Opinion ID: 338424
Heading Depth: 2
Heading Rank: 2

Heading: ICC Authority to Determine Reimbursable Costs

Text: 22 The ICC, like other administrative agencies, is of course a creature of statute and cannot exceed the specific statutory authority granted it by Congress. 25 While the precise wording of section 1(16)(b)(E) could be construed, as L&NE asserts, to grant the Commission only the ministerial duty to prescribe a mere form for the recordation of cost and revenue figures, we reject such a narrow view of ICC authority here. In our view the Commission's authority to determine what are reimbursable costs, while not explicitly set forth in the Rail Act or section 1(16)(b), is fairly implied, assuming a reasonable exercise of that authority. See American Iron & Steel Institute v. EPA, 526 F.2d 1027, 1037 (3d Cir. 1975); Niagara Mohawk Power Corp. v. FPC, 126 U.S.App.D.C. 376, 379 F.2d 153, 158 (1967); Akron, Canton & Youngstown R. R. v. United States, 370 F.Supp. 1231, 1235-36 (D.Md. 1974) (three-judge court). We consider a reading of section 1(16)(b) to limit Commission power in determining reimbursable costs to be unwarranted absent compelling evidence that such was Congress's intent. See United States v. Southwestern Cable Co., 392 U.S. 157, 177, 88 S.Ct. 1994, 20 L.Ed.2d 1001 (1968); Permian Basin Area Rate Cases, 390 U.S. 747, 780, 88 S.Ct. 1344, 20 L.Ed.2d 312 (1968); American Trucking Associations, Inc., v. Atchison, Topeka & Santa Fe Ry., 387 U.S. 397, 409-12, 87 S.Ct. 1608, 18 L.Ed.2d 847 (1967). 23 In support of our conclusion, we note that the Commission is given the authority in section 1(16)(b)(E) to audit the costs incurred and revenues obtained by the directed carrier and to certify to the Secretary of the Treasury the amount of payment due the carrier. We interpret these grants of authority to require the ICC to do more than merely check to see that the particular amounts recorded actually were expended or received by the carrier. Rather, in our view, it has a duty to determine that the amounts expended by the directed carrier were the type of expenditures for which Congress intended the carrier to receive reimbursement. 24 Even more importantly, we note that the preamble to the Rail Act declares Congress's intention to provide for necessary Federal financial assistance (for essential rail service) at the lowest possible cost to the general taxpayer. 45 U.S.C. § 701(b)(6) (Supp.IV, 1974). This court has recently stated that (w)e read this language as an earnest entreaty to economize, addressed to those who are authorized to spend many millions, ultimately billions, of dollars in preserving and subsidizing essential rail service. In re Penn Central Transportation Co., 533 F.2d 1347 at 1352 (3d Cir. 1976). 26 This express Congressional policy would be undermined if the ICC was required to reimburse a directed carrier for every expenditure made in connection with directed service, regardless of its reasonableness. We agree with the Commission that (i)t would be entirely unacceptable for all claimed costs, subject only to technical audit, to be paid without evaluation of their propriety. 25 L&NE argues that a preamble cannot confer powers on the Commission that are not conferred by the operative language of the statute. 27 But we have not concluded that the preamble to the Rail Act confers powers on the ICC not granted it in the operative language of the statute. Rather, we have merely used the preamble as a guide to aid us in determining the legitimate scope of the administrative authority that is clearly reposed in the Commission by the operative language of section 1(16)(b). In analogous situations, the Supreme Court has relied on the National Transportation Policy set forth in the preamble to the Interstate Commerce Act to determine the extent of authority granted the Commission in specific sections of that Act. See, e. g., American Trucking Associations, Inc. v. Atchison, Topeka & Sante Fe Ry., 387 U.S. 397, 409-10, 87 S.Ct. 1608, 18 L.Ed.2d 847 (1967); United States v. Pennsylvania R. R., 323 U.S. 612, 618-19, 65 S.Ct. 471, 89 L.Ed. 499 (1945). 26 Finally, the Interstate Commerce Act and the Rail Act entrust a broad subject matter to administration by the ICC. Surely, the scope of the Commission's responsibilities under the Act requires a generous construction of its statutory authority. In deciding a question concerning the scope of Commission authority in a different context, a three-judge court in Florida East Coast Ry. v. United States, 259 F.Supp. 993, 997 (M.D.Fla.1966), aff'd 386 U.S. 544, 87 S.Ct. 1299, 18 L.Ed.2d 285 (1967) stated: 27 No one who reviews the history and language of the Interstate Commerce Acts can doubt that Congress has entrusted the ICC with plenary power to regulate almost every aspect of the rail industry . . . . The ICC is in many ways a super-management often making managerial-type decisions affecting the transportation industry, with but one overriding duty to protect the public interest. 28 We think these observations particularly applicable to the ICC's broad emergency power to order and regulate directed service under section 1(16)(b). See also 49 U.S.C. §§ 1(14)-(15). 29 Having concluded that the Commission has authority to determine what costs are reimbursable consistent with section 1(16)(b), does not, of course, mean that the exercise of that power here was proper. In section 1(16)(b)(E), Congress intended that the directed carrier be reimbursed for all reasonable expenses necessary to providing directed service. Thus, the Commission's rules denying reimbursement to the directed carrier for rent paid to the other carrier in the event of an unprofitable operation can only be upheld as a reasonable exercise of its authority if, as both a statutory and a constitutional matter, the directed carrier is not required to pay rent to the other carrier in that instance.