|SURFACE TRANSPORTATION BOARD DECISION DOCUMENT|
|CONSOLIDATED RAIL CORPORATION--ABANDONMENT--BETWEEN CORRY AND MEADVILLE, IN ERIE AND CRAWFORD COUNTIES, PA|
|IMPLEMENTED THE COURT DIRECTIVE AND ORDERS THE MEADVILLE LINE RECONVEYED TO CONRAIL.|
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|Full Text of Decision|
In a certificate and decision served August 1, 1994, the ICC
authorized Consolidated Rail Corporation (Conrail) to abandon its
41.8-mile Meadville line between Corry and Meadville, PA. The
abandonment, which was unopposed, was scheduled to become
effective on August 31, 1994. Conrail's abandonment authority
was postponed by decision served August 12, 1994, because the
Cities of Corry, Meadville and Union City and the Boroughs of
Cambridge Springs and Saegertown, PA (Municipalities) jointly
filed an offer of financial assistance (OFA) under former 49
U.S.C. 10905 to purchase the line for its $2.9 million net
liquidation value. The Municipalities formed the Northwest
Pennsylvania Rail Authority (Authority) to acquire the line. The
ICC subsequently reopened an April 17, 1995 decision allowing the
abandonment certificate to become effective and directed Conrail
to sell the line to the Authority for continued rail service
pursuant to the OFA. Petitions for administrative and judicial
stay were denied, and the transfer of the line took place on
October 31, 1995.
The ICC's decision was reversed in Consolidated Rail
Corporation v. STB, 93 F.3d 793 (D.C. Cir. 1996). The court
found that the ICC, in the circumstances of this case, had no
jurisdiction to reopen its April 17, 1995 decision and rescind
the abandonment, and instructed the Board to order the line
reconveyed to Conrail.
In a decision served November 6, 1996, we reopened this
proceeding and directed the parties to advise us what action, if
any, the Board should take to implement the court's order. We
also noted that the parties had been discussing sale of the line
outside the OFA process and that a condemnation action was
possible to preserve this line.
The Authority responded that it has engaged an experienced
operator that is currently providing rail service on the
Meadville line. The Authority states that substantial repairs
have been made to the line using funds provided by the
Commonwealth of Pennsylvania (the Commonwealth). The Authority
adds that plans are underway for industrial development along the
line and proposed connections to Canadian markets via Buffalo,
NY. The Authority is allegedly planning to build a new
transloading facility in Meadville to increase trans-border
traffic from Canada.
According to the Authority, Conrail and the Commonwealth
have not been able to resolve differences over rail service on
the Meadville line. The Authority states that it would be
willing to enter into negotiations with Conrail under the Board's
auspices, and is prepared to use condemnation powers to acquire
the right-of-way if an agreement is not reached.
Conrail replies that the Board must comply with the court's
order and direct the Municipalities and the Authority to reconvey
the line. In Conrail's view, the court's decision precludes any
further Board involvement in a possible sale of the line or
Conrail states that after the line is reconveyed, the
railroad would be willing to discuss continued operation of the
line with the Municipalities and the Authority. If an agreement
is reached, Conrail indicates that it would support Board action
sought to effectuate it.
On December 6, 1996, the Authority filed a reply to
Conrail's comments.(2) The Authority indicates that, while it does
not dispute that the Meadville line must be reconveyed to Conrail
under the court's decision, when taking further action the Board
should consider that rail service is currently being provided to
shippers on the line, and that improvements are being made to
rail facilities using public and private funds. The Authority
again states that it will initiate condemnation proceedings to
acquire title to the line if necessary. But it requests that the
Board facilitate negotiations between the parties to resolve this
matter without the need to resort to condemnation.
DISCUSSION AND CONSLUSIONS
We agree with Conrail that, under the court's decision, we
are limited to ordering the line reconveyed to Conrail. Because
the court determined that Conrail has abandoned the line and that
the Board lost jurisdiction, we have no authority to approve the
subsequent acquisition of the Meadville line, whether by
agreement or condemnation.(3) Nor may we facilitate negotiations
between the parties as the Authority requests.
We recognize that the Authority and the Commonwealth still
want rail service preserved on the Meadville line. If an
agreement is reached to continue service, the operator of that
service must apply for appropriate authority under 49 U.S.C.
This action will not significantly affect either the quality
of the human environment or the conservation of energy resources.
It is ordered:
1. The Authority is directed to reconvey the Meadville line
2. This decision is effective March 12, 1997.
By the Board, Chairman Morgan and Vice Chairman Owen. Vice
Chairman Owen commented with a separate expression.
Vernon A. Williams
Vice Chairman Owen, commenting: The adverse decision of the D.C. Circuit
Court of Appeals follows a noble effort by this Board to encourage a continuation of rail
service that benefits the public by taking trucks off the highway, promoting safety,
reducing air and noise pollution, retaining railroad jobs and enhancing the world-wide
competitiveness of affected communities.
Unfortunately, the public authorities that laudably resumed rail service,
rehabilitated the track and instituted innovative marketing over a line that Conrail
deemed unprofitable now face loss of the line -- and the community loss of rail service -- because the new operator has been unable, in the short term, to obtain the necessary
financing to acquire it.
The inescapable truth of this case is that Conrail, which was created at a cost to
taxpayers of more than $7 billion, ceased to operate the line because it was dissatisfied
with the line's earnings. All Conrail sought when it first approached this Board was to
rid itself of providing rail service over the line. We permitted Conrail to achieve that
Now, rather than celebrate the preservation of rail service and offer assistance to
the new short-line operator, Conrail is demanding a return of the line, which will result in
termination of the service that has been restored.
I am not suggesting that Conrail stockholders or shippers cross-subsidize a
money-losing operation. Indeed, this Board removed such a burden from Conrail while
mangaing to retain rail service.
Service over this line should be retained and the new operator should be
assisted in its efforts to provide existing and future shippers the service Conrail was not
interested in providing.
One alternative is for Conrail promptly to negotiate an equitable lease of the line
-- at least until the municipalities are able to obtain appropriate funding to pay Conrail
the net liquidation value. Indeed, at that time Conrail will realize $2.9 million from the
sale -- the very price it demanded when seeking to rid itself of the obligation for service.
We have delayed the effective date of this decision for 30 days in expectation that an equitable solution that preserves local rail service will be accomplished. I will be watching events closely.
1. 1 The ICC Termination Act of 1995, Pub. L. No. 104-88, 109 Stat. 803 (ICCTA), which was enacted on December 29, 1995, and took effect on January 1, 1996, abolished the Interstate Commerce Commission (ICC) and transferred certain functions and proceedings to the Surface Transportation Board (Board). Section 204(c) of the ICCTA provides, in general, that, if a court remands a suit against the ICC that was pending on the date of that legislation and involves functions retained by the ICCTA, subsequent proceedings related to the case shall proceed under the applicable law and regulations in effect at the time of the subsequent proceedings. The functions at issue in this proceeding were retained and are now found at 49 U.S.C. 10903-05. Thus, current 49 U.S.C. 10903-05 will apply to this proceeding on remand.
2. 2 Even though our November 21, 1996 decision did not provide for filing of replies, we will accept the Authority's reply to provide a complete record.
3. 3 See 49 CFR 1150.22, stating that the ICC (and now the Board) lacks jurisdiction over the acquisition by a State of a fully abandoned rail line.