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ANN ARBOR R.R. CO. v. UNITED STATES

April 30, 1973

ANN ARBOR RAILROAD COMPANY, THE BALTIMORE AND OHIO RAILROAD COMPANY, THE CHESAPEAKE AND OHIO RAILWAY COMPANY, CHICAGO, ROCK ISLAND AND PACIFIC RAILROAD COMPANY, DELAWARE AND HUDSON RAILWAY COMPANY, THOMAS F. PATTON AND RALPH S. TYLER, JR., TRUSTEES OF THE PROPERTY OF ERIE LACKAWANNA RAILWAY, DEBTOR; THE KANSAS CITY SOUTHERN RAILWAY COMPANY, JOHN F. NASH AND ROBERT C. HALDEMAN, TRUSTEES OF THE PROPERTY OF LEHIGH VALLEY RAILROAD COMPANY, DEBTOR; THE LONG ISLAND RAILROAD COMPANY, LOUISVILLE AND NASHVILLE RAILROAD COMPANY, GEORGE P. BAKER, RICHARD C. BOND AND JERVIS LANGDON, JR., TRUSTEES OF THE PROPERTY OF PENN CENTRAL TRANSPORTATION COMPANY, DEBTOR; PENNSYLVANIA-READING SEASHORE LINES, RICHARDSON DILWORTH, ANDREW L. LEWIS, JR., TRUSTEES OF THE PROPERTY OF READING COMPANY, DEBTOR; SOO LINE RAILROAD COMPANY, R. D. TIMPANY, AS TRUSTEE OF THE PROPERTY OF THE CENTRAL RAILROAD COMPANY OF NEW JERSEY, DEBTOR
v.
UNITED STATES OF AMERICA and INTERSTATE COMMERCE COMMISSION


John B. Hannum, United States District Judge.


The opinion of the court was delivered by: HANNUM

MEMORANDUM AND ORDER

 Plaintiff railroads commenced this proceeding pursuant to 28 U.S.C. §§ 2321-2325 to suspend, enjoin, annul and set aside an order of the Interstate Commerce Commission. Jurisdiction is conferred upon the Court by 28 U.S.C. § 1336(a). Presently before the Court is plaintiffs' Motion for Temporary Restraining Order pursuant to 28 U.S.C. § 2284(3) pending adjudication of the merits by a three-judge court.

 In an attempt to alleviate the problem of freight car shortages, the Commission, acting pursuant to its rule making authority embodied in Section 1(14)(a) of the Interstate Commerce Act, 49 U.S.C. § 1(14)(a), as amended in 1966, issued a report and order entitled "Incentive Per Diem Charges -- 1968" *fn1" in April 1970. This rule required that during the six month period from September 1 through February 28, a railroad using an unequipped boxcar owned by another railroad was required to pay the owning railroad ("Creditor railroad") a fixed compensation for the use of the car. In its initial opinion of April 28, 1970, the Commission stated that it considered the case as an "open-end" proceeding and that the proceeding would be reopened after some experience had been gained so that appropriate modifications and reservations could be made. See 337 I.C.C. 217 at 219, 220. Since the rule was promulgated, several railroads have filed petitions seeking reopening of the proceedings and modification and/or recission of the rule. A subcommittee of the House of Representatives convened in September 1972 was highly critical of the rule. *fn2"

 By order dated and served March 6, 1973, the Commission promulgated a proposal to extend the existing incentive per diem charges on plain, unequipped boxcars from the existing six month period to a permanent year-round basis. The order invited responses, which were to be filed on or before March 23, 1973. On March 30, 1973 the Commission issued the order herein complained of, amending its order of April 28, 1970, so as to indefinitely extend incentive per diem regulations and charges to a year-round basis. Under this order, the railroads were ordered to resume incentive per diem payments on May 1, 1973. The basis for the Commission's regulation, as stated in the notice of March 6, 1973, its order of March 10, 1973, and at a hearing before this Court on April 27, 1973, is that the nation is facing an increasingly critical boxcar shortage caused primarily by the unprecedented demand for movement of grain brought about by the Russian wheat sale agreement. The Commission concedes that despite the existence of funds generated by the incentive per diem rule of April 1970 and earmarked for the purchase, building, or rebuilding of unequipped cars, the railroads during the last four years have retired more than three times as many boxcars as they have installed or rebuilt. The Commission also concedes that over 21 million dollars generated under incentive per diem remain to be disbursed. The Commission argues, however, that incentive per diem is the only means presently available to alleviate the present crises. The affidavit of William T. Bono, Chief, section of cost and valuation, bureau of accounts, Interstate Commerce Commission states that over 15 million dollars of funds generated under incentive per diem since its inception have been expended and with these funds a total of 3,478 boxcars have been purchased. *fn3"

 Plaintiffs, in their attack upon the Commission's order of March 30, 1973, allege (1) that the Commission failed to afford them an opportunity to participate in the rule making proceedings as required by Section 553 of the Administrative Procedure Act and Section 1(14)(a) of the Interstate Commerce Act; (2) that under the circumstances the Commission's order of March 30, 1973 is arbitrary and capricious and; (3) that the Commission's refusal to act on the various petitions for reconsideration is "unlawfully withheld or unreasonably delayed" within the meaning of 5 U.S.C. § 706(1).

 Section 2284(3), 28 U.S.C. provides that " . . . the district judge to whom the application is made may, at any time, grant a temporary restraining order to prevent irreparable damage." In determining whether to grant the requested temporary relief the Court will take four factors into consideration: (1) Plaintiffs' showing that without such relief they will be irreparably injured; (2) the public interest; (3) possible harm to other interested parties and (4) plaintiffs' likelihood of success on the merits. See, Middlewest Motor Freight Bureau v. United States, 433 F.2d 212, 240 (8th Cir. 1970); Palmigiano v. Travisono, 317 F. Supp. 776, 787 (D. R.I. 1970); Virginia Petroleum Jobbers Association v. United States, 104 U.S. App. D.C. 106, 259 F.2d 921 (1958).

 It has been made to appear by the affidavits which were presented to the Court that unless the Commission's order of March 30, 1973 is restrained, irreparable damage will befall the plaintiffs in that:

 1. Reading Company, already in reorganization, would have its present incentive per diem cash payout doubled to approximately $ 1 million per year. This cash will thus be unavailable for vital daily operating expenses. (Affidavit of Frederick J. May, p. 3.)

 3. The order of March 30 will compel Penn Central to pay out $ 1.1 million in cash for the months of May, June, July and August. Penn Central has already advised the Reorganization Court that a cash crisis will develop in July-September, 1973, which could force a cessation of operations. An additional cash drain in excess of $ 1 million per month would only aggravate the very real threat to Penn Central's continued service. (Affidavit of Jervis Langdon, Jr., pp. 3-7; Affidavit of Andrew C. Weamer, pp. 2-3; Affidavit of Ernest R. Varalli, p.2.)

 4. Erie Lackawanna would be obligated under the Commission's order of March 30 to pay out approximately $ 600,000 for the four months May through August, 1973, which funds will not be available for the repair of its own cars. Over 1,000 of Erie's general service boxcars are out of service at the present time, and if Erie is deprived of these funds its "bad order" ratio and consequent inability to adequately serve the public will be seriously aggravated. (Affidavit of J. R. Neikirk, pp. 2-3, 5.)

 5. Delaware and Hudson has already been compelled to bring its work force to the irreducible minimum. Under the Commission's order, D&H will be obligated to pay out in incentive per diem an additional $ 27,100 per month over the next four months. This will only precipitate further deferral of maintenance, deferral of freight car repairs, employee layoffs and the inevitable decline of service to the shipping public. (Affidavit of Thomas W. Eagan, pp. 1-3.)

 6. The Commission's order of March 30 will compel Rock Island to pay out an additional $ 830,000 annually. Rock Island's cash reached a low in March of only $ 2.1 million. Because of lack of present resources, Rock Island has already deferred track maintenance, reduced its work force, and eliminated repairs to equipment. Five of Rock Island's branch lines are inoperable for service to the shipping public because Rock Island presently has insufficient cash to maintain these properties in safe and serviceable condition. The only result of additional incentive per diem payments will be a reduced ...


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