Court: Court of Appeals for the D.C. Circuit; February 1, 1988; Federal Appellate Court
Petitions were filed to review the Interstate Commerce Commission's (ICC) determination that a railroad's operation over 13.3 miles of another railroad's line did not constitute an acquisition of track-age rights requiring ICC approval. The court affirmed the ICC's decision. Under 49 U.S.C. 10901, rail carriers can acquire or operate additional railroad lines only with ICC approval based on public convenience and necessity. The ICC has the authority to exempt certain transactions, which was established in 1985, allowing for exemptions for all acquisitions and operations under section 10901 provided that a verified notice detailing the transaction is filed, becoming effective seven days after filing.
In 1987, Indiana Rail Road Company (Indiana R.R.) notified the ICC of its intention to acquire a 113-mile line from Illinois Central Gulf Railroad (Illinois Central) under this Class Exemption. Two transportation workers unions petitioned the ICC to revoke this exemption, citing the need for regulation to protect rail transportation policy and employees. They claimed the notice contained false information, as it did not disclose that Indiana R.R. was also granted trackage rights over an additional 13.3 miles of Illinois Central's line. The ICC denied the petition, stating that Indiana R.R.’s use of the tracks was solely for traffic interchange and thus fell outside regulatory requirements under Sections 10901 and 11343. The full Commission upheld this decision upon reconsideration.
All revenues from the movement of cars over the 13.3 miles of Illinois Central’s lines between Sullivan and Palestine are credited to Illinois Central, with Palestine identified as the first suitable interchange siding. The operation is classified as an interchange between carriers, and regulation of this arrangement is deemed unnecessary for rail transportation policy. The Commission found that the Indiana Railroad Company (IRRC) utilizes Illinois Central’s track solely for interchange purposes, without any revenue generation for itself, as tariffs indicate a shift of account to Illinois Central at Sullivan. There is no overhead or bridge traffic, nor are there shippers solicited for IRRC's account on this segment.
The Commission determined that there are insufficient facilities for interchange at Sullivan, necessitating complex movements that would obstruct public highways and a high-speed mainline, making the interchange at Palestine more reasonable and compliant with statutory obligations for rail carriers to provide equitable interchange facilities.
The principle allowing a carrier to operate on another's tracks under an interchange agreement, without Commission approval, applies here, thus no Section 10901 or 11343 approval is required. Petitioners argued that IRRC's use of Illinois Central’s track for interchange constituted an acquisition of trackage rights needing Commission approval. However, the Commission reaffirmed that IRRC's track use was strictly for interchange, not for its own benefit, and ruled that no constructive trackage rights were granted, characterizing the arrangement as a reasonable interchange not subject to regulatory approval under the cited statutes.
The Commission's determination that the interchange arrangement did not require approval is upheld. Under 49 U.S.C. 10742, carriers must provide "reasonable, proper and equal [interchange] facilities." The selection of interchange points is at the discretion of the carriers, and utilizing another carrier's tracks for interchange does not necessitate Commission approval, as established in previous cases. Although the preferred interchange point is typically at the intersection of carrier lines, practical considerations may dictate alternative arrangements.
In this case, the Commission found Indiana R.R.'s use of 13.3 miles of Illinois Central’s tracks to reach the interchange at Palestine to be reasonable and compliant with the law. Attempting to interchange at Sullivan would have posed significant logistical challenges, including unsafe backing maneuvers and steep inclines, and Indiana R.R. would not benefit financially from the use of Illinois Central’s tracks since traffic costs were charged to Illinois Central.
The Commission’s interpretation, which is entitled to deference if reasonable and aligned with congressional intent, reflects its expertise in applying regulatory provisions to the realities of the railroad industry. The conclusion that the arrangement constituted a reasonable interchange agreement, rather than an acquisition of trackage rights, was deemed not unreasonable or contrary to congressional intent. Consequently, the Commission's decision is affirmed.
