Opinion ID: 305495
Heading Depth: 1
Heading Rank: 2

Heading: procedural validity of the orders

Text: 26 Responsibility for Action Within Suspension Period 27 The Compact specifies mechanics for Commission consideration of fare changes proposed by regulated carriers. The process commences with the carrier's filing of a new tariff showing the changes it contemplates. 74 The tariff must state the date on which it will take effect, which cannot be less than 30 days after the date of filing without authorization by the Commission. 75 Prior to the effective date of the change, however, the Commission may suspend the new fares for an initial period terminating 90 days after the date on which those fares would otherwise have gone into effect. 76 The Commission may also extend the suspension period to a maximum of 120 days from the original suspension date. 77 The Compact provides that [i]f, after hearing held on reasonable notice, theCommission finds that any fare . . . so suspended is unjust, unreasonable, or unduly preferential or unduly discriminatory either between riders or sections of the Metropolitan District, it shall issue an order prescribing the lawful fare . . . to be in effect. 78 The Compact further provides that [i]f no such order is issued within the suspension period (including any extension thereof) the fare, . . . involved shall take effect at the termination of such period. 79 28 As we have mentioned, the Commission suspended Transit's alternate newfare proposals for the full 120-day period permitted by the Compact. The parties are agreed, as are we, that the Compact then required the Commission to promulgate, within that period, an order which either (1) approved the new fares or which (2) appropriately (a) found these fares to be unlawful because unjust, unreasonable, or unduly preferential or unduly discriminatory and, in the latter event, which (b) proceeded to prescribe the lawful rate. 80 Transit contends that the orders under review are invalid because they do not establish a lawful fare to be put into effect by the end of the authorized suspension period. The consequence, Transit argues, is that as a matter of law the fare . . . involved-the fare proposed by Transit 81 -automatically went into effect upon the expiration of that period. 29 We cannot accept Transit's theory. Within the suspension period indulged by the Compact, the Commission conducted and completed large-scale hearings on the new tariffs submitted by Transit and, by Order No. 1216, announced its decision as to those tariffs. In that order, the Commission found that Transit was derogating from its Compact obligation to furnish economical, efficient and adequate transportation service, 82 and that, for that reason, Transit was not entitled to an adjustment of its fares upward unless and until it remedied the deficiencies. 83 As Order No. 1216 expressly states, the Commission thus found that, under those circumstances, the fares proposed . . . by D.C. Transit System, Inc., [are] unjust and unreasonable. 84 Beyond that, the commission not only turned down the increases sought by Transit but also specified the conditions which Transit must satisfy as a prerequisite to further consideration of any increase; 85 and Order No. 1216 directs [t]hat D.C. Transit System, Inc., shall continue to charge the regular route fares presently in effect. 86 That, we think, was necessarily a conclusion that the existing fare-that previously established by the Commission-was the lawful fare that must continue in force until those conditions are met and a further fare order is promulgated. 87 30 That disposition accords with what we believe the Compact signatories had in mind when they formulated the scheme for Commission handing of new-fare applications. It seems clear that the time limitations on suspensions were designed to assure that the Commission would act on the carrier's proposals in some appropriate fashion within the 120-day period. It appears equally obvious that those limitations do not afford a guaranty that the rate-making process will necessarily run its full course during that period. 88 The Commission is required to complete its investigation of proposals and to render its decision within the Compact period. Where the hearings on the proposals develop satisfactorily the basis for outright approval or disapproval of new fares, the Commission is obligated to so decide, and to do so within the time the Compact specifies. 31 Where, however, the hearings firmly establish the need for action by the carrier as a precondition to a fare change, it becomes the Commission's responsibility to make, within the mandated period, an order to that effect. The Compact empowers the Commission not only to unconditionally grant or deny requests for new fares, but also to . . . issue . . . such orders . . . as it may find necessary or appropriate propriate to carry out [the Compact's] provisions. . . . 89 That authorization imparts to the Commission's ratemaking process more than enough flexibility to accommodate needs to implement the specific demands of the Compact by orders tailored to the exigencies of particular cases. 90 Here, by the Commission's analysis, improved service and higher fares were interrelated problems demanding contemporaneous treatment, 91 and as is evident could not possibly be accommodated within the suspension period. Furthermore, the Commission found that until a new capital structure and debt structure are established, we cannot determine certain elements in the ratemaking formula. . . . 92 We hold that where, as here, the Commission had found a carrier remiss in its obligations to the traveling public, the Compact does not interpose an inexorable barrier to promulgation, within the time limits fixed, of an appropriate remedial order, nor does it automatically put proposed new fares into operation upon expiration of the period for which they were suspended. 32 Interrelationship of Service and Ratemaking Obligations 33 Interpreting pertinent provisions of the Compact, 93 the Commission held that it is required, in passing upon a rate application, to consider and weigh not only the interests of the company, including its right to a reasonable return on its investment, but also the interests of the public, including the public's right to economical, efficient and adequate transportation services. 94 This construction by the Commission of its own authorizing legislation would in any event command substantial deference in the courts. 95 In our view, derived upon independent investigation, it is eminently correct. 34 The Compact directs and empowers the Commission to proscribe just and reasonable fares, 96 an entitlement immensely valuable to the carriers it regulates. 97 But the Compact also specifies that [i]n the exercise of its power to prescribe [such] fares, . . . the Commission shall give due consideration to four enumerated factors, among others, 98 two of which have special relevance to the issue at hand. One is the need, in the public interest, of adequate and efficient transportation service by [regulated] carriers at the lowest cost consistent with the furnishing of such service. 99 The other is the need of revenues sufficient to enable such carriers, under honest, economical, and efficient management, to provide such service. 100 The parties to the Compact could hardly have more plainly mandated the well settled principle that ratemaking appropriately encompasses an examination and evaluation of the economy and efficiency of a public utility's operations 101 and the adequacy of its service. 102 35 It is equally clear that the obligations of carrier and rider here at stake are interrelated and reciprocal. The carrier's responsibility is adequate and efficient transportation service at the cheapest fares feasible, 103 and the rider's is to pay no more. 104 The carrier is entitled to revenues enabling provision of that service, but only to the extent needed under honest, economical, and efficient management. 105 It is not entitled under the Compact to a fare raise irrespective of the quality of its operation and service. As the Commission, consistently with the weight of administrative 106 and judicial 107 authority elsewhere, declared: 36 Upon a showing that it is now providing, and may in the future reasonably be expected to continue to provide, the economical, efficient and adequate transportation service to which the public is entitled, the carrier, in turn, is normally entitled to a fare which will produce a reasonable return. But where, as in this case, the record demonstrates that the carrier is in default with respect to its obligations under Section 6(a)(3) of the Compact, it is not entitled to a fare increase as a matter of law. 108 37 The Commission has both the authority and the duty to assure that this reciprocity is maintained in practice. We have had occasion in the past to point out that the mandate that just and reasonable fares be set is itself a standard which has invariably imposed an obligation to balance the interests of both the utility and the consumers. 109 As the Compact makes evident, the Commission's charge extends to the caliber of the carrier's operation and service as well as to the financial reasonableness of the fares it collects. 110 In the Commission's view, its responsibility to protect the public interest is at least equal to [its] obligation to consider [the carrier's] interest. 111 In our own view, it is certainly no less. 112 Authority to Precondition Fare Increase 38 The Commission is amply authorized to take action reasonably necessary to insure the performance of obligations which the Compact imposes on carriers. The Compact provides that it shall be liberally construed to eliminate the evils described therein and to effectuate the purposes thereof. 113 As we have noted, the Compact also confers upon the Commission power to . . . issue . . such orders . . . as it may find necessary or appropriate to carry out its provisions. 114 Like the Commission, we find within the Compact a positive mandate, applicable to ratemaking proceedings as well as others, that carriers provide, economically and efficiently, adequate transportation for the traveling public. 115 39 The orders under attack precondition further Commission consideration of any new fare increase for Transit upon the latter's acquisition of new capital in substantial amount. 116 Satisfaction of that precondition, in the Commission's judgment, is essential to the economical and efficient provision of adequate transportation to Transit's patrons. 117 Transit argues that nonetheless a precondition order was beyond its regulatory authority. We disagree. 40 Nobody seems to doubt the Commission's power to promulgate an order which simply directs a carrier to take measures necessary and appropriate to fulfillment of the Commission's responsibilities. 118 Nor is there room for doubting the validity of an order which gives such a direction concurrently with a grant of a fare increase; 119 indeed, the Commission has frequently issued orders of that type. 120 The sole question at this point is whether the Commission can insist upon compliance with such a condition prior to further treatment of an application for approval of higher fares. We answer that question in the affirmative. 41 Preconditions to fare increases designed to assure quality of service have long been recognized. More than a half-century ago, the Commission's predecessor, the Public Utilities Commission of the District of Columbia, turned down an otherwise justified fare increase on a showing of inadequacy of the Carrier's service notwithstanding that operating losses were inevitable without the increase. 121 Since then, commentators have advocated such preconditions, 122 and regulatory agencies have imposed 123 and courts have sustained them. 124 Sometimes the order has set new rates and simultaneously suspended them pending demonstration of satisfactory compliance with the condition; 125 at other times, the order, as those here, has withheld consideration of the request for increase until the condition has been met. 126 That the order assumes one or the other form is obviously without consequence insofar as its essential validity is concerned. 42 We perceive no legal barrier to an order by the Commission, securely founded upon an evidentiary record, preconditioning a fare raise upon terms calculated to safeguard the public interest in economical, efficient and adequate transportation. 127 The legislative imposition of a grave responsibility ordinarily carries with it, as a matter of necessary implication, power to employ the means by which it may be discharged. 128 In this instance, the signatories to the Compact incorporated that thesis in an express grant of administrative authority. 129 By our measure, that authority-to take action necessary or appropriate to carry out the Compact's provisions 130 -is broad enough to enable the commission to meet its regulatory responsibilities in this case. As the Commission said: 43 We construe the Compact as vesting us with the necessary tools to enable us to discharge our responsibility to the public and insure that it obtains from carriers subject to our jurisdiction economic, efficient and adequate service. Surely, Congress and the Compact signatories did not impose upon us a duty to consider and protect the public interest, on the one hand, and then fetter us with a statutory scheme so rigid and unyielding as to make impossible the responsible discharge of that duty, on the other hand. 131