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In re Commuter Operating Agency''s Determination of Financial Results to Carriers for Calendar Year 1977

Decided: December 4, 1978.

IN THE MATTER OF COMMUTER OPERATING AGENCY'S DETERMINATION OF FINANCIAL RESULTS TO CARRIERS FOR THE CALENDAR YEAR 1977


On appeal from Action of the Commuter Operating Agency Raising Rail Passenger Fares.

Lynch, Crane and Horn.

Per Curiam

This is an appeal by two nonprofit associations of commuters and wives of commuters*fn1 (hereinafter "appellants") from what is termed by the Commuter Operating Agency (C.O.A.) the "Determination of Financial Results to Carriers for the Calendar Year 1977" (hereinafter "determination"), and from a 10% increase in Conrail passenger rail fares adopted by said agency pursuant thereto and effective October 1, 1978.

Appellants moved for a stay of the fare increase. By order dated September 27, 1978 this court denied the motion pending argument on the merits of the appeal to be had on October 31, 1978. However, the order denying the stay also provided that (a) Conrail was to furnish receipts to passengers of the amount of fares paid on or after October 1, 1978 so that, in the event the increase in fares was later found to be invalid, appropriate refunds could be made; (b) C.O.A. was to file with this court "all data (including quarterly and other reports and any other information) which C.O.A. considered in reaching its determination of April 19, 1978, concerning financial results to Conrail for providing passenger service in New Jersey during the calendar year 1977." See N.J.S.A. 27:1A-17. The order further provided: "Submission of such data shall be accompanied by affidavit stating in what manner said data was considered and in what respects it influenced said determination."

Appellants having made a prima facie showing that C.O.A. had failed to comply with the requirements of said statute, N.J.S.A. 27:1A-17, we required the data and affidavit in order to ascertain whether C.O.A. had complied with the mandate of the statute, which provides, so far as pertinent:

The agency annually shall investigate and determine the financial results to each rail carrier from providing passenger service during the previous calendar year and determine what action is required

for each carrier to offset all or part of any loss shown. Such determination may include * * * (a) changes in * * * fares * * *. [Emphasis supplied]

Thereafter C.O.A. filed with this court copies of numerous documents, totalling 453 pages, together with two affidavits, one by William Whitehurst, vice-president of Peabody and Associates, consultants to C.O.A., and one by George Herkner, Jr., Assistant Director of the Division of Commuter Services in the Department of Transportation. The documents also included the report of the chief hearing examiner on the proposed determination.

Having heard the argument on the merits on October 31, 1978 and having examined the documents submitted, we conclude that C.O.A. has not complied with the statutory mandate of N.J.S.A. 27:1A-17. We conceive that the clear purpose of the provision was that C.O.A.: (1) investigate and determine the "financial results" to a rail carrier from providing passenger service during the previous calendar year (here 1977), to determine whether there has been a "loss" during that year, and (2) if such loss is found, whether it is appropriate to increase fares to offset all or part of any such loss.

We conclude that it is the intent of N.J.S.A. 27:1A-17 that C.O.A. shall reach its determination by use of historical data (i.e. , the financial results of the preceding calendar year). The data submitted to this court does not demonstrate that such process was followed. Rather, the data indicates that C.O.A.'s determination was based on prospective needs or estimates as encompassed within a projected budget for the calendar year 1979.

C.O.A.'s contention is that it is unable to comply with N.J.S.A. 27:1A-17 because Federal Regulations (49 C.F.R. 1127.1 et seq.) somewhat subsume its obligation under the New Jersey statute. This is so, it is said, because C.O.A. cannot assure an adequate subsidy under the ...


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