Source: https://law.justia.com/cases/federal/appellate-courts/F2/857/802/114749/
Timestamp: 2019-10-14 15:17:56
Document Index: 510880396

Matched Legal Cases: ['§ 11122', '§ 10701', '§ 11122', '§ 11122', '§ 11122', '§ 203', '§ 203', '§ 11122']

Lo Shippers Action Committee, Petitioner, v. Interstate Commerce Commission, and United States Ofamerica, Respondents,u.s. Clay Producers Traffic Association, Inc., Associationof American Railroads, et al., Intervenors, 857 F.2d 802 (D.C. Cir. 1988) :: Justia
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Lo Shippers Action Committee, Petitioner, v. Interstate Commerce Commission, and United States Ofamerica, Respondents,u.s. Clay Producers Traffic Association, Inc., Associationof American Railroads, et al., Intervenors, 857 F.2d 802 (D.C. Cir. 1988)
U.S. Court of Appeals for the District of Columbia Circuit - 857 F.2d 802 (D.C. Cir. 1988) Argued April 28, 1988. Decided Sept. 23, 1988
Railroads, as common carriers, generally furnish the cars and equipment necessary to perform the transportation services provided under their tariffs. However, under some circumstances, a shipper provides its own (or a leased) railroad car or a railroad makes use of a car belonging to another carrier. In those cases, the railroad provides compensation to its shipper through "allowances" on a mileage basis or to the other line through "per diem." This practice is addressed by 49 U.S.C. § 11122 (1982), which provides:
After reviewing the parties' positions, the ICC described the consequences of the relief LOSAC sought: (1) huge damage claims with "serious" financial consequences for the railroads and (2) a loss of congressionally granted flexibility for the railroads in setting their rates for transportation in railroad-owned cars at levels competitive with other means of transportation. This latter effect followed, per the ICC, from the necessary combined effect of higher allowances to private-car shippers and anti-price discrimination requirements. The Staggers Rail Act of 1980, Pub. L. No. 96-448, Sec. 201(a), 94 Stat. 1898, 1899 (1980) (codified at 49 U.S.C. § 10701a(c) (1982)) ("Staggers Act"), had given the railroads flexibility to reduce their rates to cover only their variable costs in depressed markets; the ICC viewed it as anomalous to permit railroads to have rate flexibility to compete in competitive markets and simultaneously to require that they pay higher, "inflexible"2 cost-based allowances that make attainment of the first goal impossible. 4 I.C.C.2d at 9.
The ICC next considered "whether the goals of the statute can best be served by allowing individual carriers to continue to publish allowances or by prescribing allowances for the entire industry." Id. at 11. The Commission found no need to prescribe industry-wide allowances, especially in light of the Staggers Act preference for individual over collective rate-making, and saw the congressional purpose behind section 11122 as encouraging an appropriate supply of cars. Id. at 12. The ICC reasoned that granting LOSAC's requested relief was not required to ensure an adequate supply because the present supply of LO cars is more than adequate and was principally acquired when allowances were lower and were not periodically updated. Id. at 12-13. Moreover, the ICC reasoned that an increase in allowances would be inconsistent with the "efficient use," 49 U.S.C. § 11122(a), of cars that the ICC is statutorily required to encourage since the rate increases occasioned thereby would cause railroads to lose traffic to other means of transportation aggravating the surplus of idle cars. 4 I.C.C.2d at 13. The Commission believed the "transportation use," 49 U.S.C. § 11122(b), factor also supported its decision to take no action, since LO cars are used primarily for grain shipments, a highly competitive market, and the ICC believed that the record before it indicated that the allowance caps complained of were not significant outside the grain context. 4 I.C.C.2d at 13. The Commission concluded that the railroads' allowance levels had not been shown to be unlawful under section 11122. 4 I.C.C.2d at 13-14.3 Finally, the ICC concluded that acceptance of LOSAC's proposed cost-floor standard for allowances was not necessary to protect LO shippers from abuse of market power by railroads. Id. at 18-19.
This we decline to do. The ICC's formal opinion is its decision because the commissioners retained full authority to approve, disapprove, or modify it until published. LOSAC does not contradict this assertion or contend that the February 24 vote had immediate effect. This is, however, the critical difference between this case and our decision, cited by petitioner, in Pan American World Airways, Inc. v. CAB, 684 F.2d 31 (D.C. Cir. 1982) (per curiam).
In Pan Am the Civil Aeronautics Board ("CAB"), after an unlawfully closed board meeting, issued an emergency order that lacked statutorily required findings of fact. Those followed twelve days later. On review of the order, this Court considered both the subsequently issued findings and a transcript of the preceding board meeting. Id. at 36 & n. 12. The majority and dissenter both distinguished the case there from a hypothetical case in which a decision, although made, had not been "irreversibly made." Id. at n. 12 (emphasis original); see also id. at 51 (Wilkey, J., dissenting). The situation before us now is the Pan Am hypothetical, and very closely resembles that in Kansas State Network, Inc. v. FCC, 720 F.2d 185, 191-92 (D.C. Cir. 1983). In Kansas State, the FCC had ruled against a party in a published decision. On review, the party submitted a transcript of an open meeting to demonstrate that it was the victim of agency unfairness. We struck the transcript from the record as part of protected pre-decisional processes. While we recognized in that case that Pan Am had involved our review of a transcript, we noted that the agency in Pan Am had not supplied a contemporaneous statement of reasons necessitating a review of the transcript in order "to dispose of the issue of whether the agency had complied with the Sunshine Act." Kansas State Network, 720 F.2d at 192. We further noted that the agency's failure in Pan Am to provide a written decision made it impossible for us to assess the reasonableness of the board's action without an examination of the transcript. None of these factors prevails here. Following in the footsteps of Kansas State, we limit our review to reasons given in the ICC's published decision and, absent a compelling indication of error, we must defer to the Commission's interpretation of the statute, with the administration of which it is charged. Black v. ICC, 762 F.2d 106, 114-15 (D.C. Cir. 1985).
The Commission ruled, contrary to LOSAC's contention, that it was within its discretion whether or not to issue regulations providing industry-wide terms for the use of non-railroad-owned equipment. LOSAC's contention that the statute mandates such regulation is based on the use of the word "shall" in 49 U.S.C. § 11122(b). As LOSAC notes, congressional use of "shall" indicates the absence of discretion. MCI Telecommunications Corp. v. FCC, 765 F.2d 1186, 1191 (D.C. Cir. 1985). However, LOSAC's argument here takes the word out of its statutory context. Subsection (b) relates not to whether or not industry-wide rates should be regulated but rather to what factors should be, indeed, must be, employed in determining what those rates will be if and when regulated. The relevant portion of the statute in the first instance is subsection (a) which specifies that the "regulations may include" the sort of regulations now sought by petitioner. (Emphasis supplied.) Just as the use of the word "shall" indicates the absence of discretion, the use of "may" indicates its presence. See Matzke v. Block, 732 F.2d 799, 801 (10th Cir. 1984). While we recognize that the context of a particular usage may at times require the construction of "may" as mandatory or "shall" as permissive, no such modifying context is present here. Cf. United Hosp. Center, Inc. v. Richardson, 757 F.2d 1445 (4th Cir. 1985). Accordingly, the Commission's determination that it was not required to prescribe compensation levels was within its statutory discretion, and we will not disturb that determination.
LOSAC's contention that the interpretation of this statute is for the court and that the ICC construction is not entitled to deference does not change our decision. Consolidated Rail Corp. v. United States, 619 F.2d 988 (3d Cir. 1980), cited by LOSAC compels no different result than we reach. In that case, the Third Circuit noted quite rightly that the courts and not the agencies are "the final authorities on the proper interpretation of ... statute [s]." Id. at 993 (citations omitted). The Third Circuit was reviewing the ICC's formulation of new rate regulations covering the per diem paid by a car-user line to a car-owning railroad. This involves construction of the predecessor statutes to the one we now construe, the predecessors being substantively the same as the present version. However, the question before the Third Circuit was not whether the Commission was required to regulate, but whether in regulating, it was required to consider all the enumerated factors. The Commission in that case had in fact expressly set the rates on the basis of reviewed cost of capital while expressly not considering the other factors listed in the statute. While that case held that Congress had mandated a consideration of all factors, not a portion, the case simply does not address the same question we face here. Neither does the decision stand for the proposition that the Commission is owed no deference on its interpretation of section 11122 when its decision does, as here, take into account all statutorily enumerated factors.
Neither is MCI Telecommunications Corp. v. FCC, 765 F.2d 1186 (D.C. Cir. 1985), cited by petitioner, authority for the proposition that the ICC does not have discretion to prescribe allowances. In MCI, the FCC had prohibited non-dominant carriers from filing tariffs, effectively requiring them to enter into individual contracts with customers. The applicable statute expressly provided, however, that " ' [e ]very common carrier ... shall ... file' " tariffs. Id. at 1191 (quoting and emphasizing 47 U.S.C. § 203(a) (1982)). The FCC contended that its express statutory authority to " 'modify any requirement made by ... this section,' " id. (quoting and emphasizing 47 U.S.C. § 203(b) (2) (1982)), empowered it to take its action, but we held that the FCC had no authority to prohibit companies from filing tariffs. Id. at 1188. In the present case, however, Congress clearly granted the ICC discretion as to the precise subject at issue here. Accordingly, we find that the Commission is due the deference normally owed an agency's interpretation of a statute committed to its care.
LOSAC's argument that the Commission must disapprove market-based allowances which are below cost as computed under the first sentence of subsection 11122(b) likewise compels no disturbance of the Commission's decision. The two sentences of that subsection must be read together. See Consolidated Rail, 619 F.2d at 993. The first is directed to the cost factors relied upon by LOSAC; the second to market factors which the Commission found to compel reduction below cost. Each sentence speaks with the imperative "shall." In neither sentence, nor in the two taken together, did Congress provide any conclusive evidence as to the relative weight to be afforded the various factors. It is by now hardly necessary to restate the principle that when Congress explicitly or implicitly leaves "a gap for the agency to fill," the courts will not substitute our own interpretation for that of the agency but will uphold the agency's interpretation provided only that it is a reasonable one. Chevron U.S.A. Inc. v. Natural Resources Defense Council, 467 U.S. 837, 843-44, 104 S. Ct. 2778, 2781-83, 81 L. Ed. 2d 694 (1984).
The Commission's interpretation here is more than reasonable. The Commission has previously determined that the statutory factors, considered together, do not require that railroads pay rates of compensation that guarantee full-cost recovery to car-providing shippers. This construction is consistent with the ICC's decision in Order Granting Railroads Flexibility in Setting Per Diem Levels, 364 I.C.C. 107, 108-10 (1980), in which the Commission authorized railroads to reduce compensation charges for the use of their cars by other railroads below established inter-railroad "per diem" compensation rates "as a means of discouraging cross-hauling of empty cars ... and hence as a means of improving car utilization" during a period of car surplus. Id. at 108. This decision was referenced with evident approval in the conference committee report to the Staggers Act,4 H.R.Rep. No. 96-1430, 96th Cong., 2d Sess., at 117 (1980), reprinted in 1980 U.S.Code Cong. & Admin.News 3978, 4149, with the added suggestion that the Commission permit per diem to rise above basic per diem when there is a car shortage. H.R.Rep. No. 96-1430, supra, at 118. The conference committee report states an intent that "marketplace decisions govern the railroad industry and its relationship with shippers." Id. at 118 (quoted at 4 I.C.C.2d at 11). The legislative history cited by the ICC relates to section 224 of the Staggers Act, which dealt solely with compensation-related matters. See Pub. L. No. 96-448, Sec. 224, 94 Stat. at 1929-30. The ICC's resort to legislative history adequately supported its construction of the language of the statute. LOSAC's counter-arguments do not compel the conclusion that the ICC erred in its construction, as they must to prevail. We, therefore, affirm the Commission's construction of subsection 11122(b) as permitting below-cost compensation to car-providing shippers.
The Staggers Act repealed paragraph 11122(b) (2), which had authorized the Commission to establish an incentive increment to basic compensation when there was an inadequate car supply. Pub. L. No. 96-448, Sec. 224(a) (1), 94 Stat. at 1929. The repealed paragraph read in its entirety as follows:
Revised Interstate Commerce Act, Pub. L. No. 95-473, Sec. 11122(b) (2), 92 Stat. 1337, 1422 (1978) (formerly codified at 49 U.S.C. § 11122(b) (2)).