We are unable to decide the principal question posed in this petition for review--whether the Interstate Commerce Commission properly interpreted the Interstate Commerce Act, 49 U.S.C. Secs. 10901, 11343, to deprive the agency of jurisdiction over a certain "Joint Line Agreement." The rationale for the Commission's jurisdictional determination is not discernible and, for that reason, the case must be returned to the agency.I

* Norfolk and Western Railway Company, a wholly owned subsidiary of Norfolk Southern Railway Company, provides rail freight service in thirteen states and Canada. In January 1993, N & W "leased" its rail line in Cook and Will Counties, Illinois, to the Commuter Rail Division of the Regional Transportation Authority of Northeast Illinois d/b/a METRA (METRA) pursuant to a "Joint Line Agreement." METRA is a municipal corporation providing commuter rail passenger service in Chicago, Illinois, and the surrounding metropolitan area. The METRA system consists of 475 miles of track and 230 stations, and serves approximately 76 million passengers annually. METRA provides commuter service itself on certain rail lines and on other lines pursuant to "purchase of service agreements" with freight railroads.

The "Joint Line" subject to the N & W-METRA Agreement runs from 74th Street in Chicago to Manhattan, Illinois. Since 1979, METRA has provided commuter service on the line under a purchase of service agreement with N & W, using N & W trains and employees, but using the "METRA" insignia on the trains, on employee uniforms and on passenger tickets. The Joint Line Agreement altered this arrangement by allowing METRA to use its own trains and employees. Other terms of the Joint Line Agreement are as follows. METRA may use the line for commuter service, but not for freight service. N & W retains a permanent easement over the line, allowing it to furnish common carrier freight service and to transfer trackage rights to other freight carriers. N & W also retains the right and obligation to dispatch both freight and passenger trains over the line and to issue rules governing operations over it. METRA must maintain the line--its trackage and signals--at a higher speed classification than that at which N & W maintained it. N & W's freight trains may not use the line on weekdays from 6:00 a.m. to 9:00 a.m. and from 4:00 p.m. to 7:00 p.m., unless N & W operations during those times would not interfere with commuter operations and unless METRA grants N & W a waiver from the time restrictions.

N & W petitioned the Commission for a declaratory order that its agreement with METRA was not a transaction subject to the Commission's jurisdiction under 49 U.S.C. Sec. 113431 or 49 U.S.C. Sec. 10901.2 Section 11343 deals with transactions between existing carriers3 regulated by the Commission. See, e.g., Black v. ICC, 762 F.2d 106, 115 (D.C.Cir.1985). The Commission must approve the merger or consolidation of two or more such carriers and the "acquisition by a rail carrier of trackage rights over, or joint ownership in or joint use of, a railroad line ... owned and operated by another rail carrier," 49 U.S.C. Secs. 11343(a), 11344(c). Section 10901 covers other transactions. In general, an entity, including a state agency, acquiring or operating, through purchase or lease, an active rail line assumes a common carrier obligation to assure that service over the line continues; therefore it must obtain Commission approval for the transaction.4 For reasons we discuss later, "[n]oncarriers require Commission approval under section 10901 to construct, acquire or operate a rail line in interstate commerce. Existing carriers require approval under section 10901 only to construct a new rail line or operate a line owned by a noncarrier, since acquisition by a carrier of an active rail line owned by a carrier is covered by 49 U.S.C. 11343." 49 C.F.R. Sec. 1150.1(a); see generally Simmons v. ICC, 829 F.2d 150 (D.C.Cir.1987).

The Commission recently carved out an exception to its rule that because noncarriers acquiring the land and tracks underlying an active railroad line assume common carrier obligations to ensure that service over the line continues, they must receive the Commission's approval pursuant to section 10901. In its State of Maine decision, the Commission ruled that it did not have jurisdiction over a state agency's acquisition of a carrier's rail line because the carrier retained a permanent, unconditional easement to continue its common carrier freight operations over the line. Maine, DOT-Acq. Exemption, Me. Cent. R.R., 8 I.C.C.2d 835 (1991); see also Utah Transit Auth.--Acquisition Exemption--Line of Union Pacific R.R., Finance Docket No. 32186 (Dec. 31, 1992) (not published); South Orient R.R.--Acquisition and Operation Exemption--Line of The Atchison, Topeka & Santa Fe Ry., Finance Docket No. 31971 (Sept. 2, 1992) (not published). Such transactions do not, according to the Commission, transfer any common carrier obligations subject to its regulatory authority. The freight operator retains the ability to meet its obligations and thus cannot cease to offer service on the line without the Commission's consent. See State of Maine, 8 I.C.C.2d at 837. If the noncarrier is not acquiring common carrier obligations, the Commission believes it has no jurisdiction under section 10901. Id.

Whether the transaction went forward, and whether section 11343 or section 10901 gave the Commission jurisdiction over the Joint Line Agreement, were matters the Illinois Legislative Board of the United Transportation Union--the petitioner in this case--thought important. In section 11343 transactions, the Act requires the Commission, as a condition of its approval, to safeguard the interests of adversely affected railroad employees. 49 U.S.C. Secs. 11344(a), (b)(1)(D) & 11347; Norfolk & Western Ry. v. American Train Dispatchers Ass'n, 499 U.S. 117, 132-33, 111 S. Ct. 1156, 1165-66, 113 L. Ed. 2d 95 (1991).5 On the other hand, in section 10901 transactions the Commission "may" require labor protection. 49 U.S.C. Sec. 10901(c)(1)(A)(ii), (e). The Commission exercises its section 10901 discretion in favor of requiring labor protection only in exceptional circumstances. Redden v. ICC, 956 F.2d 302, 304 (D.C.Cir.1992); Fox Valley & Western, Ltd. v. ICC, 15 F.3d 641, 644 (7th Cir.1994).

N & W's request for a declaratory order relied on the State of Maine exception, arguing that pursuant to the Joint Line Agreement, it would continue freight operations, and METRA would continue commuter service, only now using its own trains and employees. N & W also claimed that METRA's commuter passenger operations, including those over the Joint Line, were wholly within the State of Illinois, and thus not subject to the Commission's jurisdiction. See 49 U.S.C. Sec. 10501(b)(1); Southern Pac. Transp. Co.--Abandonment Exemption--Los Angeles County, Cal., 9 I.C.C.2d 385, 391-92 (1993).6

In response to the Commission notice of N & W's request, 58 Fed.Reg. 21,475 (1993), the union filed an opposition, arguing that rather than entertaining the petition for a declaratory order, the Commission should insist that METRA file an application to lease the N & W line and a motion to dismiss for lack of jurisdiction. The union also maintained that METRA is a "carrier" providing interstate commuter passenger service, that N & W would "lose control of key common carrier functions" under the Agreement, and thus, that the Agreement constitutes an acquisition of the "joint use of a railroad line" under section 11343(a)(6), requiring the Commission's approval.

The Commission granted N & W's request for a declaratory order, concluding it had no jurisdiction over the transaction. Norfolk & Western Ry.--Lease of Line in Cook & Will Counties, Ill., Finance Docket No. 32279 (May 21, 1993) (not published). The Commission concluded that the Joint Line Agreement "would not materially impair NW's ability to meet its common carrier obligation," that the Agreement "does not involve the transfer of common carrier rights or obligations subject to [the Commission's] jurisdiction," and thus, that it did not have jurisdiction over the transaction. Id. at 3-4. The Commission emphasized that N & W would retain management and control over all freight operations, and dispatching control over both freight and passenger operations; while N & W would not have the right to make repairs under the Agreement, METRA was obligated to maintain the track at a higher speed classification than that required for freight operations. Id. at 3. Although N & W would be precluded from using the line during commuter rush hours, the Commission found that N & W would have access to additional track, enabling it to reach its main Chicago area shipping yard during the restricted periods. Id. at 2. Whether METRA was a regulated "carrier," as the union claimed, was--according to the Commission--"not relevant" to whether the transaction transferred a common carrier obligation for purposes of the State of Maine exception. Id. at 3. Nevertheless, the Commission treated METRA as a provider of wholly intrastate commuter passenger service. Id. at 3-4. Because the Commission found "the transaction does not involve an action subject to [its] jurisdiction," it also rejected the union's contention that the Agreement was an acquisition of "joint use" under section 11343(a)(6). Id. at 4 n. 5. The Commission later denied the union's petition to reopen on the grounds that the union had not pointed to any material error and had not raised any new relevant evidence. Norfolk & Western Ry.--Lease of Line in Cook & Will Counties, Ill., 9 I.C.C.2d 1155, 1159 (1993).

We know the Commission invoked State of Maine, but we cannot be certain why it thought, as it apparently did, that the exception applied not only to section 10901, but also to section 11343. State of Maine, and other Commission decisions following it, dealt only with section 10901. Which provision--section 10901 or section 11343--potentially covered this transaction turned on METRA's status as an existing "carrier," a matter the Commission deemed irrelevant on the ground that METRA was not acquiring N & W's common carrier obligations.7

We can follow the Commission's reasoning with respect to section 10901, although matters are a bit more complicated than the Commission's opinion indicates. Section 10901 applies only when the acquisition or operation of the additional railroad line is by a "rail carrier providing transportation subject to the jurisdiction" of the Commission. 49 U.S.C. Sec. 10901(a). Hence, "[e]xisting carriers require approval under section 10901 ... to construct a new rail line or operate a line owned by a noncarrier." 49 C.F.R. Sec. 1150.1(a). (Section 11343 covers acquisitions by an existing carrier of a rail line owned by a carrier. Id.) Yet many courts have held that section 10901 also applies if, rather than a regulated "rail carrier," a noncarrier such as a state agency seeks "to construct, acquire or operate a rail line in interstate commerce," id. E.g., Railway Labor Executives' Ass'n v. United States, 791 F.2d 994, 1003-04 (2d Cir.1986). How can this be? The answer, rarely mentioned in modern cases sustaining the Commission's interpretation of section 10901, is that the noncarrier acquirer is deemed to be a regulated carrier if it would wind up having a common carrier obligation as a result of the transaction. See Southern Pac. Transp. Co.--Abandonment Exemption--Los Angeles County, Cal., 9 I.C.C.2d at 387 n. 4. In other words, "rail carrier" in section 10901(a) includes rail carriers-to-be (whereas "carriers" in section 11343(a) refers to existing carriers). This has been the Commission's position since at least the 1920's. See Texas & New Orleans R.R. v. The Northside Belt Ry., 276 U.S. 475, 479-80, 48 S. Ct. 361, 362-63, 72 L. Ed. 661 (1928); People of the State of Ill. v. United States, 604 F.2d 519, 524 (7th Cir.1979); Iowa Term. R.R.--Acquisition and Operation, 312 I.C.C. 546, 548-49 (1961); see also 2 I.L. SHARFMAN, THE INTERSTATE COMMERCE COMMISSION 262-63 (1931). In this light we can appreciate the logic of State of Maine with respect to section 10901 acquisitions by noncarriers: if the noncarrier does not thereby also acquire common carrier obligations, it is not, nor will it become, a "rail carrier providing transportation subject to the jurisdiction" of the Commission, and hence section 10901(a) does not give the Commission jurisdiction over the transaction.

Section 11343 is a different story. We do not understand--and the Commission did not explain--why a transfer of common carrier obligations, or the lack thereof, should have been significant under section 11343. Assume that prior to entering the agreement with N & W, METRA engaged in interstate transportation (the union claimed that it did) and for that reason was an existing carrier subject to the Commission's regulatory authority. See 49 C.F.R. Sec. 1150.1(a). The Joint Line Agreement would then be between two existing carriers--METRA and N & W--and would therefore fall, so the union argues, under section 11343(a)(6), rather than section 10901. Yet by treating METRA's status as irrelevant, the Commission must have believed that it nevertheless would have no jurisdiction over the transaction. It is not clear why. Application of section 11343(a)(6) does not appear to turn on whether common carrier obligations are being transferred from one regulated carrier to another. Section 11343(a)(6) merely says that the Commission must approve one existing carrier's "acquisition" of "trackage rights," or of "joint use" of a railroad line "owned or operated by another rail carrier."

What we have said thus far should be enough to indicate that the Commission has some explaining to do. No court has yet passed on the validity of the State of Maine "exception" to section 10901. If we proceeded further we would have to rule on that issue. But we could not stop there. As we have said, it did not matter to the Commission which provision--section 10901 or section 11343--potentially covered the METRA-N & W transaction. We would therefore have to pass as well on the validity of using State of Maine in section 11343 transactions. But we are completely in the dark about the Commission's reasoning on this subject. Although the Administrative Procedure Act requires all agency "findings and conclusions, and the reasons or basis therefor" to appear in the record, 5 U.S.C. Sec. 557(c)(3), the Commission's opinion contains not a word regarding why it thought, as it apparently did, that State of Maine's analysis of section 10901 applies equally to section 11343. Given this state of affairs our only recourse is to send the case back to the Commission. See, e.g., International Longshoremen's Ass'n v. National Mediation Bd., 870 F.2d 733, 736 (D.C.Cir.1989).8

The Commission's brief and oral argument offer a rationale for the agency's decision, a rationale that nowhere appears in the administrative record. It is this. Carrying out of the Joint Line Agreement may constitute a "joint use" of a railroad line within the meaning of section 11343(a)(6). But METRA has been jointly using the line for the past twenty-five years. So what we have here is a continued joint use, rather than the acquisition of a joint use as section 11343(a)(6) contemplates. Commission counsel adds that METRA could not have "acquired" N & W's obligation to provide commuter passenger service because that obligation never rested with N & W. For these and other reasons, the Joint Line Agreement does not result in the transfer, consolidation, or acquisition of any carrier service or use within the Commission's jurisdiction under section 11343(a)(6). Cf. American Train Dispatchers Ass'n v. ICC, 671 F.2d 580, 582 (D.C.Cir.1982). Whether these are good arguments is not for us to say at this point.9 On remand the Commission may adopt its counsel's position, or it may not.

* * * * * *

The petition for review is granted, the Commission's declaratory order10 is vacated, and the case is remanded to the Commission for further proceedings consistent with this opinion.

So ordered.