Opinion for the Court filed by District Judge OBERDORFER.
OBERDORFER, District Judge:
This is a petition to review a decision of the Interstate Commerce Commission exempting the Indiana Hi-Rail Corporation ("IHR")
Petitioner, Jack O. Black, Indiana Legislative Director of the United Transportation Union ("UTU"), challenges various aspects of the Commission's decision. First, petitioner argues that IHR's takeover of the railway line was a "consolidation," "merger," or "acquisition of control" pursuant to 49 U.S.C. § 11343 (1982). In such transactions, the imposition of employee protective conditions is mandatory under 49 U.S.C. § 11347 (1982). Second, petitioner contends that the Commission's further decision to grant IHR a general exemption from Commission regulation under the Interstate Commerce Act was arbitrary and capricious. Finally, UTU argues that during the proceedings before the Commission, the Commission improperly treated a petition for reconsideration filed by UTU as subject to the criteria for "revocation" of
For the reasons stated below, the Commission's determination that the imposition of employee protective conditions was not mandatory is affirmed. The Commission's discretionary refusal to impose such conditions on IHR, and its grant to IHR of a general exemption from Commission regulation, are similarly affirmed. Finally, even if the Commission erred in its characterization of UTU's petition for reconsideration, it does not appear in this case that any "substantial rights" of UTU were thereby affected. 28 U.S.C. § 2111 (1982).
The Rushville line has already been the object of considerable agency and judicial attention. In December of 1977, N & W applied to the Commission for authority to abandon the line pursuant to 49 U.S.C. § 10903 (1982),
In the meantime, IHR, an entity first organized in 1980,
At the same time that IHR was acquiring the Connersville line, it also revealed a strong interest in acquiring the Rushville line as well. In the Commission proceedings on IHR's application to acquire the Connersville line, indeed, IHR actually announced that it had "negotiated an agreement with N & W to acquire" the Rushville line. Indiana Hi-Rail Corp. — Feeder Line Acquisition, supra, 366 I.C.C. at 46. It appears that in fact no final sale was actually consummated, but contacts between N & W and IHR continued. When the Commission subsequently considered the Rushville line abandonment application on remand from the Seventh Circuit Court of Appeals, IHR intervened and filed a brief urging that the Commission's processing of the application be expedited.
Upon the withdrawal of IHR's purchase offer, the Commission returned to its handling of the Rushville line as an abandonment matter.
Yet while N & W was thus terminating its operations on the Rushville line, public negotiations to sell the line to IHR resumed. Respondents and intervenor assert that on April 8, 1983 — the eve of the cessation of service — N & W notified IHR of its willingness to sell the Rushville line on new terms and also to lease the line to IHR pending consummation of the sale. J.A. 3, 5, 9. Almost immediately, IHR and N & W made public an agreement on the sale of the line, id., and IHR executed a lease with N & W on April 12, 1983, J.A. 41 — the same day on which N & W ceased service on the line. On the following day, IHR applied to the Commission for a temporary exemption from ICC regulations so as to enable IHR to operate the line under lease pending consideration by the Commission of a petition for a permanent exemption with respect to IHR's operation of the line after the sale was consummated. J.A. 1-7.
On April 15, 1983, the ICC rendered a decision that granted the temporary exemption, and that allowed IHR to operate the line during the period of the lease without having to provide any employee protections in doing so. J.A. 8-11. Simultaneously, IHR filed tariffs, which became effective on April 20, 1983, with respect to its prospective operations on the Rushville line. The Commission represents — without contradiction by petitioner — that IHR's operations on the line commenced on April 20, 1983. See Respondents' Brief at 36-37 & n. 26, Addendum E.
Soon thereafter, on July 11, 1983, the ICC also granted IHR's petition for a permanent exemption, effective August 11, 1983. J.A. 54-60. Paralleling the pattern of the temporary exemption decision, the permanent exemption decision also imposed no labor protection requirements on IHR with respect to its operation of the line. J.A. 58-59.
The Commission's July 11, 1983 decision stated that "petitions for reconsideration must be filed by August 1, 1983." J.A. 59, 60. UTU filed such a petition with the Commission on August 1, 1983. J.A. 84. In the Commission's ruling on the petition, however, it announced that it would consider the petition according to the standard for "revocation" of an exemption, set out in 49 U.S.C. § 10505(d) (1982). J.A. 84-85. The ruling, served on October 26, 1983, denied the petition. Id. at 85, 89.
This appeal followed.
It is well established that the imposition of labor protective conditions on the acquiring entity is mandatory for any railway transaction that is a "consolidation," "merger," or "acquisition of control" pursuant to 49 U.S.C. § 11343. 49 U.S.C. § 11347; see McGinness v. Interstate Commerce Commission, 662 F.2d 853, 857 (D.C.Cir.1981).
At oral argument, the emphasis of the presentation by counsel for the Commission
Commission precedent states that "A line is fully abandoned after a certificate of public convenience and necessity has been issued, and when operations have ceased, tariffs have been canceled and a letter has been filed with the Commission that the abandonment has been consummated." Common Carrier Status of States, State Agencies and Instrumentalities, and Political Subdivisions, 363 I.C.C. 132, 135 n. 2 (1980), aff'd, Simmons v. ICC, supra. In the present case, though the Commission made no explicit review of N & W's compliance with these formal criteria, there is evidence in the record that would have supported a finding of compliance with at least three of these four requirements:
a) On March 3, 1983, the Commission issued a certificate of public convenience and necessity to N & W authorizing it to "abandon" the Rushville line. J.A. 8, 30, 55; Petitioner's Brief at 14a-15a.
b) Between April 12, 1983, and April 20, 1983, N & W ceased its operations on the line. J.A. 3, 8, 30.
c) On April 12, 1983, N & W cancelled its tariffs on the line. J.A. 3, 8, 30.
Petitioner, however, has raised legitimate concerns with respect to the fourth Commission criterion: the filing of a letter confirming that the abandonment of the line has been consummated. On April 20, 1983, N & W filed a letter with the Commission duly citing the Commission's March 3, 1983 abandonment order, but inconsistently reporting only that "operations" on the Rushville line had been "discontinued." J.A. 26, 40.
Numerous federal courts, moreover, have stated in a related context that a determination as to whether there is an "abandonment" should involve a more searching and functional inquiry about the actual intent of the parties to the transaction
Petitioner, also, raises the "intent" issue directly. Petitioner argues that N & W and IHR had "all along ... planned to transfer" the Rushville line to IHR, Petitioner's Brief at 25, and that the only purpose of the abandonment process was to take the transaction out from under 49 U.S.C. 11343 and thus avoid the mandatory employee protection requirements that would thereby have applied. See id. at 25-26; J.A. 15-16. Although respondents contend that N & W and IHR finally succeeded in reaching agreement on an eventual sale only on the very eve of N & W's abandonment of the line, petitioner essentially argues that this "last minute" public agreement may well have been an orchestrated event. Application of the "intent" criterion to this case would presumably necessitate an inquiry into whether or not N & W actually "intended" to cease permanently all transportation service on the Rushville line regardless of the outcome of its simultaneous negotiations to sell the line to IHR. See In re New York, Susquehanna & Western R.R., 504 F.Supp. 851, 855 (D.N.J.1980); cf. Gregory v. Helvering, 293 U.S. 465, 468-70, 55 S.Ct. 266, 267-68, 79 L.Ed. 596 (1935); Bloomington Coca-Cola Bottling Co. v. Commissioner, 189 F.2d 14, 16-17 (7th Cir.1951). Unfortunately, the Commission made no effort to undertake any such inquiry,
In another case, we might be inclined to remand this matter to the Commission to allow it to address more thoroughly petitioner's concern over the bona fides of the asserted "abandonment" of the Rushville line. But we need not do so here because we find that we must nevertheless affirm the Commission's alternative basis for ruling that the transaction does not fall under § 11343: that prior to the acquisition, IHR was not a "carrier" within the meaning of § 11343, because it was an "exempt" feeder line operator licensed and operating exclusively under the new feeder line development program, 49 U.S.C. § 10910.
In order for § 11343 to be applicable, it is necessary, as noted, that a railway acquisition be one "involving" at least two carriers. See supra at 111. In order to qualify as a "carrier" for the purposes of § 11343, an acquiring entity must be one "providing transportation subject to the jurisdiction of the Interstate Commerce Commission under ... chapter 105 of this title...." 49 U.S.C. § 11343(a). Here, only one carrier is involved, because while N & W concededly meets this definition, IHR does not. IHR's only prior operations were those on the Connersville line, which, as noted, was acquired by IHR pursuant to the feeder line development program enacted by Congress in 1980. See supra at 108-109 and note 4. To encourage and facilitate entry into the feeder line market, the Congress, inter alia, expressly allowed program participants to elect to exempt themselves — with respect to feeder lines acquired under the program — from all regulation under Title 49 "except for the provisions of chapter 107 of this title with respect to transportation under a joint rate." 49 U.S.C. § 10910(g)(1); see H.R.Rep. 1035, 96th Cong., 2d Sess. 71-72 (1980), reprinted in 1980 U.S.Code Cong. & Ad.News 3978, 4016-17; H.R.Rep. 1430, 96th Cong., 2d Sess. 124-25, reprinted in 1980 U.S.Code Cong. & Ad.News 4110, 4156-57. Section 11343 of Title 49 is itself in chapter 113, not chapter 107, and it does not deal with joint rates. The exemption option in § 10910(g)(1), moreover, by its very terms embraces chapter 105, which sets forth the Commission's general jurisdiction over rail carriers, see 49 U.S.C. §§ 10501-10505 (1982). As noted, IHR exercised the exemption option when it acquired the Connersville feeder line. J.A. 3. Accordingly, the Commission concluded that IHR was not "providing transportation subject to the jurisdiction of the ICC under chapter 105 of this title," because IHR was a feeder line operation that had elected, as authorized, to exempt itself from chapter 105, inter alia, with respect to the only line that it operated. J.A. 86. Thus, the ICC held, IHR was not a "carrier" for the purposes of § 11343, and therefore § 11343 did not apply to IHR's purchase of the Rushville line. Id.
This ground for the Commission's decision involves no factfinding, but rather construction of a narrow, specialized statute (49 U.S.C. § 10910(g)(1)) that the Commission has responsibility for integrating into the pre-existing railway regulation scheme, including 49 U.S.C. § 11343. We defer to the Commission's interpretation of a statute it is charged with administering unless there are compelling indications that the
Petitioner advances several arguments that the Commission's interpretation of the statute is incorrect. Only one raises any concern worth addressing.
Respondents' Brief at 43. Petitioner's argument, thus, fails to identify any compelling reason for finding that the Commission's interpretation of the statute is wrong.
Accordingly, the finding that IHR was not a "carrier" within the meaning of § 11343 must be affirmed. As this was not a § 11343 acquisition, the Commission was under no mandatory duty to impose labor protective conditions on IHR.
Where the acquisition of a railway is governed by § 10901 rather than § 11343, the decision whether to impose labor protective conditions on the acquiring entity rests within the Commission's own discretion. See § 10901(c)(1)(A)(ii); Railway Labor Executives' Ass'n v. United States, supra, 697 F.2d at 286; Simmons v. Interstate Commerce Commission, supra, 697 F.2d at 340; In re Chicago, Milwaukee, St. P. & P. R.R., supra, 658 F.2d at 1169; Okmulgee Northern Ry. — Abandonment, supra, 320 I.C.C. at 645. In this case, contrary to petitioner's contention, the Commission's decision not to impose employee protective conditions on IHR was clearly an appropriate exercise of its discretion.
First, the Commission has traditionally not imposed such conditions on an acquiring entity — where the acquiring entity is a non-carrier — in the absence of a demonstrated justification or need. See In re Chicago, Milwaukee, St. P. & P. R.R., supra, 658 F.2d at 1169; Railway Labor Executives' Ass'n v. United States, supra, 697 F.2d at 286 (10th Cir.1983). The petitioner has identified no such justification or need. Moreover, we are satisfied that the Commission could rationally conclude from the entire record that circumstances did not require the imposition of labor protective conditions in this case, particularly in light of the special congressional purpose being served by the feeder line development program. Second, the Commission took into account the fact that employee protective conditions were already imposed on N & W as a condition to "abandonment." See J.A. 58; Petitioner's Brief at 15a-18a; supra note 9. Third, the Commission considered the potential expense and burden to IHR in circumstances where there was not a demonstrated
We recently reiterated that "[t]he scope of review under the `arbitrary and capricious' standard is narrow and a court is not to substitute its judgment for that of the agency." Brae Corp. v. United States, 740 F.2d 1023, 1038 (D.C.Cir.1984) (quoting Motor Vehicles Manufacturers Ass'n v. State Farm Mutual Automobile Insurance Co., 463 U.S. 29, 43, 103 S.Ct. 2856, 2866-67, 77 L.Ed.2d 443 (1983)), cert. denied ___ U.S. ___, 105 S.Ct. 2149, 85 L.Ed.2d 505 (1985). Given all the circumstances of this case, and given that our holding is restricted to the acquisition of a rail line by an entity previously operating only as a "feeder line" under 49 U.S.C. § 10910, we cannot say that the Commission's refusal to impose labor protective conditions on IHR was arbitrary or capricious.
In transactions involving the acquisition of a railway line under 49 U.S.C. 10901, the Commission has the authority, pursuant to 49 U.S.C. 10505 (1982), to exempt the acquiring entity from rail regulation with respect to its acquisition and operation of the line if it finds 1) that such regulation "is not necessary to carry out the rail transportation policy set forth in 49 U.S.C. 10101a" of the Interstate Commerce Act, and 2) that either "the transaction or service is of limited scope" or the regulation "is not needed to protect shippers from the abuse of market power." 49 U.S.C. § 10505(a).
In granting IHR a general exemption from most rail regulation, the Commission considered several factors which the Commission could legitimately have deemed to render regulation unnecessary. See J.A. 9, 57, 89. In its July 11, 1983 decision, the Commission expressly found that consideration both of barriers to entry, see 49 U.S.C. § 10101a(7) (1982), and efficiency of business operation, see id. § 10101a(10), supported granting the exemption. Petitioner points to no unconsidered factor that might possibly have rendered the conclusion to grant the exemption arbitrary and capricious in the circumstances of this case. Cf. Coal Exporters Ass'n, Inc. v. United States, 745 F.2d 76, 93-94 (D.C.Cir.1984), cert. denied, ___ U.S. ___, 105 S.Ct. 2151, 85 L.Ed.2d 507 (1985). Despite petitioner's protestations, the Commission's failure explicitly to address each of the remaining factors in § 10101a "is not in itself fatal." Coal Exporters Ass'n, Inc. v. United
Petitioner has similarly failed to show that the Commission's other findings — that service provided on the Rushville line is limited in scope, and that there is no danger of abuse of market power with respect to service on the line, J.A. 57-58 — were arbitrary or capricious. In support of the former finding, the Commission noted that the line is only 22.21 miles long. Id. In support of the latter finding, the Commission noted that the exemption decision, far from threatening shippers with a potential abuse of market power, appears likely to ensure that rail service on the line remains an available alternative in the region. Id.; see Coal Exporters Ass'n, Inc. v. United States, supra, 745 F.2d at 90.
On August 1, 1983, UTU timely filed a petition for reconsideration of the Commission's July 11, 1983 decision, challenging both the refusal to impose labor protective conditions on IHR, and the decision to grant IHR a permanent exemption pursuant to § 10505(a). J.A. 71-76, 84. In the Commission's October 26, 1983 decision denying UTU's petition for reconsideration, the Commission explained what it deemed to be the appropriate standard of review to be applied:
UTU argues that the Commission, in response to UTU's petition for reconsideration, should have considered both IHR's application for the § 10505(a) exemption and the collateral labor protection issue de novo, fixing the burden of proof on IHR. Thus, UTU complains that the Commission's treatment of the petition for reconsideration as one for revocation under § 10505(d)
UTU's objection to the Commission's treatment of its petition for reconsideration fails to state a basis for relief. First, as the Commission points out, even if the statutory section for "revocation" of an exemption had not been invoked, the burden would still have been on UTU, as the petitioner for reconsideration, to show "material
For the foregoing reasons, the decision of the Commission is affirmed.
Accordingly, the March 3, 1983 abandonment certificate stipulated that if N & W were to exercise the authority granted by the certificate, N & W would be required to fulfill "the conditions for the protection of employees described in Oregon Short Line R. Co. — Abandonment Goshen, 360 I.C.C.  (1979)." Brief for Petitioner at 15a. Employee protection requirements, thus, have already been imposed on N & W in connection with the abandonment of the Rushville line. In the petition before this Court, by contrast, UTU seeks to have employee protection requirements imposed upon IHR, in connection with IHR's corresponding takeover of the line. In fact, IHR asserts that, even in the absence of employee protection requirements, it "offered employment to a number of former N & W employees (one of whom accepted but subsequently quit), and has operated from the beginning under a collective bargaining agreement with the UTU covering all of IHR's hourly employees." Intervenor's Brief at 32.
Title 49 U.S.C. § 11347 (1982) (formerly 49 U.S.C. § 5(2)(f) (1976 ed.)) provides that:
Evidence involving actions by N & W itself, though conflicting, also exists. For example, N & W had been seeking abandonment authority with respect to the Rushville line since 1977. Such persistence suggests that N & W might well have planned simply to abandon the line if alternative dispositions were fruitless. See Interstate Commerce Commission v. Baltimore & A. R.R., supra, 398 F.Supp. at 462. On the other hand, as noted, N & W's letter of April 20, 1983 informing the Commission of its April 12, 1983 cessation of service on the line did not expressly state that the "line" had been "abandoned," but instead stated only that "operations" on the line had been "discontinued." J.A. 26, 40. This inconsistency in N & W's formal notice suggests that N & W may well have sought to preserve the option of later attempting to resume its own operations on the line if the Commission were to deny IHR's exemption petition and the sale of the line were ultimately to fall through. Such evidence, again, would be quite relevant to any inquiry into intent.
Petitioner also cites cases holding that various carriers remained subject to § 11343 (or its predecessor) despite the fact that the carrier enjoyed certain exemptions pursuant to other statutory provisions. See, e.g., Valley Line Company v. United States, 390 F.Supp. 435 (W.D.Pa.1975); McAllister Lighterage Line, Inc. — Purchase, 265 I.C.C. 483, 487 (1948). However, these cases are inapposite because none of them involves the exemption provided for in § 10910(g)(1).