Opinion ID: 383816
Heading Depth: 2
Heading Rank: 2

Heading: Restriction on Consideration of Geographic Competition Within Regulations.

Text: 137 CP&L argues that even if the language of § 10709 permits the Commission to consider geographic competition, the Commission's holding in Ex parte No. 320, Interim Report precludes such evidence. 138 In proposing the market share presumption, the Commission engaged in a lengthy discussion of the relevant market. The Justice Department, the Department of Transportation, and the railroads proposed a broad market definition, including competition of substitute products and geographic competition. Ex parte No. 320, Interim Report, 353 I.C.C. at 900. The Department of Transportation in particular urged that geographic competition be used to rebut any presumption arising under the market share test. 353 I.C.C. at 901. 139 Although its discussion occurred in its consideration of the market share presumption, the Commission clearly rejected the proposals of the Justice Department, the Department of Transportation, and the railroads on the broad basis of the language of § 202(b) of the Reform Act, as well as the policy behind the statute. The Commission held that § 202(b) of the Reform Act precluded the Commission from looking to geographic competition. 73 The Commission was clearly interpreting the broad, statutory concept of market dominance as defined in § 202(b), and not just the definition of market as used in the market share presumption. In issuing Ex parte No. 320, Final Report, adopting the present regulations, the Commission in no way modified its interpretation of market dominance as used in the statute. This is the statutory interpretation which CP&L urges us to adopt as the only reasonable interpretation of § 202(b); this is the interpretation which the District of Columbia Circuit upheld in Atchison, Topeka & Santa Fe Railway Co. v. ICC, 580 F.2d at 634. 140 Since the issuance of Ex parte No. 320, Final Report, the Commission has apparently reversed itself, indicating in very brief language that evidence of geographic competition is relevant in determining market dominance. In its clarification of the revenue/cost presumption required by the remand in Atchison, Topeka & Santa Fe Railway Co. v. ICC, supra, the Commission in a footnote stated that there had been a misunderstanding of the Commission's willingness to consider all evidence relevant in determining market dominance, noting: 141 While certain evidence is not germane to computing market share, proponents of a rate may introduce evidence of potential competition, competition from private carriage, alternative product competition or geographic competition to show that effective competition exists. 142 359 I.C.C. at 736, n.7. In a case decided at approximately the time this case was filed, the Commission again noted without explanation that geographic competition is relevant in rebutting any presumption. BN-Iowa at 28. In a case decided after the record was closed in this case, the Commission noted that it had requested the parties to supply information concerning substitute coal origins. Increased Rates on Coal, Midwest Railroads August, 1979, Docket No. 37246, Served Nov. 15, 1979 (unprinted). Finally, in this case the Commission stated that its prior remarks prohibiting the consideration of geographic competition were limited to the definition of market as used in the market share presumption. 143 These statements by the Commission indicate its desire to alter its prior statutory interpretation of market dominance found in Ex parte No. 320, Interim Report. However, the Commission has not given reasons why it believes its initial interpretation of § 202(b) of the Reform Act is incorrect. When an agency desires to depart from its prior norms or from a prior statutory interpretation, it must clearly set forth its reasons. Atchison, Topeka & Santa Fe Railway Co. v. Wichita Board of Trade, 412 U.S. 800, 808, 93 S.Ct. 2367, 2375, 37 L.Ed.2d 350 (1978); NLRB v. Sunnyland Packing Co., 557 F.2d 1157 (5th Cir. 1977). The Commission at one time set forth extensive reasons for its interpretation that § 202 of the Reform Act precluded consideration of geographic competition, and cannot now reject that well-developed reasoning without explanation. 144 Two additional problems immediately come to mind as a result of this unexplained change. First, were we to uphold the Commission's consideration of geographic competition in this case, we would in effect be approving a new interpretation of market dominance as having a reasonable basis in law without the benefit of the Commission's thoughts on this matter. In the normal course of events, an administrative agency pronounces its understanding of a statute, which in turn is afforded deference by the reviewing court. 74 On this appeal we decline to consider whether the language or history of § 10709 permits consideration of geographic competition. We prefer to have the benefit of the Commission's considered analysis of its prior reasoning in Ex parte No. 320, Interim Report and the reasons, if any, for revising that interpretation. Since we are remanding this case for reconsideration of other issues, obtaining the Commission's reasoning on this matter will not delay this proceeding. 145 Second, this court is ill-equipped to address in the first instance one aspect involved in the determination of whether § 202(b) of the Reform Act permits consideration of geographic competition. One of the requirements imposed by § 202 of the Reform Act was that the Commission establish rules designed to provide for a practical determination (of market dominance) without administrative delay. Thus, in determining the scope of market dominance, as used in the statute, a relevant factor is the rapidity with which the Commission can determine the existence of market dominance. The Commission in Ex parte No. 320, Interim Report noted that consideration of geographic competition and other forms of competition would require lengthy antitrust-type litigation and would perhaps frustrate its ability to make market dominance determinations promptly. 353 I.C.C. at 905. We perceive nothing in the Commission's later holdings-that geographic competition is relevant in determining market dominance-explaining why it now believes such evidence would not frustrate the statutory mandate for quick determination. Not being involved in the agency stages of rate litigation, this court is an inappropriate forum to determine in the first instance and without the benefit of the Commission's thinking, whether the quick determination requirement can be met if geographic competition is considered. 146