MR. JUSTICE CLARK delivered the opinion of the Court.
This is an appeal from the judgment of a three-judge District Court, 241 F.Supp. 974, setting aside orders of the Interstate Commerce Commission, 307 I. C. C. 493, 312 I. C. C. 277, 317 I. C. C. 502, which granted the
BACKGROUND OF LAKE CALUMET HARBOR PORT.
Lake Calumet Harbor Port is one of seven facilities within the Port of Chicago available for the handling of water-borne freight. It is a shallow lake approximately two miles in length and covers approximately 1,250 acres. It is accessible by water from Lake Michigan via the Calumet River into the heart of the Chicago switching district, a distance of some six miles.
As early as 1880 one of the Pullman companies constructed trackage that first brought rail service to Lake Calumet. Pullman reserved some 300 to 500 acres for the development of a harbor and later donated some acreage to the United States for the development of a turning basin. Comprehensive plans for dredging Lake Calumet harbor and the filling of submerged lands were prepared in 1916 by an engineer for the City of Chicago. In 1917 Pullman waived riparian rights to some four miles of Lake Calumet shoreline to the City of Chicago and in 1935 gave additional land to the United States for the purpose of widening the Calumet River.
In 1947 the Illinois Central, an appellant here, attempted to enter the port area. Pullman and two of the seven appellants here. New York Central and the Belt Railway Company of Chicago, opposed the application which was addressed to the Illinois Commerce Commission. In 1949, during the pendency of the proceeding, Rock Island acquired the common stock and certain industrial property of Pullman for $2,200,000. Rock Island then entered the proceedings in opposition to Illinois Central. The application of the latter was approved by the Illinois Commerce Commission but the Circuit Court of Cook County rejected it and the Supreme Court of Illinois affirmed in 1953. Chicago, R. I.
The Interstate Commerce Commission in approving the acquisition of Pullman by Rock Island—over the objections of Illinois Central and the Belt Railway Company, each of which also sought to acquire Pullman or a portion of its trackage on the lake—imposed certain conditions on Rock Island designed to guarantee fair practices, assure nondiscriminatory handling of the traffic of other railroads to and from the lake and guarantee the mutuality of traffic and operating relationships theretofore existing between Pullman and the other roads. Rock Island, however, continued to be the only line providing direct service to the port.
The Chicago Regional Port District was created as a municipal corporation by the State of Illinois in 1951. Its purpose was the development of Lake Calumet into a major deep water port facility for both domestic and import-export traffic via the St. Lawrence Seaway. In 1954 the Port District declared by resolution that the public's, as well as the port's, interest required that its trackage be accessible to as many railroads as possible. In 1955 the Port District acquired the lake and some adjoining property from the City of Chicago and began dredging the lake and constructing port facilities at its southern end; it also built 14 miles of railroad yard "hold" tracks in the port, docks, two 6,500,000-bushel grain elevators, three transit sheds occupying 300,000 square feet of space, a back-up warehouse with 200,000 square feet of space, and streets. These facilities cost $24,000,000 and were paid for by the sale of Port District revenue bonds. By contract with the Port District the Rock Island operates over the trackage of the Port District and also serves the Calumet Harbor Terminals, Inc., a private harbor facility. No other railroads reach the port on their own tracks. The Nickel
THE APPLICATIONS BEFORE THE COMMISSION.
On October 22, 1956, the appellants Illinois Central Railroad Company and the Pennsylvania Railroad Company, requested authority from the Commission under the provisions of 49 U. S. C. § 1 (18) to construct 1.431 miles of new track that would connect their lines to the present trackage of an affiliate of Illinois Central that passes near Lake Calumet's southwestern shore. Similar applications were subsequently filed by the Chicago South Shore and South Bend Railroad, the Belt Railway Company of Chicago, the Michigan Central Railroad Company, the New York Central Railroad Company and the Indiana Harbor Belt Railroad Company. All of the applicants sought to operate directly to and from the Lake Calumet port, rather than use the facilities of the Rock Island. The latter, as well as the Nickel Plate, requested and was given leave to intervene as were other parties.
The original applications of the seven railroads did not specifically request authority from the Commission to operate over the Port District's tracks. It appears that appellants were under the impression that formal Commission authority was not necessary because of the
On October 5, 1959, the Commission adopted the Hearing Examiner's recommendations but ruled that the applicants should file supplemental applications covering their proposed operations within the Port District, as provided in the proposed lease with the District. The Commission discussed the lease and indicated that it was satisfactory. It did, however, feel that the exclusive right of operation clause should be eliminated. The Commission also ruled that Rock Island's service to Calumet Harbor Terminals, Inc., was not to be disrupted and that every industry located at Lake Calumet Harbor was to have direct rail service, not only from the applicants but the Rock Island and Nickel Plate, if they so elected.
In April 1960, the appellants, pursuant to the Commission's requirement, filed supplemental applications for specific authority to operate within the Port District. The proposed lease covered by these applications eliminated the exclusionary provisions to which the Commission had objected. Despite the request of Rock Island and Nickel Plate for a hearing on the new lease the Commission
In June 1961, however, the appellants and the Port District found it necessary to amend their operating agreement and appellants filed a second supplemental application asking for approval of the same. This agreement modified the one previously approved by the Commission. The old agreement had provided for a 5% annual rental for the use of the Port District's rail facilities based upon the valuation of the latter, but not to exceed $2 per car, loaded or empty, including locomotives. The new agreement provided for a flat charge of $2 for each loaded freight car; it also specifically eliminated industry-owned tracks within the Port District from the agreement; and provided that it did not affect the right of Rock Island to operate in the Port District nor grant any exclusive privilege to the appellants. The Commission, after once again denying appellees' request for a hearing, approved this final agreement on November 26, 1962. The Commission found that the changes merely clarified the rights and responsibilities of the parties. As to the rentals it found that "rentals generally may be considered reasonable where, as here, the facts of record disclose that nonaffiliated parties, after bargaining at arm's length, have entered into an agreement under which increased service will be offered to the public, all parties to the agreement will benefit financially, and the interveners' ability to continue to serve the public will not be impaired."
PROCEEDINGS IN THE DISTRICT COURT.
The Rock Island and Nickel Plate then filed this suit seeking to enjoin the Commission's orders and the three-judge District Court vacated the orders on the grounds we have stated.
The court found that it was faced with two basic problems: (1) whether there was "substantial evidence" to support the order of the Commission and (2) whether the refusal of the Commission to have a hearing on the lease agreement between the applicants and the Port District denied Rock Island and Nickel Plate due process of law.
With respect to the first problem the court found "substantial support" for some of the "important findings" of the Commission. However, it found that the record did not "offer ample support" for certain of its conclusions. These conclusions appeared to have been drawn by the Commission from the prior findings which the court had found to have "substantial support" in the record.
On the supplemental application for authority to operate within the Port District the court held there was insufficient evidence to support the order of approval; that the rental under the final contract was materially different from the provisions of the original plan and bound the Rock Island and Nickel Plate to operate under the same condition without affording them the right of a hearing. By a divided court it ordered a complete rehearing on all issues. We cannot agree with either the findings of the District Court or with its disposition of the case.
APPLICABLE STANDARD ON REVIEW.
At the outset the Commission and the appellant railroads contend that the court did not apply the correct standards in reviewing the Commission's action. As we
We have concluded that the court erred in setting aside the conclusions of the Commission. The Act authorizes the issuance of certificates such as the ones sought here when the Commission finds that the future public convenience and necessity will require additional railroad service. 49 U. S. C. § 1 (18). This Court has repeatedly held that if a railroad, voluntarily proposing the extension of its lines, can show that its proposal "either presently or in the reasonably near future will be self-sustaining, or so nearly so as not unduly to burden interstate commerce, the Commission may issue a certificate authorizing the proposed line," Interstate Commerce Commission v. Oregon-Wash. R. & Nav. Co.,
Moreover, we believe that the District Court erred in striking down the conclusions of the Commission. These conclusions
As we view the original applications of the appellants they proposed "to extend their operations to serve the Lake Calumet Harbor District near Chicago, in Cook County, Illinois . . . future industries, elevators, warehouses, docks and piers in the Calumet Harbor Port area." The prayer was that "your Commission issue a certificate of public convenience and necessity authorizing the construction and operation for which authority is herein sought."
The other applications had similar allegations and the other appellants' questionnaire returns contained like statements. Moreover, the answers filed on May 16, 1957, by Rock Island and Pullman to the applications, addressed themselves solely to the proposition that "applicant's extension of its line of railroad and operations through trackage rights to serve territory [the Port District] heretofore served exclusively and adequately by petitioners cannot be supported by public convenience and necessity, could mean only a duplication of rail service, and would create unsound and uneconomic conditions in transportation."
As we read the record before the Hearing Examiner the case was tried on the theory that the applications included the proposed operations within the Port District. During the presentation of appellants' evidence objection was made to the introduction of the proposed lease between appellants and the Port District on the ground that it was beyond the scope of the application. The Hearing Examiner overruled the objection. The testimony of virtually all of the appellants' witnesses was
The record establishes beyond a doubt that the appellants were in fact seeking Commission approval of the entire project. Their offering of the unexecuted, proposed contract into evidence is one of many indications of this fact. The Hearing Examiner specifically noted, at the time the contract was received in evidence, that its approval by the Commission was necessary in order for the appellants to serve the Port District as they proposed. It would, indeed, have been a futile act for the appellants
It is true that appellees objected to the introduction of the proposed agreement because they felt, and rightly so, that the application which the appellants had submitted was not technically broad enough for the authority they sought. The Hearing Examiner overruled them and they were obliged to—and did—offer their evidence on the matter. When the question came before the Commission for decision, it ruled that the applications were technically deficient and permitted the parties to correct the same through the filing of supplemental applications. At no time did the Commission find that the proposal to operate within the Port District had not been adequately explored and examined. Rather, a careful reading of the Commission's entire opinion leads us to the opposite conclusion. At every stage of the proceedings before the Hearing Examiner and also before the Commission, operations of the appellants within the Port District were considered an integral part of the overall plan which they submitted.
The ruling of the Commission that the supplemental applications should be considered in "conjunction with the original application," did not, in our view, deprive appellees of due process of law. When appellees requested a full hearing on the supplemental applications the grounds they alleged were that they were adequately serving the port; that they were prepared to spend further sums of money in the construction of facilities to serve it; that they were entitled to retain the traffic of the Port District; that there was no adequate reason for extension of the railroad lines of appellants into territory heretofore served exclusively by appellees; and that the extension of the railroad lines of appellants was not justified by public convenience and necessity. As the Commission itself found, "Examination of the record discloses
The changes in the proposed lease agreement which the Commission approved without a further hearing involved the removal of the "exclusive right to operate within the Port" clause, which that document had given the appellants, and the formula for determining the annual rental to be charged by the Port District. As to the former, it can hardly be maintained that this worked a hardship or detriment upon the appellees. The removal of the clause, in fact, made certain that appellees were not precluded from continuing their present operations. As to the rental clause, it will be remembered that the original proposed agreement provided for 5% annual rental based on the value of the land and tracks, but not to exceed $2 per car. This was changed in the first supplemental application to a charge of not to exceed $2 per revenue car or locomotive. The final contract merely provided for a charge of $2 for each revenue car, which was much more favorable to the appellants than either of the former clauses. Moreover, the final charge compared favorably to other per-car rates previously approved by the Commission. In the light of these considerations, as well as the fact that appellees were invited and refused to sit in on the negotiation of the contract; had ample opportunity and did present their evidence as to the reasonableness of the charge for the use of Port District property; were, and are, in nowise bound by the contract; and, finally, in view of the insignificance of the changes in the final agreement compared with the former ones, we are led to conclude that appellees were not entitled to another hearing.
The judgment is therefore reversed and the case is remanded to the District Court with directions to sustain the Commission's orders.
It is so ordered.
MR. JUSTICE BLACK, dissenting.
The District Court set aside an order of the Interstate Commerce Commission on the ground that the evidence failed to support its findings of fact. I dissent from the Court's reversal of that holding. In Universal Camera Corp. v. Labor Board, 340 U.S. 474, 488, it was said that "Congress has merely made it clear that a reviewing court is not barred from setting aside a Board decision when it cannot conscientiously find that the evidence supporting that decision is substantial, when viewed in the light that the record in its entirety furnishes, including the body of evidence opposed to the Board's view." In the case here the District Court found that it could not conscientiously support the Commission's findings and I would affirm its judgment, adhering to the principles so firmly announced in Universal Camera, supra.