The opinion of the court was delivered by: ROSENN
Prior to the establishment of the new rules governing abandonment petitions, the I.C.C. had one standard procedure, called the "long form", for handling such requests. 49 C.F.R. §§ 1121.1-1121.5. Although this procedure, adopted in 1971, was simpler than the 1941 procedures it replaced, the I.C.C. believed further simplifications and expedition of abandonment petitions were needed to cope with the current railroad crises in the northeast quadrant of the country.
The rules challenged here establish two additional "short form" abandonment procedures. Under Subpart B of the new rules, the agency establishes a rebuttable presumption that abandonment should be permitted for any railroad showing fewer than 34 carloads per mile were carried over the lines for which abandonment is sought during the year preceding the petition. 49 C.F.R. §§ 1121.20-1121.24. Subpart C provides for filing of a short form application where no public objection is anticipated by the railroad. 49 C.F.R. §§ 1121.30-1121.35.
The I.C.C. issued the new rules governing the filing and handling of such proceedings on January 14, 1972. Abandonment of Railroad Lines, Ex Parte No. 274 (Sub.-No. 1). The new rules were to become effective upon publication in the Federal Register on January 22, 1972. 37 F.R. 1046. After receiving objections to the new rules, the I.C.C., on February 10, 1972, announced that no decision would be made on the merits of any abandonment proceeding under the new rules until it had ruled on the petitions for reconsideration which it had stated it would entertain on February 4, 1972.
The Commonwealth of Pennsylvania and Pennsylvania Public Utility Commission (hereinafter "Pennsylvania") and Congress of Railway Unions instituted this action against the I.C.C. in the United States District Court for the Middle District of Pennsylvania on February 10, 1972, seeking to restrain operation of the new rules until a three-judge court could review their legality.
On February 16, 1972, operation of the new I.C.C. rules was restrained by Judge Michael H. Sheridan pending hearing of the request that a three-judge court permanently enjoin their operation, or final disposition of rehearing petitions by the I.C.C., whichever should occur sooner. This three-judge panel was constituted pursuant to 28 U.S.C. § 2284 to hear the action.
Plaintiffs challenge the new I.C.C. rules on two major grounds: (1) the rules alter the substantive law of railroad abandonment as expressed in 49 U.S.C. § 1(18)-(20), and therefore exceed the authority of the I.C.C.; and (2) administrative procedures required for promulgation of the rules by § 4 of the Administrative Procedure Act, 5 U.S.C. § 553, were not complied with since no public hearing was held, a statement of the basis and purpose of the rules was not presented, and in addition, the rule's departure from prior norms and the legal basis for that departure were not explicated. The I.C.C. contends the rule was within its statutory authority and that all necessary administrative procedures were fulfilled.
Consideration of both statutory authority for promulgation of the new rules and procedural means by which they were adopted requires careful scrutiny of their effect on railroad abandonment proceedings. The I.C.C. is granted authority to permit abandonments by 49 U.S.C. § 1(18)-(20). Subsection (18) prohibits abandonment of any railroad line subject to I.C.C. jurisdiction "unless and until there shall first have been obtained from the Commission a certificate that the present and future public convenience and necessity permit of such abandonment." Subsection (20) gives the Commission power to issue such a certificate, to refuse to issue it, or to issue it for portions of a railroad line. Subsection (19), primarily at issue here, grants the Commission authority to establish "rules and regulations as to hearings and other matters" in connection with consideration of applications for abandonment certificates. Notice to the governor of the State in which the lines to be abandoned run is required, and he has the "right to be heard as hereinafter provided with respect to the hearing of complaints."
The statute itself does not define "the present and future public convenience and necessity" which must be found by the I.C.C. before granting an abandonment petition. The general test for determining whether an abandonment certificate should be granted, however, was set down almost 50 years ago in Colorado v. United States, 271 U.S. 153, 46 S. Ct. 452, 70 L. Ed. 878 (1926):
The benefit to one [traffic on lines other than the one to be abandoned] of the abandonment must be weighed against the inconvenience and loss to which the other [traffic which had previously moved on the line to be abandoned] will thereby be subjected. Conversely, the benefits to particular communities and commerce of continued operation must be weighed against the burden thereby imposed upon other commerce. . . . The result of this weighing -- the judgment of the Commission -- is expressed by its order granting or denying the certificate.
271 U.S. at 168, 46 S. Ct. at 456. The Court recognized that if a railroad were required to continue to operate non-prosperous lines, its ability to provide necessary services on more prosperous lines could be damaged. It would therefore be in the best interests of the public to allow abandonment of the nonprosperous lines in order to maintain more necessary services on other lines. Nonetheless, the Court recognized a railroad line, which imposed "a relatively light burden upon a prosperous carrier," should not be abandoned if "the communities directly affected" would be subjected to "serious injury." 271 U.S. at 169, 46 S. Ct. at 456. Therefore, said the court:
271 U.S. at 169, 46 S. Ct. at 456. Because the determination to be made by the I.C.C. involves a balancing of interests, the Court noted that no specific findings of fact were necessary. 271 U.S. at 169, 46 S. Ct. 452.
The Commission has consistently followed the weighing of interests test since Colorado. It recently reiterated this test in Anapee & Western Ry. Co. Abandonment, Etc., 336 I.C.C. 395, 413 (1969), stating:
The only remaining issue is whether the present and future public convenience and necessity permits such abandonment. A more sophisticated refinement of this specification is whether or not the monetary loss to the line of the railroad sought to be abandoned would be outweighed by the inconvenience which such abandonment would cause to that part of the public served thereby.
In the typical railroad abandonment proceeding, therefore, if the abandonment is contested, protestors will attempt to present evidence rebutting the railroad's contention that the line in question is a heavy burden on the railroad's overall operation and demonstrating the community's concern that abandonment would severely damage local public interests. The Commission weighs the two alleged burdens to determine if the abandonment should be approved.
At the heart of the dispute in the present case is the question whether the new I.C.C. rules change that weighing process, thus establishing a new substantive law of abandonment. The I.C.C. contends no change is foreseen; ...