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LONG ISLAND RAIL RD. CO. v. UNITED STATES

May 9, 1956

The LONG ISLAND RAIL ROAD COMPANY, Plaintiff,
v.
UNITED STATES of America, Defendant



The opinion of the court was delivered by: BYERS

This case is before a statutory three judge court convened pursuant to statute. *fn1" It came on for argument on April 16, 1956 on plaintiffs' motion for an interlocutory injunction and defendants' cross-motion for summary judgment and dismissal of the complaint. It is the latter with which this decision is concerned.

The complaint was filed February 29, 1956, and upon the same date a temporary restraining order was issued pursuant to 28 U.S.C.A. § 2284, staying the parties defendant from putting into effect the tariff schedules involved in the proceeding before the Commission. This order was subsequently extended by consent to April 30, 1956. By amendments submitted at the argument on April 16th and consented to by the defendants, the original complaint has been amended to allege matters which took place before the Commission subsequent to February 29, 1956. Such of these matters as appear to be relevant to our decision will be mentioned in the subsequent discussion.

 The proceeding before the Commission was initiated by the filing by three railroads, for brevity referred to respectively as Lackawanna, Lehigh Valley and Erie, of tariff schedules to become effective on various dates in November and December 1955, proposing to furnish trailer-on-flat-car service to and from the Borough of Queens, New York City. Such service, called by the parties 'piggy-back service', may be explained as follows: A trailer with its contents of freight collected, for example, in Buffalo, New York, is there placed on a flat-car and transported to the railroad's freight yard in Hoboken or Jersey City, N.J., where the trailer is removed from the flat-car; the trailer is then attached to a truck and moved over the highways for delivery to the consignee of the freight in the Borough of Queens. Conversely, if the shipment originates in Queens for delivery in Buffalo, similar movements by truck, flat-car, and truck are made in the opposite direction. A 'piggy-back' service had previously been established for the Borough of Manhattan and several other localities within the City of New York, but not for the Borough of Queens. *fn2" It had long been the practice to transport freight from the New Jersey railheads to Queens on car-floats or by lighters operated respectively by Long Island and Brooklyn Eastern District Terminal. Fearing that the proposed new 'piggy-back' service to and from Queens would result in competition disastrous to them, Long Island and Brooklyn Terminal filed with the Commission protests and requests for suspension of the proposed tariffs, as they were entitled to do under section 15(7) of the Interstate Commerce Act, 49 U.S.C.A. § 15(7). Long Island's protest sets out its contention that the proposed service is not transportation by motor vehicle incidental to railroad transportation in the performance within a terminal area of transfer, collection or delivery service within the exemption provided by 49 U.S.C.A. § 302(c), but is an attempt to extend the proponent railroads' lines from New Jersey to the Borough of Queens without first obtaining a certificate of public convenience and necessity as required by 49 U.S.C.A. § 1(18). The protest also sets out that the Long Island emerged in 1954 from a reorganization under section 77 of the Bankruptcy Act, 11 U.S.C.A. § 205 and is now operating as a Railroad Redevelopment Corporation pursuant to Chap. 824 of the Laws of New York 1954, Ex.Sess., under a 12 year program of rehabilitation and modernization approved by the New York Public Service Commission, the Interstate Commerce Commission and the Long Island Transit Authority. It fears that the competition of the proposed 'piggy-back' service will reduce its income to such an extent as to wreck its 12 year program.

 The Eastern District Terminal has been permitted to intervene as a party plaintiff, and the Lackawanna and Erie have been permitted to intervene as parties defendant.

 The Commission, by its Board of Suspension, voted not to suspend the proposed tariffs; but on appeal by the protestants (plaintiffs here), Division 2 of the Commission, acting as an appellate division, on November 15th and 23rd, and the Board of Suspension on December 7th, voted to investigate the lawfulness of the proposed rates and to suspend their operation until June 15, 1956, 'unless otherwise ordered by this Commission.' The proponent railroads promptly filed a petition for reconsideration, to which the protestants filed replies. On February 20, 1956, Division 2 vacated the prior suspension orders and discontinued the investigation as of March 1, 1956. *fn3" On February 27 the protestants by telegrams requested the Commission to stay the effective date of the order of February 20 for at least 30 days beyond March 1, 1956. This request was denied on February 29. On the same date the plaintiffs obtained the temporary restraining order already mentioned. Because of such order the Commission by its Chairman, suspended operation of the tariffs until further order by the Commission. *fn4"

 The suspension orders of Division 2 are quoted in part. The November 15th order stated:

 'That upon consideration of the said schedules and protests thereto there is reason to believe that they would, if permitted to become effective, result in rates and charges, rules, regulations or practices which would be unjust and unreasonable in violation of the Interstate Commerce Act; * * *.'

 The November 23rd order stated:

 'That upon consideration of the said schedules and protests thereto there is reason to believe that they would, if permitted to become effective, result in rates and charges which purport to extend service beyond the area served by respondents in violation of the Interstate Commerce Act.'

 The vacating order of February 20th recited no reasons other than 'good cause appearing therefor.' The original complaint challenged the validity of the vacating order on the ground (1) that 'good cause appearing therefor' was an insufficient statement of reasons for the Division's about face, and (2) that the order did not comply with the requirements of the Administrative Procedure Act, 5 U.S.C.A. § 1007(b), *fn5" as construed in Amarillo-Borger Exp. v. United States, D.C.N.D.Tex., 138 F.Supp. 411.

 The statute, 49 U.S.C.A. § 15(7), does not require the Commission to state its reasons when suspension of proposed rates is denied; only when suspension is granted must reasons be stated.

 By a 'corrected order' entered (probably March 1, 1956) nunc pro tunc as of February 20th, and incorporated by amendment to the complaint, Division 2 substituted for the phrase 'good cause appearing therefor' the following statement:

 '* * * upon reconsideration of the previous action in this proceeding, we are reasonably satisfied that the said schedules if permitted to become effective would not result in rates and charges, rules, regulations or practices which would be unjust and unreasonable, or result in rates and charges which purport to extend service beyond the area served by respondents, in violation of the Interstate Commerce Act.' *fn6"

 Under section 15(7), 49 U.S.C.A., § 15(7), the refusal or granting of suspension is a matter confided to the discretion of the Commission and no court has jurisdiction to review the Commission's decision unless it has refused to exercise discretion or has exercised it arbitrarily. *fn7" The plaintiffs so concede. Such discretionary orders are merely interlocutory steps preceding a hearing and decision as to the lawfulness of the proposed rates. *fn8" They may be made 'pending' a hearing on the merits and without the introduction of testimony. While a suspension order must state reasons, the basis for the reasons we assume to be the expert knowledge of the members of the Suspension Board or the Division of the Commission, acting as ...


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