersey for

emergency authority to interchange traffic with various

railroads over routes which by-pass the lines it has been

Operating in Pennsylvania. Action on the application is

anticipated shortly.

Following today’s action by the Commission, the

Central of New Jersey presumably will retire from its

operation in Pennsylvania pursuant to its embargo notices

and directives from the governing reorganization court.

However, it still will be required to leave intact certain

facilities essential to the safe operations and control of

movement over the track, including train control and

signal devices.

10a

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

Nos. 71-2163, 72-1050 and 72-1051

In the Matter of

THE CENTRAL RAILROAD COMPANY OF NEW JERSEY, debtor

Commonwealth of Pennsylvania and

Pennsylvania Public Utility Commission,

Appellants in No. 71-2163

Reading Company, Appellant in No. 72-1050

United Transportation Union, Appellant in No. 72-1051

(Appeals from D.C. Order No. 445)

(D.C. No. B-401-67 In Bankruptcy)

ON APPEALS FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF NEW JERSEY

Present: McLaughlin, Van Dusen and Aldisert, Circuit Judges.

JUDGMENT

This cause came on to be heard on the record from the

United States District Court for the District of New

Jersey and was argued by counsel.

On consideration whereof, it is now here ordered and

adjudged by this Court that Order 445 of the said District

—_—

lla

Court, filed December 20, 1971, be, and the same is

hereby affirmed. Costs taxed against Appellants.

ATTEST:

/s/ Thomas Quinn

Clerk

Dated: March 10, 1972

Certified as a true copy and

issued in lieu of a formal

mandate on March 22, 1972.

Test: Thomas F. Quinn

Clerk, United States Court

of Appeals for the

Third Circuit.

i RF *

12a

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

No. 72-1023

In the Matter of

THE CENTRAL RAILROAD COMPANY OF NEW JERSEY,

Debtor

Commonwealth of Pennsylvania and

Pennsylvania Public Utility Commission,

Appellants

(Appeal from D.C. Order No. 451)

(D.C. No. B-401-67 In Bankruptcy)

ON APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF NEW JERSEY

Present: McLaughlin, Van Dusen and Aldisert, Circuit Judges.

JUDGMENT

This cause came on to be heard on the record from the

United States District Court for the District of New

Jersey and was argued by counsel.

On consideration whereof, it is now here ordered and

adjudged by this Court that Order No. 451 of the said

13a

District Court, filed January 11, 1972, be, and the same

is hereby affirmed. Costs taxed against Appellants.

ATTEST:

/s/ Thomas F. Quinn

Clerk

Dated: March 10, 1972

Certified as a true copy and

issued in lieu of a formal

mandate on March 22, 1972.

Test: Thomas F. Quinn

Clerk, United States Court

of Appeals for the

Third Circuit.

ee

lb

APPENDIX B

Section 1(18)-1(20) of the Interstate Commerce Act,

49 U.S.C. 1(18)-1(20):

(18) After ninety days after this paragraph takes

effect no carrier by railroad subject to this part shall

undertake the extension of its line of railroad, or the

construction of a new line of railroad, or shall acquire

or operate any line of railroad, or extension thereof, or

shall engage in transportation under this part over or

by means of such additional or extended line of railroad,

luniess and until there shall first have been obtained from

the Commission a certificate that the present or future

public convenience and necessity require or will require

the construction, or operation, or construction and opera-

tion, of such additional or extended line of railroad,

and no carrier by railroad subject to this part shall aban-

don all or any portion of a line of railroad, or the opera-

tion thereof, unless and until there shall first have been

obtained from the Commission a certificate that the

present or future public convenience and necessity permit

of such abandonment. Nothing in this paragraph or in

section 5 shall be considered to prohibit the making of

contracts between carriers by railroad subject to this

part, without the approval of the Commission, for the

joint ownership or joint use of spur, industrial, team,

switching, or side tracks.

(19) The application for and issuance of any such

certificate shall be under such rules and regulations as tc

hearings and other matters as the Commission may from

time to time prescribe, and the provisions of this part

shall apply to all such proceedings. Upon receipt of

any application for such certificate the Commission shall

cause notice thereof to be given to and a copy filed with

the governor of each State in which such additional or

extended line of railroad is proposed to be constructed or

operated, or all or any portion of a line of railroad, or

a

2b

the operation thereof, is proposed to be abandoned, with

the right to be heard as hereinafter provided with respect

to the hearing of complaints or the issuance of securities ;

and said notice shall also be published for three consecu-

tive weeks in some newspaper of general circulation in

each county in or through which said line of railroad is

constructed or operates.

issue it for a portion or portions of a line of railroad, or

extension thereof, described in the application, or for the

partial exercise only of such right or privilege, and et

certificate as prayed for, or to refuse to issue it, or Pi

attach to the issuance of the certificate such terms and

conditions as in its judgment the public convenience and

necessity may require. From and after issuance of such

certificate, and not before, the carrier by railroad may,

without securing approval other than such certificate,

comply with the terms and conditions contained in or

attached to the issuance of such certificate and proceed

with the construction, operation, or abandonment cov-

ered thereby. Any construction, operation, or abandon-

ment contrary to the provisions of this paragraph or of

paragraph (18) or (19) of this section may be enjoined

by any court of competent jurisdiction at the suit of the

United States, the Commission, any commission or regu-

lating body of the State or States affected, or any party

in interest; and any carrier which, or any director, offi-

cer, receiver, operating trustee, lessee, agent, or person,

acting for or employed by such carrier, who knowingly

authorizes, consents to, or permits any violation of the

provisions of this paragraph or of paragraph (18) of

this section, shall upon conviction thereof be punished

by a fine of not more than $5,000 or by imprisonment for

not more than three years, or both. '

Section 77(0) of the Bankruptcy Act, 11 US.C. 205(0):

(o) The trustee or trustees, from time to time, shall

determine what lines or portions of lines of railroad and

-_

3b

what other property of the debtor, if any, should be

abandoned or sold during the pendency of the proceed-

ings in the interest of the debtor's estate and of ultimate

reorganization but without unduly or adversely affect-

ing the public interest, and shall present to the judge

petitions, in which other parties in interest may join, for

authority to abandon or to sell any such property; and

upon order of the judge made after a hearing pursuant

to such reasonable notice by publication or otherwise as

the judge may direct to parties in interest, authorizing

any such abandonment or sale, but only with the ap-

proval and authorization of the Commission when re-

quired by the Interstate Commerce Act as amended Feb-

ruary 28, 1920, or as it may be hereafter amended, the

trustee or trustees shall take all steps and carry out all

proceedings necessary for the consummation of any such

abandonment or sale in accordance with the order of the

judge. Any such order of the judge shall be a final order

for the purposes of appeal. The judge may order and

decree any sale of property, whether or not incident to

an abandonment, under this subsection at public or

private sale and subject to or free from liens. The pro-

ceeds derived from any such sales shall be received by the

trustee or trustees subject, in case the property was sold

free from lien, to any liens thereon at the time of sale,

and shall be applied or disposed of in such manner as the

judge by further order shall direct. The expense of such

sale shall be borne in such manner as the judge may de-

termine to be equitable. The judge may order the trus-

tee or trustees of the debtor to deposit such proceeds with

any mortgage trustee entitled thereto, to be applied in

payment of all or part of such mortgage.

Judicial Code, Title 28:

Sec. 1398. [As codified June 25, 1948, August 30, 1964.]

[28 U.S.C. § 1398.] Inverstate Commerce CoMMISSION’S