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NEW YORK v. UNITED STATES

March 4, 1969

STATE OF NEW YORK, Plaintiff, Broome County Chamber of Commerce, Intervenor-Plaintiff,
v.
UNITED STATES of America, and Interstate Commerce Commission, Defendants, Erie-Lackawanna Railroad Company, Intervenor-Defendant



The opinion of the court was delivered by: WATERMAN

WATERMAN, Circuit Judge:

The State of New York commenced this action pursuant to 28 U.S.C. §§ 2321-2325 seeking to enjoin, suspend, set aside and annul, or to remand for further consideration a Report and Order of the Interstate Commerce Commission entered November 4, 1966 in Finance Docket No. 24205, Erie-Lackawanna Railroad Co., Discontinuance of Trains, 330 I.C.C. 508 (1966), reconsideration denied by order dated May 12, 1967, permitting the discontinuance of passenger trains 1 and 2 between Hoboken, New Jersey, and Chicago, Illinois ("The Phoebe Snow") *fn1" and passenger trains 21 and 22 between Hoboken, New Jersey, and Binghamton, New York. *fn2" The Commission found that the operation of the four trains was not required by public convenience and necessity and that the continued operation thereof would unduly burden interstate commerce or foreign commerce

 The proceedings in this case commenced with a notice and supporting statement of an Erir-Lackawanna Railroad Company proposal, filed with the Commission on June 15, 1966 pursuant to Section 13a(1) of the Interstate Commerce Act, 49 U.S.C. § 13a(1), *fn3" to discontinue the four passenger trains effective July 16, 1966. By order of June 30, 1966, the Commission instituted an investigation of the proposed discontinuance and ordered the trains continued meanwhile. A Commission trial examiner held twelve days of public hearings in New York City; Scranton, Pennsylvania; Elmira, New York; Huntington, Indiana; Chicago; Binghamton, New York; Port Jervis, New York; and Washington, D.C. Some 1600 pages of transcript were needed to report the testimony taken at these hearings and over 100 exhibits were introduced by parties. Because of the statutory limitation upon the time available for investigation and decision, the Commission's June 30 order provided that a trial examiner's initial report and recommended order be omitted and, instead, provided that the hearing record be certified to the Commission, Division Three, for initial decision. *fn4" Interested parties were permitted to file briefs with the Commission. Thereafter the Commission, Division Three, issued the November 4 report and the Commission's § 13a investigation was discontinued.

 The four trains stopped running on November 29, 1966. On December 9, 1966, some five days before the initial order discontinuing the investigation was to become effective, the State of New York, in accordance with the provisions of 49 U.S.C. § 17(8) and the Commission's General Rules of Practice, filed a petition with the Commission for reconsideration. This petition for reconsideration automatically stayed the earlier order discontinuing the investigation. Division Three, acting as an Appellate Division, denied the petition for reconsideration by order served May 19, 1967. Promptly thereafter, on June 14, 1967, the within action was commenced in the Northern District of New York and a three judge district court was convened in accordance with 28 U.S.C. § 2284.

 The Erie-Lackawanna Railroad Company (hereinafter referred to as "E-L") and the Broome County Chamber of Commerce were permitted to intervene in this action without objection, the former as a defendant and the latter as a plaintiff. The E-L raised a jurisdictional question in its brief and moved for dismissal of the action on the ground that the federal district court lacked jurisdiction to review the Commission's decision. The court holds that it has jurisdiction over the parties and the subject matter, denies the motion to dismiss, and sustains the decision of the Interstate Commerce Commission.

 E-L's jurisdictional question is based on the argument that an Interstate Commerce Commission order to terminate a § 13a investigation, after the Commission has entered into a full investigation and completed the investigation is not a reviewable order within the meaning of 28 U.S.C. § 1336. This argument has been advanced to other three judge district courts when court review has been sought after the termination of a § 13a investigation, and it has been rejected in two reasoned and learned opinions, Vermont v. Boston and Maine Corp., 269 F. Supp. 80 (D.Vt. 1967); City of Williamsport v. United States, 273 F. Supp. 899 (M.D.Pa. 1967), affirmed, 392 U.S. 642, 88 S. Ct. 2286, 20 L. Ed. 2d 1348 (1968) (per curiam). We are in agreement with the reasoning of the Vermont and the City of Williamsport cases. We reject the contrary conclusions reached by the three judge courts in New Hampshire v. Boston and Maine Corp., 251 F. Supp. 421 (D.N.H.1965); and in Minnesota v. United States, 238 F. Supp. 107 (D.Minn.1965). *fn5"

 Having decided that we have jurisdiction over this case, we proceed to discuss the merits. Our function in this type of case is limited to determining whether there is substantial evidence on the record as a whole to support the Commission's findings and whether the proper legal standards were applied by the Commission to the facts as the Commission found them to be. See, e.g., Illinois Central R. Co. v. Norfolk & Western Ry. Co., 385 U.S. 57, 87 S. Ct. 255, 17 L. Ed. 2d 162 (1966); cf. Consolo v. Federal Maritime Commission, 383 U.S. 607, 86 S. Ct. 1018, 16 L. Ed. 2d 131 (1966). Petitioner and intervenor Broome County attack as clearly erroneous the Commission's finding that the continued operation of the four trains was not required by public convenience and necessity and the determination that continued operation of the trains would unduly burden interstate commerce.

 On the first branch of its findings, those relative to public convenience and necessity, the Commission relied on evidence that there was a declining number of passengers utilizing the involved four trains over the 1,000 mile run and a decline in head-end usage; that adequate alternate rail service was available between most of the points serviced by the four trains; and that adequate, but in some cases less convenient, passenger service by private car, bus, and airplane was also available in the area the trains served. Its findings that continued operation would unduly burden interstate commerce were based upon its evaluation of the effect a continuation of the passenger service would have on the ongoing financial condition of the carrier. In arriving at this evaluation the Commission considered the carrier's past operating loss and its projected future losses occasioned by providing the involved passenger service, and it concluded that continuation of the passenger service could jeopardize E-L's recovery from past financial difficulties and that the discontinuation of that service would result in an improvement in the carrier's net income.

 The 1963-1966 passenger traffic on these four trains which, as the Commission found, clearly demonstrates an accelerating decline in passenger usage, is set forth in 330 I.C.C. at 520-21:

 
Passenger utilization. - Passenger statistics are actual for the periods used. Commencing on February 1, 1963, the count and revenues have been compiled by electronic processing machines from conductors' ticket collections and cash ticket sales. Statistics for 1963 are for the 11-month period from February 1, and for 1964, 1965, and the first quarter of 1966, they are for the full period. The following table shows the daily average number of revenue passengers using the trains and the percentage decline from the base year 1963:

  Train No. 1 Train No. 2 Train No. 21 Train No. 22 1963 280.15 278.85 38.84 38.26 1964 248.08 11% 246.61 12% 23.35 40% 25.15 34% 1965 223.26 20% 243.53 13% 20.56 47% 25.35 34% 1966 164.38 41% 179.96 36% 12.90 67% 15.87 59%

 The findings as to alternate service are as follows:

 
There is continued and increasing competition from private automobiles in intercity passenger transportation, accelerated by the growth of the Interstate Highway System and the growing mileage of limited access highways. Bus transportation, by reason of those same highways and lower bus fares, remains a strong competitor. Air carriers are attracting larger shares of the long-distance traffic with the increasing use of jet planes which can make the flight from New York or Newark to Chicago in approximately two hours compared with approximately 23 hours by train. E-L's alternate service by trains Nos. 5, 6, 15, 17, and 10, and by its New Jersey commuter trains, has been previously outlined. No. 5 leaves Hoboken at 7:30 p.m. and arrives in Scranton, Pa. about 11:00 p.m. It leaves Jamestown, N.Y. about 6:00 a.m. and proceeds through the day to Chicago. No. 6 leaves Chicago at 10:35 a.m. and arrives in Jamestown at 11:00 p.m. It leaves Cresco, Pa. about 6:30 a.m. and proceeds in daylight to Hoboken. Thus, on these segments of the route, the alternate E-L trains run at relatively convenient hours. For about 300 miles between the Scranton-Cresco area and Jamestown, on the other hand, this alternate service is at night and would not be as convenient as the Phoebe Snow for passengers who prefer daytime travel. Over about two-thirds of that 300-mile segment (the portion east of Hornell, N.Y.), there is considerable bus service along the route of the Phoebe Snow and much of it is provided the full distance to and from New York City. Between Jamestown and Hornell, trains Nos. 1 and 2 stop at eight communities which would have neither daytime train service nor convenient air or bus service. These communities in 1965 produced, on the average, fewer than two boarding or deboarding passengers per train. The largest is Olean, N.Y., which averaged about five "ons" and five "offs," but the patronage from the others was de minimus. Olean has daily New York City service via another railroad.
 
Of the points served by trains Nos. 21 and 22, most have frequent bus service, both between intermediate points, and between those points and the termini. Only four would not have direct bus service. Together these four communities have a population of but 3,600, and produced an average of four or five passengers per train. Lacking rail service, these passengers could, with minimal discomfort, go by automobile about 8 to 20 miles to the nearest regular bus stop. In addition, there is other rail passenger service between New York and Chicago, serving some of the points ...

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