BLACK v. I.C.C.

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")1 from all requirements of the Interstate Commerce Act with respect to IHR's acquisition and operation of a 22.21 mile railroad line between New Castle and Rushville, Indiana (the "Rushville line"). Indiana Hi-Rail Corporation — Exemption from 49 U.S.C. Subtitle IV — Operations between New Castle and Rushville, IN, Finance Docket No. 30169 (July 11, 1983). The Rushville line had previously been owned and operated by Norfolk and Western Railway Company ("N & W"). In addition to granting the general exemption, the decision further announced that the Commission would not impose any employee protective conditions on IHR with respect to IHR's takeover and operation of the line.

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 an exemption under 49 U.S.C. § 10505(d) (1982), and thereby incorrectly placed the burden of proof as to that petition on UTU.

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).

I.

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),2 even though the line had been a profitable one serving several shippers. See J.A. 2. After an initial denial by an administrative law judge, the Commission approved the abandonment in 1980. Norfolk & W. Ry. Co. — Abandonment, 363 I.C.C. 115 (1980). Subsequently, the United States Court of Appeals for the Seventh Circuit set aside the approval and remanded the case to the Commission. International Minerals & Chemical Corp. v. Interstate Commerce Commission, 656 F.2d 251 (7th Cir.1981). On remand, the Commission — in a decision served on November 4, 1982 — again approved N & W's application for abandonment of the Rushville line. Norfolk and Western Railway Company — Abandonment between New Castle and Rushville, in Henry and Rush Counties, Indiana, Docket No. AB-10 (Sub-No. 11) (Nov. 4, 1982).

In the meantime, IHR, an entity first organized in 1980,3 had acquired from Conrail a six-mile railroad line between Beesons and Connersville, Indiana (the "Connersville line"), J.A. 3, within the same general region as the Rushville line. See Joint Brief for the Interstate Commerce Commission and the United States of America at 12a (map of Rushville and Connersville lines) [hereinafter cited as "Respondents' Brief"]. IHR's authority to acquire the Connersville line was granted by the Commission on November 16, 1981, under 49 U.S.C. § 10910 (1982), the Staggers Rail Act "feeder line" development program. Indiana Hi-Rail Corp. — Feeder Line Acquisition, 366 I.C.C. 42 (1981).4 At the time of acquisition, IHR elected to invoke an aspect of the feeder line development legislation that allowed it — as a participant in the feeder development program — to take a full exemption from all of the provisions of Title 49 (except those relating to joint rates) with respect to its operation of the Connersville line, see § 10910(g)(1).5 J.A. 3. IHR continues to operate the Connersville line as a feeder line effectively exempt from ICC regulation. See J.A. 3.

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.6 Then, soon after the Commission's November 4, 1982 re-approval of N & W's abandonment application, IHR — on November 12, 1982 — made an offer to purchase the Rushville line pursuant to 49 U.S.C. § 10905(c) (1982). See Petitioner's Brief at 14a.7 When it then appeared that N & W and IHR would be unable to agree on a purchase price, they requested that the Commission establish a price for the line pursuant to 49 U.S.C. § 10905(e). Id. The Commission complied, announcing a price on February 11, 1983. IHR, however, rejected even the Commission's suggested price, and on February 18, 1983, IHR formally withdrew its § 10905(c) offer to purchase the line. Id.

Upon the withdrawal of IHR's purchase offer, the Commission returned to its handling of the Rushville line as an abandonment matter.8 On March 3, 1983, the Commission issued to N & W an abandonment certificate with respect to the line. Id. at 14a-15a.9 N & W gave public notice on April 1, 1983, that it would cease service on the Rushville line effective April 12, 1983. See Petitioner's Brief at 6; Respondent's Brief at 36 n. 25, 14a-16a. On April 12, 1983, N & W in fact cancelled its tariffs and claims to have ceased service on the Rushville line. J.A. 3, 30. On April 20, 1983, N & W filed a letter with the Commission stating that on April 12, 1983, it had "discontinued" service on the line. J.A. 26, 40.

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.

II.

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).10 The statute itself and the relevant cases indicate, however, that no "consolidation," "merger," or "acquisition of control" is present where the transaction is not one "involving" at least two carriers, 49 U.S.C. § 11343(a); see id. § 11343(a)(1)(6); In re Chicago, Milwaukee, St. P. & P.R.R., 658 F.2d 1149, 1169 (7th Cir.1981), cert. denied, 455 U.S. 1000, 102 S.Ct. 1632, 71 L.Ed.2d 867 (1982); People of the State of Illinois v. United States, 604 F.2d 519, 524-26 (7th Cir.1979), cert. denied, 455 U.S. 951, 100 S.Ct. 1599, 63 L.Ed.2d 786 (1980), or where the transaction involves the takeover of a line that has been "abandoned" within the meaning of 49 U.S.C. § 10903, see Okmulgee Northern Ry. — Abandonment, 320 I.C.C. 637, 638-41 (1964). Instead, the acquisition of a line of railway in either of these circumstances is typically governed by 49 U.S.C. § 10901 (1982).11 See In re Chicago, Milwaukee, St. P. & P.R.R., supra, 658 F.2d at 1169; People of the State of Illinois v. United States, supra, 604 F.2d at 524-25; Okmulgee Northern Ry. — Abandonment, supra, 320 I.C.C. at 638-41. Unlike transactions under 49 U.S.C. § 11343, where imposition of labor protective conditions is mandatory, the decision whether to impose such conditions on the acquiring entity in any transaction under 49 U.S.C. § 10901 falls within the Commission's discretionary authority. See 49 U.S.C. § 10901(c)(1)(A)(ii); Railway Labor Executives' Ass'n v. United States, 697 F.2d 285, 286 (10th Cir.1983); Simmons v. Interstate Commerce Commission, 697 F.2d 326, 340 (D.C.Cir.1982); 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 645.12 Accord Interstate Commerce Commission v. Railway Labor Executives Ass'n, 315 U.S. 373, 379-80, 62 S.Ct. 717, 721, 86 L.Ed. 904 (1942); Prairie Trunk Railway — Acquisition and Operation, 348 I.C.C. 832, 849 (1977). In response to petitioner's arguments to the contrary, the Commission maintains both that it properly treated the Rushville line as one that had indeed been "abandoned" by the time of its acquisition by IHR, and that, in any event, IHR was not a "carrier" within the meaning of § 11343 prior to the acquisition. For either reason, the Commission argues, it was under no mandatory obligation to impose labor protective conditions on IHR, and did not abuse its discretion in declining to do so in the circumstances here.

A.

At oral argument, the emphasis of the presentation by counsel for the Commission was on the Commission's conclusion that the Rushville line had been "abandoned" by N & W before the acquisition by IHR. Notwithstanding counsel's argument, however, the fact remains that the decisions of the Commission at issue in this case addressed the "abandonment" question in only a cursory and conclusory fashion, without clearly specifying the criteria the Commission had applied or the facts it had considered in making the "abandonment" determination. See J.A. 8-10, 55, 58-59, 87.13 Such a record poses serious difficulties for our review of the Commission's determination.

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, 40.14 The Commission's own regulations make clear that the abandonment of a line and the discontinuance of rail service are distinct events requiring separate authorization by the Commission. See 49 C.F.R. §§ 1152.1-.28 (1984). The record, moreover, contains copies of letters filed in other Commission proceedings by N & W — an experienced railway operator — showing that N & W was fully capable of distinguishing between abandonment and discontinuance in providing formal notice of such events to the Commission. See Reply Brief at 4b-9b. In light of N & W's obvious expertise in railway regulation, this anomolous language in N & W's formal notice raises genuine questions as to whether the Commission's final "abandonment" criterion has been met. The Commission's decisions in this matter, however, made no reference to the N & W letter, and give no indication whether the Commission even considered this inconsistency. See J.A. 55, 58-59, 87.

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 than the bare formalities addressed by the Commission here. As stated by the Eighth Circuit Court of Appeals, "`[a]bandonment' ... is characterized by an intention of the carrier to cease permanently or indefinitely all transportation service on the relevant line." Interstate Commerce Commission v. Chicago & North Western Transp. Co., 533 F.2d 1025, 1028 (8th Cir.1976) (emphasis added). See Mississippi Public Service Commission v. Interstate Commerce Commission, 662 F.2d 314, 317 (5th Cir.1981); Interstate Commerce Commission v. Maine Central R.R., 505 F.2d 590, 593-94 (2d Cir.1974); Interstate Commerce Commission v. Chicago, R.I. & Pac. R.R., 501 F.2d 908, 911 (8th Cir.1974), cert. denied, 420 U.S. 972, 95 S.Ct. 1393, 43 L.Ed.2d 652 (1975); Interstate Commerce Commission v. Baltimore & A. R.R., 398 F.Supp. 454, 462 (D.Md.1975), aff'd, 537 F.2d 77 (4th Cir.), cert. denied, 429 U.S. 859, 97 S.Ct. 159, 50 L.Ed.2d 136 (1976).15 In Interstate Commerce Commission v. Chicago, R.I. & Pac. R.R., supra, the Eighth Circuit Court of Appeals succinctly explained that "[f]actually, determination of the question revolves around the intent of the railroad...." 501 F.2d at 911 (emphasis added).

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,16 and its inadequate factfinding prevents us from addressing the issue definitively ourselves. As such, in light of the Commission's failure to identify the criteria to be applied or address the relevant facts, we cannot rely upon the "abandonment" theory to resolve the labor protection issue.

B.

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 Commission's interpretation is incorrect. See Chevron, U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. ___, ___, 104 S.Ct. 2778, 2782, 81 L.Ed.2d 694 (1984); CBS, Inc. v. Federal Communications Commission, 453 U.S. 367, 382, 101 S.Ct. 2813, 2823, 69 L.Ed.2d 706 (1981). Prior cases make clear that the acquisition of a single rail line by an entity that is not itself a carrier and that is not affiliated with any other carrier falls under § 10901, not § 11343. In re Chicago, Milwaukee, St. P. & P. R.R., supra, 658 F.2d at 1169; People of the State of Illinois v. United States, supra, 604 F.2d at 524-26.17 This reflects the fact that § 11343 is plainly concerned not with new, non-carrier entities entering the railway market through limited acquisitions such as the one at issue here, but with transactions integrating two or more carriers and with the effect of multi-carrier transactions on competition.18 People of the State of Illinois v. United States, supra, 604 F.2d at 524-26. Indeed, prior cases have recognized that automatically subjecting non-carrier purchasers of railway lines to the mandatory labor protection requirements of § 11343 may well discourage such new entry into the rail market. E.g., In re Chicago, Milwaukee, St. P. & P. R.R., supra, 658 F.2d at 1711. Here, the Commission has determined that the unilateral exemption option in the feeder line development program, 49 U.S.C. § 10910(g)(1), was intended by Congress to allow a program participant that otherwise is a "non-carrier" to preserve its "non-carrier" status for the purposes of § 11343. The same legislative considerations supporting the statutory exemption option in § 10910(g)(1) with respect to most of Title 49 in general support the exemption — for feeder line program participants — with respect to § 11343 in particular. Given the several broad incentives contained in the feeder line development legislation, see H.R.Rep. 1430, 96th Cong., 2d Sess. 124-25, reprinted in 1980 U.S.Code Cong. & Ad.News 4110, 4156-57, nothing in the Commission's construction of 49 U.S.C. § 10910(g)(1) is inherently unreasonable. See CBS, Inc. v. Federal Communications Commission, supra, 453 U.S. at 390, 101 S.Ct. at 2827.

Petitioner advances several arguments that the Commission's interpretation of the statute is incorrect. Only one raises any concern worth addressing.19 Petitioner complains that if the Commission's interpretation of § 10910(g)(1) would allow a given feeder line program participant to invoke its special "noncarrier" status each time it acquired a non-feeder line, the program participant could use the exemption to construct an "empire" of railway lines "free from regulation" by the Commission. Petitioner's Brief at 18. The Commission, however, provides a ready response to petitioner's expansive scenario, explaining that

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.

III.

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 need and where former employees had protection. See J.A. 57-58. Finally, the Commission concluded that IHR would probably not acquire the line if those conditions were imposed. See J.A. 57-58, 88.20

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.

IV.

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).21 In this case, the Commission granted IHR a permanent exemption from all the requirements of 49 U.S.C. Subtitle IV with respect to the acquisition and operation of the Rushville line. J.A. 59. Such exemption decisions must be upheld unless the decision to grant the exemption can be shown to have been "arbitrary, capricious, an abuse of discretion or otherwise contrary to law." Simmons v. Interstate Commerce Commission, supra, 697 F.2d at 342. Petitioner has failed to make such a showing.

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 States, supra, 745 F.2d at 94 n. 22. The Commission "`need not explicitly discuss in its decision each factor enumerated'" in 49 U.S.C. § 10101a as long as "`the essential basis of the ICC's rationale [is] clear enough so that a court can satisfy itself that the ICC has performed its function....'" Id. (quoting Alamo Express, Inc. v. Interstate Commerce Commission, 673 F.2d 852, 860 (5th Cir.1982)). On the facts of this case, and in consideration of the findings that the Commission did make, we are satisfied that the Commission has met this standard.

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 90.22 On such facts, neither finding is irrational, see American Trucking Ass'ns v. ICC, 656 F.2d 1115, 1127 (5th Cir.1981), and either finding, in conjunction with the Commission's conclusion that regulation was not necessary to carry out the objectives of the Interstate Commerce Act, would suffice under 49 U.S.C. 10505(a) to support the exemption decision.

V.

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:

J.A. 84-85.

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)23 improperly placed the burden of proof on UTU with respect to the matters raised in the petition.

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 error, new evidence, or substantially changed circumstances" that justified reversal of any aspect of the Commission's earlier decision. 49 C.F.R. § 1115.4 (1984). Second, without ruling as to whether the Commission was or was not correct in invoking the "revocation" provision in § 10505(d), it plainly appears from the Commission's decision on reconsideration that the Commission fully addressed all of UTU's arguments as to the alleged errors in the Commission's earlier decision, with respect to both the labor protection issue and the § 10505(a) exemption. See J.A. 84-89. Thus, the "substantial rights" of UTU were not affected by any error the Commission may have made in purporting to apply § 10505(d) to the petition for reconsideration instead of § 10505(a). 28 U.S.C. § 2111 (1982).

CONCLUSION

For the foregoing reasons, the decision of the Commission is affirmed.