Source: https://law.justia.com/cases/federal/appellate-courts/F2/634/137/454878/
Timestamp: 2020-08-12 19:12:44
Document Index: 370552345

Matched Legal Cases: ['§ 706', '§ 10729', '§ 10729', '§ 10729', '§ 10323', '§ 10729', '§ 10729', '§ 10706', '§ 1109', '§ 1109', '§ 1109', '§ 202', '§ 202', '§ 1', '§ 10101', '§ 10707', '§ 202', '§ 10729', '§ 10707', '§ 10729', '§ 10707', '§ 10707', '§ 17', '§ 10323', '§ 3', '§ 10707', '§ 10709', '§ 15', '§ 10707', '§ 10729', '§ 10729', '§ 10706', '§ 202', '§ 202']

Central Power and Light Co., Petitioner, v. United States of America and Interstate Commerce Commission,respondents.state of Texas, Petitioner, v. United States of America and Interstate Commerce Commission,respondents, 634 F.2d 137 (5th Cir. 1980) :: Justia
Justia › US Law › Case Law › Federal Courts › Courts of Appeals › Fifth Circuit › 1980 › Central Power and Light Co., Petitioner, v. United States of America and Interstate Commerce Commiss...
Central Power and Light Co., Petitioner, v. United States of America and Interstate Commerce Commission,respondents.state of Texas, Petitioner, v. United States of America and Interstate Commerce Commission,respondents, 634 F.2d 137 (5th Cir. 1980)
U.S. Court of Appeals for the Fifth Circuit - 634 F.2d 137 (5th Cir. 1980) Dec. 15, 1980
In reviewing the Commission's decisions, we are guided by familiar standards. Basic is the rule that the reviewing court must consider whether the decision was based on relevant factors and whether there has been clear error of judgment. Citizens to Preserve Overton Park v. Volpe, 401 U.S. 402, 416, 91 S. Ct. 814, 823, 28 L. Ed. 2d 136 (1971). While our "inquiry into the facts is to be searching and careful, the ultimate standard of review is a narrow one. The court is not empowered to substitute its judgment for that of the agency." Ibid; see Bowman Transportation v. Arkansas-Best Freight System, 419 U.S. 281, 285, 95 S. Ct. 438, 441, 42 L. Ed. 2d 447 (1974). In the context of rate making, particularly appropriate to one aspect of this opinion,15 the Supreme Court has noted:
Such decisions 'are not to be disturbed by the courts except upon a showing that they are unsupported by evidence, were made without a hearing, exceed constitutional limits, or for some other reason amount to an abuse of power.' Manufacturers R. Co. v. United States, 246 U.S. 457, 481 (38 S. Ct. 383, 389, 62 L. Ed. 831) (1918). As this Court has observed, 'The process of rate making is essentially empiric. The stuff of the process is fluid and changing-the resultant of factors that must be valued as well as weighed. Congress has therefore delegated the enforcement of transportation policy to a permanent expert body and has charged it with the duty of being responsive to the dynamic character of transportation problems.' Board of Trade of Kansas City v. United States, 314 U.S. 534, 546 (62 S. Ct. 366, 372, 86 L. Ed. 432) (1942).
Atchison, Topeka & Santa Fe Ry. Co. v. Wichita Board of Trade, 412 U.S. 800, 806, 93 S. Ct. 2367, 2374, 37 L. Ed. 2d 350 (1973). (footnote omitted).
Tempering this deference afforded agency action is the requirement that a reviewing court set aside agency action found to be arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law. 5 U.S.C.A. § 706(2) (A) (West 1977). Variations on this theme inform us that we must be able to discern from a decision the reasons for the Commission's conclusions and the policies it is pursuing. Potomac Electric Power Co. v. United States, 584 F.2d 1058 (D.C. Cir. 1978). "We must know what a decision means before the duty becomes ours to say whether it is right or wrong." United States v. Chicago, Milwaukee, St. Paul & Pacific Railroad, 294 U.S. 499, 511, 55 S. Ct. 462, 467, 79 L. Ed. 1023 (1935). Also, an agency must either conform itself to its prior norms and decisions or explain the reason for its departure. Secretary of Agriculture v. United States, 347 U.S. 645, 74 S. Ct. 826, 98 L. Ed. 1015 (1954); Mitchell Energy Corp. v. Federal Energy Regulatory Commission, 580 F.2d 763 (5th Cir. 1978); NLRB v. Sunnyland Packing Co., 557 F.2d 1157, 1160 (5th Cir. 1977); see Frozen Food Express, Inc. v. United States, 535 F.2d 877 (5th Cir. 1976). With these standards in mind, we turn to the issues.
With respect to CP&L's argument that the capital incentive rate provision applies only to innovative types of service, we note that there is no such requirement in the language of § 10729.17 CP&L, though, perceives in the legislative history of § 10729 such a requirement. Although the District of Columbia Circuit in Houston Lighting & Power Co. v. United States, 606 F.2d 1131 (D.C. Cir. 1979), cert. denied, 444 U.S. 1073, 100 S. Ct. 1019, 62 L. Ed. 2d 755, extensively reviewed the legislative history of § 10729 and found no requirement that the service be innovative, CP&L offers no reason to us why the District of Columbia Circuit was mistaken in its conclusion.18 After reading the legislative history, we agree with the District of Columbia Circuit that the service need not be innovative or of a new type for the reasons they enunciated. 606 F.2d at 1137-1139. In so holding, we follow our recent decision in Celanese Chemical Co., Inc. v. United States, 632 F.2d 568 (5th Cir. 1980).
The Commission argues that it has authority under 49 U.S.C.A. § 10323(a) and under American Farm Lines v. Black Ball Freight Service, 397 U.S. 532, 90 S. Ct. 1288, 25 L. Ed. 2d 547 (1970) and United States v. Benmar Transport & Leasing Corp., 444 U.S. 4, 100 S. Ct. 16, 62 L. Ed. 2d 5 (1979), to reconsider a decision even after the petitions for judicial review have been filed. We do not consider American Farm Lines or Benmar Transport authoritative in this situation since neither case deals with a rail carrier, and the Reform Act has established special provisions governing Commission procedure in rail cases.20
Section 10327(g) (1), which deals specifically with reconsideration, states:
There is nothing in the legislative history addressed to the particular question of whether the Commission could, on its own initiative, seek a voluntary remand in a rate incentive case. However, we do perceive in the legislative history a policy which would be violated by a voluntary remand. The Reform Act traces its roots back to the 93rd Congress. The House Committee on Interstate and Foreign Commerce in that Congress, after considering a bill sponsored by the Department of Transportation24 , reported to the House a bill, H.R. 5386, with a rate incentive provision essentially the same as that found in § 10729, the primary difference being that the House bill offered 3 years, instead of 5 years, protection to an incentive rate.25 In the debate on the floor of the House, Rep. Adams explained that the rate incentive provision was known as the "Big John" provision because it was aimed at ameliorating problems such as that encountered by the Southern Railway in its efforts to publish new rates for shipment of grain in innovative "Big John" cars it had developed.26 Rep. Adams stated this provision would:
606 F.2d at 1143. The court there rejected the argument and we agree. To have judicial review of an agency action with no authority in that agency to correct errors is a futile exercise. We do not perceive in the legislative history of § 10729, the "clear and convincing evidence" necessary to conclude that Congress intended to restrict normal judicial review. Dunlop v. Bachowski, 421 U.S. 560, 567, 95 S. Ct. 1851, 1857, 44 L. Ed. 2d 377 (1975), Abbott Laboratories, Inc. v. Gardner, 387 U.S. 136, 141, 87 S. Ct. 1507, 1511, 18 L. Ed. 2d 681 (1967). While Congress wished to give railroads assurances that if they made substantial investments, rates associated with these investments would remain undisturbed for 5 years, there is no hint it wished to protect erroneous Commission action. On remand, accordingly, the Commission shall have authority to take whatever action our opinion requires.
We read the Commission's regulation together with its comments on the regulation as evidence of its concern that docketing a rate may have some relevance in determining whether the rate bureau presumption has been satisfied. We cannot ascertain the possible implications of docketing a rate with the particular rate bureau involved in this case as there is nothing in the record as to the procedure followed by the Southwestern Freight Rate Bureau.38 Although § 10706(a) (3) (A) provides that there be a final disposition of a rate docketed with a rail rate bureau by the 120th day after it is docketed, there is no indication as to whether such approval was obtained in this case or whether such approval is automatic in the rate bureau involved. While we defer to the expertise of the Commission to make the initial determination of what relevance docketing a rate may have in this case on market dominance, we conclude that in light of the Commission's own requirement for information concerning docketing of rates, and its statement that circumstances underlying independent action are too varied to permit uniform inference, the Commission should have addressed CP&L's allegation. Cf. Pitre Brothers Transfer, Inc. v. United States, 580 F.2d 140 (5th Cir. 1978). On remand, the Commission shall do so.
Under the Commission's market share presumption of market dominance, carriers are presumed to enjoy market dominance where they have handled at least 70% of the involved traffic during the preceding year. 49 C.F.R. § 1109.1(g) (1). Here no traffic has moved in the past from Axial to Coleto Creek, but when it commences, the railroads will have 100% of the market.39 The Commission found that the market share presumption was irrelevant in this case, noting:
Under the revenue/cost presumption, market dominance is presumed to exist where the rate in issue exceeds the variable cost of providing the service by 60 percent or more. 49 C.F.R. § 1109.1(g) (3). The crucial concept is that of variable costs. All the petitioners allege one or more mistakes by the Commission in calculating the railroads' variable costs for CP&L's traffic. Because this is such a technical subject, a review of the Commission's rules and practices for determining costs will be beneficial before discussion of the substance of the petitioners' objections.
With respect to unit coal train cases, the Commission has consistently modified Rail Form A in calculating costs for the purposes of rate-making.43 I & S, No. 9199, Unit Train Rates on Coal-Burlington Northern, Inc., Decided July 13, 1979 (unprinted) ("BN-Iowa"); Arkansas Power & Light Co. v. Burlington Northern, Inc., 361 I.C.C. 504 (1979) ("Arkansas Power"), petition for review pending; San Antonio, Texas v. Burlington Northern, Inc., 361 I.C.C. 482 (1979) ("San Antonio I "), vacated and remanded sub nom. San Antonio v. United States, 631 F.2d 831 (D.C. Cir. 1980) ("San Antonio II "); Annual Volume Rates on Coal-Wyoming to Flint Creek, Arkansas, Docket No. 36970 and Southwestern Electric Power Company v. Burlington Northern, Inc., Docket No. 36980, combined, Decision Served May 25, 1979 (unprinted) ("Flint Creek"); Kings Mill, supra; Smithers Lake, supra. This modification has taken the form of the use of additives, one for additional equipment and the other for incremental fixed plant investment necessitated by unit coal train movements. These additives are added to the figure derived by Rail Form A to give what the Commission considers to be a more accurate projection of costs. These additives are not based upon systemwide historical averages, but are based upon actual incremental investments necessitated by a movement. These additives calculate both an operating expense portion associated with a movement and an allowance for the cost of the capital investment necessitated by a movement. These costs are directly allocated to a given movement by means of the additive. (J.A. III, pp. 2050-1). Thus, for example, instead of relying on Rail Form A's averages, the additive takes the actual capital investment in fixed plant necessitated by a movement, calculates the cost of that capital investment and directly allocates this cost to the movement. (J.A. III, pp. 2050-1). In order to eliminate a double count on the elements included within the additives, the Commission purportedly removes from the Rail Form A calculation the incremental fixed plant and equipment investments associated with the movement under consideration.
Under the substantial investment test, presumption of market dominance arises when a shipper makes a substantial investment in rail-related equipment or facilities which prevents or makes impractical the use of another carrier or mode. 49 C.F.R. § 1109.1(g) (3). The Commission here found that CP&L has made an investment of $15,500,000 in rail-related equipment.57 The Commission nevertheless found this presumption inapplicable.58 The Commission found that: (1) the investment did not preclude, economically or otherwise, the use of competing rail carriers, (2) CP&L was not precluded from using its investment to transport coal from other domestic sources, and (3) CP&L was not precluded from using rail links to Texas seaports, where CP&L was obtaining coal from South Africa for its shakedown operations. The Commission supported these findings with only the general remark that the record demonstrates the existence of considerable competition to supply both the coal and the transportation of coal without specifying where in the record such support occurs. Because we fail to find support in the record for several of the Commission's findings, we vacate these portions of its decision. With respect to other findings, we vacate and remand in order that the Commission may more adequately explain its findings. In paragraph (i) below, we discuss the significance of the fact that Coleto Creek is served by only one terminating rail carrier, SP. Then, in paragraph (ii), we discuss the finding of competing rail lines for the Axial-Coleto Creek movement. In paragraph (iii), the Commission's finding of alternative domestic sources is considered. Finally, in paragraph (iv), we look at the finding of the existence of alternative transportation modes in the form of a sea-rail link to the Coleto Creek facility.
These statements by the Commission indicate its desire to alter its prior statutory interpretation of "market dominance" found in Ex parte No. 320, Interim Report. However, the Commission has not given reasons why it believes its initial interpretation of § 202(b) of the Reform Act is incorrect. When an agency desires to depart from its prior norms or from a prior statutory interpretation, it must clearly set forth its reasons. Atchison, Topeka & Santa Fe Railway Co. v. Wichita Board of Trade, 412 U.S. 800, 808, 93 S. Ct. 2367, 2375, 37 L. Ed. 2d 350 (1978); NLRB v. Sunnyland Packing Co., 557 F.2d 1157 (5th Cir. 1977). The Commission at one time set forth extensive reasons for its interpretation that § 202 of the Reform Act precluded consideration of geographic competition, and cannot now reject that well-developed reasoning without explanation.
In no instance82 have we either directed that the Commission take additional evidence or refrain from doing so. We leave those matters to its discretion. F.C.C. v. Pottsville Broadcasting Co., 309 U.S. 134, 60 S. Ct. 437, 84 L. Ed. 656 (1940). Of course, the Commission may take into account the delay required for taking such evidence, the need for expedited decision, the adequacy of the opportunities previously afforded a party who wishes to adduce additional evidence and any other factors it may consider appropriate in determining, on an issue-by-issue basis, whether to rely upon the present record or to require or permit additional evidence.
Pub. L. No. 94-210, 90 Stat. 41 (1976) revised the Interstate Commerce Act, then codified at 49 U.S.C.A. §§ 1 et seq. Pub. L. No. 95-473, 92 Stat. 1337 (1978) subsequently revised and recodified, without substantive change, the Interstate Commerce Act at 49 U.S.C.A. §§ 10101 et seq. Reference hereinafter shall be either to sections of the Interstate Commerce Act as recodified, or to specified sections of the Reform Act
Since the drafting of this opinion, the Staggers Rail Act of 1980, Pub. L. No. 96-448, 94 Stat. 1895, has been enacted, further amending the Interstate Commerce Act as it applies to the rail industry. Reference to sections of the Interstate Commerce Act shall be to the provisions as they read before the Staggers Rail Act of 1980.
The alternative section under which the railroads could have filed their proposed rate is § 10707. This section also was added to the Interstate Commerce Act by the Reform Act. See Reform Act, Pub. L. 94-210, § 202(e), 90 Stat. 31 (1976). Section 10707 is the section under which investigation of a proposed rail rate would normally be conducted, and is the only section authorizing investigation of a rail rate that has already become effective. It does not have a capital investment prerequisite. It does impose time limits on the Commission in conducting a proceeding, though not as stringent as the time limits of § 10729. See § 10707(b) (1). A significant difference from § 10729 is that in a § 10707 proceeding, the burden is on a carrier proposing a changed rate, classification, rule or practice to prove the change is reasonable. § 10707(e)
In American Farm Lines, the Supreme Court noted the power of the Commission to grant rehearings after a petition was filed with a court was not limited or qualified by 49 U.S.C. § 17(6) and (7), (the relevant provisions of the Interstate Commerce Act before the 1978 recodification), governing Commission reconsideration. 397 U.S. at 540, 90 S. Ct. at 1293
Section 10323(a) is captioned, "Rehearing, reargument, and reconsideration-nonrail proceedings." While this caption indicates § 10323 pertains to nonrail cases, we are conscious that § 3(a) of Pub. L. 95-473, 92 Stat. 1466, recodifying the Interstate Commerce Act, specifies we are not to draw inferences concerning statutory construction from captions
Southern Railway's difficulties can be traced in Grain in Multiple-Car Shipments-River Crossings to the South, 318 I.C.C. 641 (Division 2), reversed, 321 I.C.C. 582 (1963) (Full Commission), reversed sub nom. Cincinnati, N. O. & T. P. Ry. Co. v. United States, 229 F. Supp. 572 (S.D. Ohio 1964), vacated per curiam sub nom. Arrow Transport Co. v. Cincinnati, N. O. & T. P. Ry. Co., 379 U.S. 642, 85 S. Ct. 610, 13 L. Ed. 2d 550, on remand, 325 I.C.C. 752 (1965)
Cf. Southern Railway Co. v. Seaboard Allied Milling Corp., 442 U.S. 444, 99 S. Ct. 2388, 60 L. Ed. 2d 1017 (1979) and Georgia Power Co. v. United States, 617 F.2d 107 (5th Cir. 1980), both holding appellate courts have no jurisdiction to review a Commission's decision not to investigate a rate under § 10707. In this case, there has been an investigation of market dominance and jurisdiction is clearly established under § 10709(b) establishing judicial review over determinations of market dominance
(a) In order that the Commission may determine whether a rail carrier proposing a rate increase possesses market dominance over the service to be rendered under a proposed rate, there shall be included in the carrier's statement notifying the Commission that it wishes to have the proposed rate considered pursuant to section 15(8) (c) of the Interstate Commerce Act, evidence upon which the Commission may base a determination with regard to market dominance, to the extent available, and including but not limited to the following information:
(emphasis added). While this requirement to bring forth evidence literally applies to rates considered under § 15(8) (c) and while 15(8) (c) was recodified in 1978 as § 10707, and not § 10729, we can perceive no reason why this should make a difference in the understanding of the relevance of rate bureau activity in determining "market dominance." We also note that this regulation requires the carrier, and not the shipper, to provide evidence concerning the docketing, discussion, consideration or approval of a rate. We are conscious that in § 10729 cases the party best able to come forward with the evidence has the burden of producing the evidence. Ex parte No. 327, Rate Incentive for Investment Capital, supra. We are unable to determine whether CP&L or the shippers were best able to produce evidence of rate bureau activity and whether either party has failed to satisfy its burden of coming forward with evidence. Our opinion is founded on the simple observation that there is minimal evidence of rate bureau activity which merited Commission consideration.
49 U.S.C.A. § 10706(a) (2) provides that the Commission must approve a rate bureau agreement before actions carried out under it are exempt from the antitrust laws. The Commission has noted that it has not prescribed any particular form of agreement and that each agreement may be tailored to meet the needs of the particular carrier group and its shippers. Ex parte No. 297, Rate Bureau Investigation, 349 I.C.C. 811, 815 (1975), affirmed and clarified, 351 I.C.C. 437 (1976), affirmed sub nom. Motor Carriers Traffic Association, Inc. v. United States, 559 F.2d 1251 (4th Cir. 1977)
Section 10709 was originally passed as part of § 202 of the Reform Act. The definition of market dominance in § 202 was " 'market dominance' refers to an absence of effective competition from other carriers or modes of competition, for the traffic or movement to which a rate applies." In the 1978 recodification of the Interstate Commerce Act, the phrase "traffic or movement" was changed to "transportation." Section 3(a) of Pub. L. 95-473, 92 Stat. 1466, the act implementing the recodification, provides that the recodification shall "not be construed as making a substantive change" in the prior law
Of course, it is not always the case that a court has the benefit of an agency's expertise in interpreting a statute since occasionally a court may be called upon to state its understanding before that agency has given its interpretation. See NLRB v. Hearst Publications, 322 U.S. 111, 131, 64 S. Ct. 851, 860, 88 L. Ed. 1170 (1944)
In other cases dealing with implementation of statutes with time limits, other courts have imposed time restrictions on agency action on remand. CPC International, Inc. v. Train, 515 F.2d 1032 (8th Cir. 1975); International Harvester Co. v. Ruckelshaus, 478 F.2d 615 (D.C. Cir. 1973)