Opinion ID: 444114
Heading Depth: 2
Heading Rank: 1

Heading: The Standards for ICC Review of State Commission Decisions

Text: 37 In its central attack on the ICC decision, Utah Power argues that the ICC exceeded the scope of its authority in purportedly conducting a de novo review of the proceedings and decision of the Utah Commission. [J]ust as a reviewing court whose function is similar to that of the ICC under Sec. 11501(c) in the sense that both bodies are charged with ensuring that an agency follows the governing statute, asserts Utah Power, the ICC was not intended to act 'as though it were conducting a trial de novo.' New York v. United States, 331 U.S. 284, 335 [67 S.Ct. 1207, 1234, 91 L.Ed. 1492] (1947). Utah Power Brief at 29. In support of its argument, Utah Power seizes on a reference to the ICC's role under section 11501(c) as quasi-appellate, Illinois Central Gulf Railroad v. ICC, 702 F.2d 111, 114 (7th Cir.1983), and also relies upon the recent opinion of the Sixth Circuit in Kentucky Utilities Co. v. ICC, 721 F.2d 537 (6th Cir.1983). Finally, petitioner contends that because the statute requires completion of ICC review within 30 days, Congress in requiring such prompt decisions could not have intended the ICC to conduct a searching and thorough inquiry of state proceedings and decisions. 38 The statutory standard of review governing the ICC in this case is set forth in section 11501(c), supra. In authorizing the ICC to review the lawfulness of the rate, that provision establishes a broad basis for appeal because it permits petitioners to attack any standard[ ] or procedure applied by the state for noncompliance with the applicable provisions of the Staggers Act. In addition, as the ICC ably points out, Utah Power and the Utah Commission ignore[ ] the statutory language which requires that the ICC delve substantially further into the matter: 39 Section 11501(c) does more than direct the ICC to review state decisions to see that the standards and procedures applied are in accordance with the federal statute. If the ICC finds that the state applied incorrect standards and procedures, it must also determine ... the appropriate rate (emphasis added). The ICC obviously could determine that the appropriate rate was neither that proposed by the railroad (if the rate were shown to be unreasonably high) nor that ordered by the state (if that did not represent the maximum reasonable rate by the Commission's standards). This is clearly a fact-based determination. Thus the ICC is not confined to the purely appellate role of reversing a lower tribunal's rate decision. 40 ICC Brief at 30-31. 41 The exact scope of the ICC's authority over the decisions of state commissions is not spelled out in the statute. The legislative history leaves little doubt, however, that the ICC was vested with powers to act as broadly as it would have enjoyed had it been the administrative agency of first instance. The Conference Report on the Staggers Act first refers to the House Amendment to section 11501, stating: 42 [I]t amends section 11501 by adding new provisions which provide that only State authorities whose standards and procedures have been certified by the Commission may exercise jurisdiction over intrastate rail rates, classifications, rules and practices. Intrastate rail transportation not subject to the jurisdiction of a certified State authority is subject to the jurisdiction of the Commission. In no event may a State authority exercise jurisdiction over general rate or inflation-based rate increases. Decisions of State authorities may be appealed to the Commission if not in accordance with this subtitle. 43 H.Rep. No. 96-1430, 96th Cong., 2d Sess. 106 (conference), reprinted in 1980 U.S.Code Cong. & Ad.News 4110, 4138. The Conference Committee adopted the House amendment in major part and to the congressional intent expressed in section 11501 added this further gloss: 44 The conference substitute adopts the House amendment, except that the Commission's power to adjust intrastate rates is retained in the event that actions by certified states impose a burden on interstate commerce. The conferees' intent is to ensure that the price and service flexibility and revenue adequacy goals of the Act are not undermined by state regulation of rates, practices, etc., which are not in accordance with these goals. Accordingly, the Act preempts state authority over rail rates, classifications, rules and practices. States may only regulate in these areas if they are certified under the procedures of this section. 45 Id. (emphasis added). 46 Congress thus vested the ICC with a broad mandate to examine closely the decisions of even certified state agencies. Otherwise, the Commission could be in no position to determine if action by an individual state had imposed a burden on interstate commerce, or whether state regulation of rates or practices had undermined the price, service flexibility, or revenue adequacy goals of the Act. The ICC was given this broad power of oversight in order to guarantee that the nation's railroads would be regulated uniformly by national standards. 47 The Staggers Act regulatory structure can only be properly understood when viewed against the background of the initial attempt in Congress to oust the states from any regulatory role. The resulting compromise guaranteed states that were certified to apply the national standards and regulations that they would have the initial opportunity to engage in intrastate ratemaking. In this case, the ICC's dismissal of the railroad's initial petition gave this initial opportunity to the Utah Commission. This first opportunity that resides in the states must be taken seriously by the ICC. When a state agency has acted, however, the authority of the ICC in its reviewing capacity is expansive, bounded only by the limitations of the Staggers Act and the traditional tests of administrative rationality. 48 Considerations of judicial deference to the expertise of an administrative agency, which will often stay a court's hand when reviewing the work of an agency, do not argue strongly here for ICC deference to the state's expertise. This is a purely statutory matter. Congress was sufficiently convinced of the ICC's expertise in the area of all rail regulation, intrastate and interstate, to empower the Commission initially to review intrastate rates where a state had either abdicated its authority entirely by opting out of the certification process, 49 U.S.C. Sec. 11501(b)(4)(B), 15 or had failed to act with sufficient speed, 49 U.S.C. Sec. 11501(d). The deference which the ICC renders to any state regulatory commission will depend upon the state's conformance to national standards and regulations in accordance with the Staggers Act, and on years of professional performance and the soundness of its decisions. Automatic deference is not written into the statute. 49 Nor does the 30 day statutory time limit on ICC review support Utah Power's attempt to limit the scope of ICC review. This argument is not without a surface appeal, but it is clear that Congress by requiring rapid remedial action was simply seeking to correct a past record of egregious delays that significantly burdened interstate commerce. Charges of substantial delays in correcting inadequate intrastate rates were made during the Act's progress through Congress, and the need for correcting such delays was keenly recognized. See H.R.Rep. No. 96-1035, 96th Cong., 2d Sess. 61 (1980) (disparity between intrastate and interstate rates cost rail carriers $400 million in 1977 alone). 16 Thirty days is admittedly a short period of time within which to tackle and resolve some regulatory problems, but the ICC has been regulating railroads for almost 100 years, and is highly skilled in the rate area. To make certain that the ICC will be in a position to act expeditiously upon difficult rate issues, the Act requires that the Commission maintain up-to-date standards, procedures, and data for establishing revenue levels, and annually determine the revenue adequacy for all rail carriers. 17 Indeed, it was the Commission's expertise in the area of revenue adequacy which allowed it so quickly and accurately to understand the deficiency in treatment of the issue by the Utah Commission. In sum, construing the 30 day time limit as indicating a Congressional intent to impose a limitation on the scope of review of the ICC would read far too much into that provision. 50 Our holding places us in agreement with the Third Circuit in Wheeling-Pittsburgh Steel Corp. v. ICC, 723 F.2d 346 (3d Cir.1983), which rejected an attempt to read into section 11501 a narrower power of review in the ICC over the action of state agencies. We cannot agree, wrote the court, that Congress intended that state regulatory authorities exercise a measure of discretion in the interpretation of federal standards and procedures under the Act. Id. at 353. The court concluded: 51 We hold that the phrase standards and procedures in section 11501(c) refers to standards and procedures promulgated and interpreted in decisions and orders of the ICC as well as those standards or procedures expressly incorporated in the Interstate Commerce Act. On questions of law as to whether state authorities have complied with these standards or procedures, the Commission's review is plenary. 52 Id. at 354-55 (emphasis added). We agree with the foregoing and also consider that the ICC, while conducting a section 11501 review, may choose to limit its review to the record complied before the state agency, or start over if it considers the case so requires. The single restraint imposed by Congress is that the process must be completed within 30 days. We will not imply a substantive limitation when Congress failed to prescribe one. 18 53 We recognize the ICC's inability to bring certification of all state regulations and procedures to a quick conclusion for those states that have applied, and its slow progress in the development of specific national standards. But the Staggers Act provides its own definite national standards which can be applied, and a statute is not necessarily in need of agency regulations to make any of its statutory standards operative. An agency may elect to proceed by adjudication. We are also aware, however, that this is an era of great tumult in regulatory approach, a time of rapid change and innovation. The Staggers Act ordered some monumental changes in carrier regulation. In establishing the 30-day time table, Congress may not have accurately evaluated the extreme magnitude and difficulty of the task it was placing on the Commission with respect to its initial state certifications. Nonetheless, the ICC retains the authority and obligation to delve into state proceedings to ensure that the statutory standards of the Staggers Act are followed. 54