Source: http://pa.findacase.com/research/wfrmDocViewer.aspx/xq/fac.19800328_0040743.C03.htm/qx
Timestamp: 2017-11-24 08:02:04
Document Index: 492608880

Matched Legal Cases: ['arte 334', '§ 212', '§ 1', '§ 1', 'arte 334', '§ 1', '§ 10', '§ 706', '§ 212']

UNITED STATES OF AMERICA AND INTERSTATE COMMERCE COMMISSION, RESPONDENTS, CHICAGO AND NORTH WESTERN TRANSPORTATION COMPANY; WILLIAM M. GIBBONS, TRUSTEE OF THE PROPERTY OF THE CHICAGO, ROCK ISLAND & PACIFIC RAILROAD, AS TRUSTEE, AND NOT INDIVIDUALLY, THE ATCHISON, TOPEKA AND SANTA FE RAILWAY COMPANY, BURLINGTON NORTHERN INC., MISSOURI PACIFIC RAILROAD COMPANY, PITTSBURGH AND LAKE ERIE RAILROAD COMPANY, SOUTHERN PACIFIC TRANSPORTATION COMPANY, UNION PACIFIC RAILROAD COMPANY, WESTERN PACIFIC RAILROAD COMPANY, SOO LINE RAILROAD COMPANY, INTERVENORS ; THE ATCHISON, TOPEKA AND SANTA FE RAILWAY COMPANY, BURLINGTON NORTHERN INC., MISSOURI PACIFIC RAILROAD COMPANY, PITTSBURGH AND LAKE ERIE RAILROAD COMPANY, SOUTHERN PACIFIC TRANSPORTATION COMPANY, UNION PACIFIC RAILROAD COMPANY, WESTERN PACIFIC RAILROAD COMPANY, PETITIONERS V. THE UNITED STATES OF AMERICA AND THE INTERSTATE COMMERCE COMMISSION, RESPONDENTS, CHICAGO AND NORTH WESTERN TRANSPORTATION COMPANY, SOO LINE RAILROAD COMPANY, STANLEY E. G. HILLMAN, TRUSTEE OF THE PROPERTY OF THE CHICAGO, MILWAUKEE, ST. PAUL AND PACIFIC RAILROAD COMPANY, DEBTOR ("MILWAUKEE RAILROAD"), INTERVENORS ; CONSOLIDATED RAIL CORPORATION, CHICAGO AND NORTHWESTERN TRANSPORTATION COMPANY AND SOO LINE RAILROAD COMPANY, PETITIONERS V. UNITED STATES OF AMERICA AND INTERSTATE COMMERCE COMMISSION, RESPONDENTS, THE ATCHISON, TOPEKA AND SANTA FE RAILWAY COMPANY, BURLINGTON NORTHERN INC., MISSOURI PACIFIC RAILROAD COMPANY, PITTSBURGH AND LAKE ERIE RAILROAD COMPANY, SOUTHERN PACIFIC TRANSPORTATION COMPANY, UNION PACIFIC RAILROAD COMPANY, AND WESTERN PACIFIC RAILROAD COMPANY, INTERVENORS
Petition for Review of Orders of the Interstate Commerce Commission (ICC Ex Parte No. 334)
The various petitions*fn1 before us request our review of two final orders of the Interstate Commerce Commission in Ex Parte No. 334, Car Service Compensation Basic Per Diem Charges Formula Revision in Accordance with the Railroad Revitalization and Regulatory Reform Act of 1976, reflecting decisions of April 3, 1978 (Order 2), and of April 6, 1979 (Order 3).*fn2 The commission proceeding in Ex Parte 334, as its title indicates, was designed to implement § 212 of the Railroad Revitalization and Regulatory Reform Act of 1976 (4R Act) which modified § 1(14)(a) of the Interstate Commerce Act to require that charges paid by a railroad for the use of freight cars that it does not own must be fixed on the basis of the costs of ownership, including a fair return on the cost of owning and maintaining each type of freight car.*fn3
Petitioners in Nos. 78-1575 and 79-1640, Consolidated Rail Corporation, Chicago and Northwestern Transportation Company, and Soo Line Railroad Company, argue that the commission's per diem rates were formulated by ignoring or misapplying statutory criteria. They argue that the statute calls for a "fair return" and that the agency's orders are the result of an unfair and illegitimate interpretation of the statute, that "current costs of capital" was not properly interpreted, and that costs of repair must be updated. In addition, they urge that the revised rates are too high and violate the policies and purposes of railroad legislation.*fn4
Since the turn of the century, railroads have paid for the use of each other's freight cars on the basis of a per diem rate. This rate, originally based solely on the number of days that a railroad had possession of another's cars, had been fixed by mutual agreement. In order to facilitate interstate commerce, railroads are required to accept from originating railroads loaded freight cars in route to their final destination, rather than shifting the freight between the cars of connecting roads. This is called the car pool system. See generally United States v. Allegheny-Ludlum Steel Corp., 406 U.S. 742, 743, 92 S. Ct. 1941, 1944, 32 L. Ed. 2d 453 (1972); Baltimore and Ohio Chicago Terminal Railroad v. United States, 583 F.2d 678, 681 (3d Cir. 1978), cert. denied, 440 U.S. 968, 99 S. Ct. 1520, 59 L. Ed. 2d 784 (1979). These self-regulating agreements broke down, however, when several railroads refused to pay the per diem rates, and the commission then instituted a proceeding under § 1(14)(a) of the Interstate Commerce Act for the purpose of prescribing, under a code of car service rules, the compensation to be paid for rental of freight cars.
The legislative history of the 4R Act shows that Congress saw the act as a remedy to the major problems of the railroads, among them the fact that the return on investments had been insufficient to enable the railroads to finance capital expenditures. Because the rate of return had been less than the cost of investment for many years, rail car acquisition had not been meeting the needs of the industry. Congress specifically found, for example, that "(not) only the Consolidated Rail Corporation ("ConRail'), but the Nation's rail industry at large is today faced with the clearly demonstrable need to make massive capital expenditures to . . . acquire equipment in quantities to enable the National Rail System to properly discharge its common carrier public interest responsibility for prompt and efficient transport;" Congress also foresaw the expenditure of almost two billion dollars for the acquisition of rolling stock and other equipment. S.Rep.No.499, 94th Cong., 2d Sess. 1, 21, reprinted in (1976) U.S.Code Cong. & Admin.News 14, 35. Section 212 of the 4R Act was designed to attack these problems.
The per diem rates in effect prior to the commission's Ex Parte 334 proceedings were those established in the commission's 1968 Per Diem Report. Chicago Burlington & Quincy Railroad v. New York Susquehanna & Western Railroad, 332 I.C.C. 176 (1968), aff'd sub nom. Union Pacific Railroad v. United States, 300 F. Supp. 318 (D.Neb.), aff'd sub nom. Boston & Maine Railroad v. United States, 396 U.S. 27, 90 S. Ct. 196, 24 L. Ed. 2d 142 (1969). The 1966 amendments to § 1(14)(a) required the commission to consider the national level of ownership of a type of freight car and other factors affecting the adequacy of the national freight car supply and then,
Union Pacific Railroad v. United States, 300 F. Supp. at 321.
Normally this court's standard of review is set forth in § 10(e) of the Administrative Procedure Act, 5 U.S.C. § 706, under which the commission's orders would be reviewed to see if they were "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law." The scope of our review of the commission's actions is generally narrow, limited to whether the commission's conclusions are rationally supported. United States v. Allegheny-Ludlum Steel Corp., 406 U.S. 742, 749, 92 S. Ct. 1941, 1946, 32 L. Ed. 2d 453 (1972). A different standard of review applies to issues of statutory construction. We are, of course, not bound by the commission's conclusions if they are based on a misinterpretation of the act. The courts are the final authorities on the proper interpretation of the statute. Volkswagenwerk Aktiengesellschaft v. Federal Maritime Commission, 390 U.S. 261, 272, 88 S. Ct. 929, 935, 19 L. Ed. 2d 1090 (1968). Therefore, we will examine the statute to see if the commission has the statutory authority for its actions. The question of whether § 212 of the 4R Act should be construed as permitting the commission to adopt new rates only after consideration of all the statutorily enumerated factors is a fundamental question that goes to the basis upon which the agency is empowered by Congress to act. This court need not defer to the agency in drawing its conclusion as to the meaning of the statute or the nature of the agency's power to act. Volkswagenwerk Aktiengesellschaft, 390 U.S. at 272, 88 S. Ct. at 935. Administrative discretion and the appropriate scope of review thereof are not relevant until the court first resolves the issue of statutory construction. Allegheny General Hospital v. NLRB, 608 F.2d 965, 970 (3d Cir. 1979).
It is well established that an agency must consider all factors specifically included in its statutory mandate. Shannon v. HUD, 436 F.2d 809, 819 (3d Cir. 1970); Pennsylvania v. Lynn, 163 U.S. App. D.C. 288, 501 F.2d 848, 855 (D.C. Cir. 1974). See also ICC v. J-T Transport Co., 368 U.S. 81, 89, 82 S. Ct. 204, 209, 7 L. Ed. 2d 147 (1961). The courts then perform their function of insuring that the commission has considered all the relevant factors brought to its attention by interested parties and has reached a reasoned decision. National Industrial Sand Association v. Marshall, 601 F.2d 689, 699-700 (3d Cir. 1979).
What Conrail and the other petitioners in Nos. 78-1575 and 79-1640 object to is the commission's determination that, because the cost of capital section of the new formula, unlike the other sections of the formula, would not require the data by car type first available for the year 1978, and then not until the end of 1979, it would order immediate implementation of the cost of capital section. Conrail argues that the commission's action of partial ...