Case 129

Berkshire Scenic Railway Museum v. Interstate Commerce Commission, 52 F.3d 378 (1st Cir. 1995).

The Berkshire Scenic Railway Museum sought review of an Interstate Commerce Commission (ICC) decision allowing a non-carrier to acquire and operate a rail line under a class exemption from ICC's more involved application process. The museum used a portion of the rail line as a scenic railway. The profits it generated helped fund the renovation of the Lenox Railroad Station, listed in the National Register of Historic Places. The museum alleged that the applicant provided false and misleading information in its application to ICC and failed to perform adequate historic preservation and environmental reviews.

During the administrative process, the applicant notified the Massachusetts State Historic Preservation Officer (SHPO) of its intention to use the rail line for freight service. The notification explained that the line was currently used for that purpose and, further, that no buildings were located on the property to be acquired. At the time of the notification, however, the applicant did not know that a small portion of the Lenox station encroached on the rail line. The SHPO responded that although there were historic properties listed in or eligible for the National Register adjacent to the rail line, the acquisition and operation of the line would not affect them.

In reviewing ICC's decision, the court gave broad deference to the agency, particularly its interpretation of its regulations regarding false and misleading information. 52 F.3d at 381. The court adopted ICC's view that an exemption is void under the regulation only if the false and misleading information pertained to a material part of the transaction. Id. The museum argued that the applicant's statements regarding historic properties located on the rail line and the use of the line were false and misleading.

The court rejected this argument, finding those comments "immaterial misstatements." Id. at 382. The transaction would have qualified for an exemption, the court reasoned, even if the facts had been properly represented because "historic preservation is simply not a material element of an 'acquisition and operation' transaction." Id.

Moreover, the court noted that the applicant proposed to use the line for freight service, the service for which the line had been previously used and, therefore, the acquisition could not adversely affect the Lenox station. The court also found as immaterial the fact that the applicant did not disclose to ICC that it would refuse to allow Berkshire to operate the scenic railway.

The museum also alleged that ICC did not properly conduct historic preservation review as required by the National Historic Preservation Act (NHPA). Specifically, the museum argued that the applicant's actions fell within the adverse effect criteria listed in the implementing regulations of NHPA because the transaction would result in isolation of the property from its setting and deterioration of the property. Id. (citing 36 C.F.R. § 800.9(b)(2), (b)(4)).

The court found no basis for the museum's arguments regarding isolation or deterioration because the scenic railway had already ceased operation for a year prior to the acquisition of the rail line and, therefore, the acquisition was not the cause of the isolation.

The court also was persuaded by the SHPO's no effect determination in which neither the Lenox station nor the scenic railway were mentioned. Additionally, the court observed that the station was not "isolated" from the railway because it actually encroached upon the right-of-way.

The court also determined that ICC had a rational basis for not conducting an environmental assessment (EA) because its regulations did not require an EA where there was only a change in ownership and no change in operations.

Finally, although the court did not decide the issue, it did note that "a substantial question exists" as to whether ICC could condition the exemption issued to the applicant by requiring it to allow the railway museum to continue to use the rail line.

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