Opinion ID: 363964
Heading Depth: 2
Heading Rank: 2

Heading: The Course of These Proceedings.

Text: 7
8 On 9 November 1976 the nation's railroads petitioned the ICC for permission to file a master tariff and connecting supplements in order to implement a general four percent increase on freight rates nationwide. The petition showed that the railroads had experienced increases in annual operating costs of nearly $1 billion. 13 Even were the rate increase implemented nationwide on both interstate and intrastate traffic, there would have been a revenue shortfall of some $300 million. 14 The Commission permitted 15 the railroads to file master tariff X-336 to effect the four percent increase nationwide for interstate traffic. Finding the railroads' revenue needs unquestionable, the ICC concluded that it was unnecessary to suspend and investigate the X-336 tariff as permitted under section 15(8). 16 The Commission concluded that the increase was necessary to prevent a further decline in the railroads' overall financial condition; that the railroads' rate of return continued to be substandard; and that, absent the increase, the railroads would not have sufficient funds . . . to defray the cost escalations established. 17 9
10 As is ordinarily the case, the cost increases justifying the four percent general rate increase in tariff X-336 affected intrastate as well as interstate traffic. Consequently, the southern railroads in January 1977 began to seek, through state proceedings, identical increases in intrastate rates in each of the states within the Southern Freight Association Territory. The increase was eventually accepted and implemented in each of those states, except North Carolina. 18 11 On 4 January 1977 the railroads filed with the North Carolina Utilities Commission (NCUC) a tariff supplement which would have applied the four percent increase to North Carolina traffic. The NCUC suspended the increase until 6 November 1977 and began an investigation. 19 Because the NCUC did not act finally on the railroads' four percent increase within 120 days after the filing of the tariff supplement, the railroads moved to discontinue the proceedings, arguing that § 13(5) had ousted the North Carolina authorities of jurisdiction. The NCUC terminated its investigation by order of 16 May 1977. 20 12
13 On 9 May 1977 the railroads petitioned the Commission to investigate the allegedly discriminatory North Carolina rates pursuant to its § 13(4) authority. An investigation was ordered on 25 May 1977. 21 14 On 31 May 1977 the railroads sought to invoke what they conceived to be an alternative procedure for implementing the intrastate rate increase under § 13(5). The railroads filed with the ICC tariff supplement S-20 to master tariff X-336 in order to apply the general increase to North Carolina traffic. Contemplating the ordinary course of practice under §§ 6 and 15, the railroads filed the supplements to become effective on 7 July 1977, after more than 30 days notice, unless suspended by the ICC. 15 The Commission rejected tariff supplement S-20 by letter of 5 July 1977. 22 Noting that an investigation into the North Carolina rates had been docketed pursuant to § 13(4), the letter asserted that there was no authority to establish the increase (i)nasmuch as no order of the Commission has been served authorizing the increase to be placed in effect. 23 16 The railroads appealed the decision letter within the Commission. On 18 July 1977, Division 2 of the ICC denied the railroads' application for review, 24 finding that the railroads were required to observe the existing rates until the Commission had concluded its § 13(4) investigation of those rates. 17 Ten days later, the railroads sought review in this court 25 and a stay of the orders Pendente lite. On 13 September 1977, without ruling on the motion for a stay, we remanded the record and directed the Commission to file a supplemental memorandum regarding the railroads' motion. While the record was on remand, Division 2 entered a further order on 6 October 1977. 26 The latest order reaffirmed the 18 July order, although on slightly different grounds, disclaiming authority to process the railroads' tariff supplement pursuant to §§ 13(5) and 15(8). 18 Finally, during the course of the filing controversy, the ICC had been conducting its investigation of the North Carolina rates pursuant to § 13(4). On 18 November 1977 the Administrative Law Judge (ALJ) found that the North Carolina rates caused an unjust discrimination against interstate commerce and ordered that the rates be raised to the interstate level. 27 After 30 days, no exceptions having been filed, this ruling became the final decision of the ICC. In light of the outcome of the § 13(4) proceeding, the Commission moved for dismissal of the instant petition for review, arguing that the controversy had become moot. The motion to dismiss was denied and our review followed.