City of New York v. United States

Civil No. 71-C-1639 (E.D.N.Y. January 20, 1972)

The Interstate Commerce Commission must consider environmental factors and must file an environmental impact statement before it may authorize abandonment of a railroad line in Brooklyn, regardless of the advanced stage of the proceedings and the improbability of the existance of an alternative to allowing abandonment. These steps are necessary to preserve the integrity of NEPA. Only sections of the opinion setting out that facts and the court's discussion of the NEPA issue are reproduced below. The full text is available from ELI as ELR Dig. [228] for $3.30.

Counsel for Plaintiff
Louis Walters
New York, N.Y.

Counsel for United States of America
Lloyd H. Baker Assistant U.S. Attorney
Eastern District of New York

Counsel for Defendant, Interstate Commerce Commission
Theodore C. Knappen Assistant General Counsel
Washington, D.C.

Counsel for Defendant, Bush Terminal R.R.
G. Clark Cummings
New York, N.Y.

[2 ELR 20275]

Friendly, C.J.

In this action against the United States, the Interstate Commerce Commission, Bush Terminal Railroad and certain of the latter's officers and directors, the City of New York, joined by several intervenors, asks us to annul an order of the Interstate Commerce Commission dated December 13, 1971, in F.D. No. 25896, which authorized abandonment of the entire line of Bush Terminal Railroad Company (the Railroad) in Kings County, New York, and Hudson County, New Jersey. The order, which was effective immediately, was entered after the Railroad on December 1, 1971, had unilaterally imposed an embargo on all outgoing freight and announced that on December 15, 1971, it would impose a similar embargo on all incoming freight, because of the allegedly unseaworthy condition of its marine equipment, and after users of the Railroad had begun an action to enjoin the embargo which they considered to be an unauthorized abandonment. The Railroad terminated operation on December [2 ELR 20276] 13 immediately on learning of the Commission's order.¹

On December 17, the City began this action and sought a temporary restraining order, see 28 U.s.C. § 2284 (3). Judge Weinstein denied this but set the City's motion for a temporary injunction for argument on December 22 before a three-judge court which he asked to have convened, 28 U.S.C. §§ 2321, 2325. At the argument, the Bush Terminal Users Association, Inc., United Transportation Union, the Brotherhood of Railway, Airline and Steamship Clerks, Freight Handlers, Express and Station Employes, and the Department of Transportation of the State of New York were allowed to intervene as plaintiffs. Issuance of a temporary restraining order was again refused, but we reserved decision on the motion for a temporary injunction pending the filing of the record and briefs. [There follows a further statement of facts, not reproduced]

II.

Despite the bleak financial picture of the Railroad's past history and future prospects established before the trial examiner, we are confronted with a serious argument by the plaintiff and intervenors that the Commission has acted here in violation of the National Environmental Policy Act of 1969 (NEPA), 42 U.S.C. §§ 4321-47. Although this abandonment proceeding was initiated before NEPA became effective on January 1, 1970, all agency hearings and decision-making occurred long after the effective date. Consequently, we have no doubt that NEPA was applicable. Cf. Environmental Defense Fund, Inc. v. Corps of Engineers, 324 F. Supp. 878, 880 (D.D.C. 1971); Environmental Defense Fund, Inc. v. Corps of Engineers, 325 F. Supp. 728, 743-44 (E.D. Ark. 1971). While the Commission may initially have thought that, as a general matter, abandonment proceedings were not within the provisions of NEPA, subdivisions (A), (B), and (D), among others, of § 102 (2), 42 U.S.C. § 4332 (2), impose a number of duties on all federal agencies with respect to the consideration and exploration of the environmental effects of their decisions and plans, and the obligation of a federal agency to adhere to these subdivisions in all instances is essentially unqualified.⁹ In addition, in cases of "major Federal actions significantly affecting the quality of the human environment," § 102 (2) (C) requires the federal agency to include in its report a "detailed statement" which comprehensively considers the effect of the proposed action upon the environment and alternatives thereto. At the time of the hearings in this proceeding, it may not have been entirely clear from the statute or from the Interim Guidelines published by the Council on Environmental Quality (CEQ), 35 Fed. Reg. 7390-93 (May 12, 1970), revision proposed, 36 Fed. Reg. 1398-1402 (Jan. 28, 1971), guidelines published, 36 Fed. Reg. 7724-29 (April 23, 1971), that a railroad abandonment proceeding, despite its potential for increase in the use of alternative modes of transportation with greater polluting effects, such as trucks, constituted the type of federal action which requires a detailed environmental statement as prescribed in § 102 (2) (C). However, the Commission has gone a long way to resolving whatever doubt there was on the question by its proposed rules which include railroad abandonment proceedings among those actions which may have a significant effect on the quality of the environment. See ICC Notice of Proposed Rule Making: Implementation of National Environmental Policy, App. A(d) (2), 36 Fed. Reg. 10807, 10809 (June 3, 1971). And although it is evident that the Commission has been slow in reacting to the directive of the CEQ, 35 Fed. Reg. 7390-93 (May 12, 1970), and of NEPA itself, that each federal agency establish formal procedures to guide the preparation of § 102 (2) (C) environmental impact statements, this cannot, excuse the Commission's failure to consider adequately the provisions of NEPA once the Act had become effective.

The Examiner's report gave no consideration to the environmental implications of the abandonment of the Railroad's operations. None of the protestants had sought at the hearing to develop the record in this respect. The environmental issue was first raised by the City in its Exceptions to the Examiner's report. It argued there that if 13,500 carloads — which it assumed to be the Railroad's annual traffic — were moved by truck, substantial additional tonnage of pollutants would be discharged.¹⁰ The Railroad replied that these figures were highly exaggerated, particularly since much of the protestants' argument at the hearing and in their exceptions was not that users would turn to trucks but rather that they would move away as soon as their leases expire, or perhaps even before. Whatever the merits of these opposing views, it is apparent that there is likely to be some adverse environmental effect as a result of the abandonment. Yet the only agency consideration given the environmental issues is the cursory statement of Division 3 which we set out in the margin.¹¹ In our opinion, this is insufficient to establish compliance with, in particular, § 102 (2) (B) & (D), much less with the detailed requirements of § 102 (2) (C).

We recognize that the Commission was here faced with a relatively new statute so broad, yet opaque, that it will take even longer than usual fully to comprehend its import. The protestants compounded an already difficult situation by waiting until the eleventh hour to raise an important question which would best have been considered from the outset. Further, we are not eager to remand for what may well be a largely ritualistic act. We have serious question whether, in view of the consistent record of losses and the large sums needed to remedy deferred maintenance and for capital expenditures and the unavailability of any likely source for these, there is any alternative to allowing abandonment here, despite adverse environmental effects. A recent offer by the Users Association, discussed infra, perhaps offers at least a glimmer of hope. But at this juncture the Railroad appears unable to continue, and has operated as long as it has only because the Terminal Company has not pressed for collection of increasing [2 ELR 20277] amounts — now more than a million and a half dollars — owed to it. We find no indication in NEPA that Congress meant to authorize an agency to compel a parent or sister comapny to finance a losing subsidiary or affiliate simply because the latter's demise will have an unfortunate effect on the environment; and there would be the gravest doubt whether it constitutionally could under the circumstances here before us. See Brooks Scanlon Co. v. Railroad Comm'n, supra, 251 U.S. 396, 399; Railroad Comm'n v. Eastern Texas R.R., 264 U.S. 79, 85 (1924); Pacific Tel. & Tel. Co. v. Tax Comm'n, 297 U.S. 403, 413 (1936) (Brandeis, J.); In re New York, N.H. & H.R.R., 304 F. Supp. 793, 801-03 (D. Conn. 1969), aff'd in part and rev'd in part sub nom. New Haven Inclusion Cases, 399 U.S. 392 (1970).

On the other hand, such considerations do not justify the Commission's disregard of the law. The tardiness of the parties in raising the issue cannot excuse compliance with NEPA; primary responsibility under the Act rests with the agency. See Calvert Cliffs' Coordinating Committee, Inc. v. AEC, 449 F.2d 1109, 1118-19 (D.C. Cir. 1971); cf. Scenic Hudson Preservation Conference v. FPC, 354 F.2d 608, 620 (1965), cert. denied, 384 U.S. 941 (1966); Isbrandtsen Co. v. United States, 96 F. Supp. 883, 892 (S.D.N.Y. 1951) (three-judge court), aff'd sub nom. A/S Ludwig Mowinckels Rederi v. Isbrandtsen Co., 342 U.S. 950 (1952). Furthermore, the legislative history indicates that one of the strong motivating forces behind NEPA, and § 102 in particular, was to make exploration and consideration of environmental factors an integral part of the administrative decision-making process. See S. Rep. No. 91-296, 91st Cong., 1st Sess.; 115 Cong. Rec. 40416 (Dec. 20, 1969) (remarks of Senator Jackson). See also Calvert Cliffs', supra, 449 F.2d at 1112-14. To permit an agency to ignore its duties under NEPA with immunity because we have serious doubts that its ultimate decision will be affected by compliance would subvert the very purpose of the Act and encourage further administrative laxity in this area. The systematic investigation of the abandonment of the Railroad's operations which NEPA requires may well reveal substantial environmental consequences and, given that the most recent offer of the Users Association may possibly provide an economic alternative to abandonment, compel further consideration of its propriety and necessity. In any event, preservation of the integrity of NEPA necessitates that the Commission be required to follow the steps set forth in § 102, even if it now seems likely that those steps will lead it to adhere to the present result. Thus, this proceeding must be remanded to the Commission for it to bring itself into compliance with the law.

III.

[The Court finds the offer of a users association to pay a surcharge an insufficient basis on which to reopen proceedings but directs further consideration of the Railroad's financial prospects only because remand for failure to comply with NEPA is required in any event.]

IV.

In remanding this action to the Commission for further action we do not vacate its abandonment order of December 13, and thus we allow the Railroad to remain shut down pending further administrative action.¹⁸ Although the Commission's failure to act in accordance with applicable law, specifically NEPA, would provide sufficient basis for vacating the Commission's order, see 5 U.S.C. § 706(2)(A), such action is not compelled. In reviewing the Commission's action, we sit as a court with equity powers, and as such

may adjust relief to the exigencies of the case in accordance with the equitable principles governing judicial action. The purpose of judicial review is consonant with that of the administrative proceeding itself, — to secure a just result with a minimum of technical requirements.

Ford Motor Co. v. NLRB, 305 U.S. 364, 373 (1939). See also Addison v. Holly Hill Fruit Products, Inc., 322 U.S. 607, 619-22 (1944). The special circumstances here justify our remanding for further consideration without the vacating of the Commission's order that would normally attend upon this. NEPA is a new and unusual statute imposing substantive duties which overlie those imposed on an agency by the statute or statutes for which it has jurisdictional responsibility. Initially harmonizing and integrating the special duties imposed by NEPA with an agency's traditional regulatory functions is not an easy task. What is more, the plaintiffs who now seek to benefit from the Commission's failure completely to perform the tasks imposed on it by NEPA exacerbated the problem by waiting until after the hearings were completed to raise the environmental question. While none of this can ultimately insulate unlawful administrative conduct from judicial correction, in the exercise of our equity powers we deem this sufficient, considering the seriously deteriorated condition of the Railroad, both physically and economically, as established by the evidence before the Commission, to warrant allowing the December 13 order to remain standing at this juncture for a short period while the Commission supplements the record on the environmental issue and then assesses whether its order should be in any way revised. Cf. Coffey v. Jordan, 275 F.2d 1 (D.C. Cir. 1959).

Even more clearly this is a wholly logical posture in which to have this action proceed insofar as the additional evidence with respect to the surcharge offer is concerned. We have already explored the evidence at length and found that there was substantial basis in the present record for the Commission's conclusions with respect to the Railroad's current financial condition and future economic prospects. Even assuming the most recent surcharge offer so substantially alters the Railroad's financial prospects as to make abandonment inappropriate, it is nonetheless merely additional evidence which could and should have been presented to the trial examiner. Thus, we do not think that this evidence can impeach the present validity of the December 13 order on the record now before us. At most, under the special circumstances of this case, this additional evidence can and does warrant supplementary action by the Commission — albeit this action may ultimately impugn the continuing propriety of the December 13 order and warrant its revision. Cf. Fleming v. FCC, 225 F.2d 523 (D.C. Cir. 1955); Massachusetts Bay Telecasters, Inc. v. FCC, supra, 261 F.2d at 65-67.

We will, then, give the Commission ninety days to conduct whatever further proceedings it may wish concerning the environmental and surcharge issues, to make additional determinations, and to serve, and file with us, a supplemental report consistent with this opinion and the record of any further proceedings. The parties shall serve and file any further briefs within fifteen days after service of the supplemental report; we will hear additional argument if requested. We emphasize the need for expeditious action and holding the Commission to strict time schedule because we are permitting the December 13 order to stand and the Railroad to remain shut down.¹⁹ In the meantime, we will retain jurisdiction, cf. Addison v. Holly Hill Fruit Products, Inc., supra, 322 U.S. at 619, and will withhold decision of the motion for a preliminary injunction. Upon the filing of the [2 ELR 20278] supplelental [sic] report and record we shall deal with this matter as on final hearing. F.R. Civ. P. 65(a)(2).

1. We understand that arrangements were made whereby New York Dock Railway, apparently using some of the Railroad's equipment, handled distressed freight in the immediate vicinity of City of New York.

9. While § 102 contains the qualification "to the fullest extent possible," this does not appear to have been intended to relax the obligation of administrative authorities to perform the duties set forth in the section. To the contrary, the conference committee which added this language stated that its purpose

is to make it clear that each agency of the Federal Government shall comply with the directives set out in [§ 102 (2)] unless the existing law applicable to such agency's operations expressly prohibits or makes full compliance with one of the directives impossible . . . . Thus, it is the intent of the conferees that the provision "to the fullest extent possible" shall not be used by any Federal agency as a means of avoiding compliance with the directives set out in section 102. Rather, the language in section 102 is intended to assure that all agencies of the Federal Government shall comply with the directives set out in said section "to the fullest extent possible" under their statutory authorization and that no agency shall utilize an excessively narrow construction of its existing statutory authorizations to avoid compliance.

Conference Report No. 91-765, 91st Cong., 1st Sess. (1969). See also Port of New York v. United States, __ F.2d __, __, n. 26 (2 Cir. 1971), slip opin. 445. [2 ELR 20105].

10. The figures in the City's Exceptions, which were not otherwise of record, were:

*2*Emission Tons per Year

(low) (high)

Assuming Assuming

26,314 trucks 59,200 trucks

Carbon monoxide 14,000 31,000

Hydrocarbons 1,950 4,900

Oxides of Nitrogen 3,900 7,950

Particulate 310 600

11. This, in full text, is

It appearing, That, although a substantial question of possible damage to the environment has been raised, denial of the application herein will almost certainly result in the financial collapse of the applicant, which would, in effect, substitute economic waste for brief postponement of the envisioned environmental damage; and that under the balancing test prescribed by the court in Calvert Cliffs' Coordinating Committee, Inc., et al. v. Atomic Energy Commission, No. 24, 839 (U.S. Ct. App., D.C. 1971), [1 ELR 20346] as in accordance with Section 102 of the National Environmental Protection Act, any damage that may occur to environmental amenities by our approval of this application is to be outweighed by the proven economic harm that would result from its denial . . . .

18. In its brief in this action, the Railroad has argued that even if we were to vacate the Commission's order, our actions would neither remove nor be determinative of the legality of its self-imposed embargo. We find it unnecessary to pass upon this.

19. That this action to review the Commission's abandonment order had had to proceed with the Railroad already shut down and that we have now found it necessary to seek further agency consideration highlights the preferability of the Commission's usual practice of not making its orders of abandonment effective until 30 or 35 days after service. Indeed, the plaintiffs contend that on this ground alone the order was arbitrary, capricious, and an abuse of discretion 5 U.S.C. § 706(2)(A). On the basis of the evidence before the Commission concerning the serious economic and physical condition of the Railroad we are not inclined so to conclude. Without doubt, immediate abandonment had a drastic effect on the users and employees of the Railroad. But all concerned had been on notice of the likelihood of abandonment for two and a half years. The Railroad had even offered the users the services o a transportation consultant to help them devise other means of transportation. Delay in the effectiveness of the order would have been of little significance here were it not now necessary to remand to the Commission for further action, and the matters which have delayed a speedy, final determination of the Railroad's future are ones which the plaintiffs could and should have presented to the Trial Examiner long ago.