Opinion ID: 406177
Heading Depth: 1
Heading Rank: 3

Heading: Is the Regulation Arbitrary?

Text: 65 The Carriers argue that the Commission's action in adopting the proposed regulation is unlawful, even if authorized by statute, because it is arbitrary and capricious. Before considering this challenge to the reasoning that underlies the Commission's decision, we note that the arbitrary and capricious standard is highly deferential and forbids a court from substituting its judgment for that of an agency. Environmental Defense Fund, Inc. v. Costle, 657 F.2d 275, 283 (D.C.Cir.1981). If the agency considers the relevant factors and articulates a rational connection between the facts found and the choice made, the decision is not arbitrary or capricious. Watkins Motor Lines, Inc. v. I.C.C., 641 F.2d 1183, 1188 (5th Cir. 1981). See also City of Houston v. FAA, 679 F.2d 1184 at 1189-90 (5th Cir. 1982). 66 Briefly, the Carriers contend that the new regulation is arbitrary and capricious because it is unnecessarily harsh when viewed against its objectives. They submit that rate symbols are mere technicalities and that shippers are likely to learn about increases through prefiling notices or new filings even without the required symbols. Thus, while perhaps useful, symbols are not of sufficient importance to justify extensive penalties for carriers who erroneously omit them. Certainly, the Carriers insist, the sanction adopted by the Commission-retroactive overcharge liability with a three-year statute of limitations-is out of all proportion to the seriousness of such omissions. An unscrupulous shipper lucky enough to detect an unsymbolized increase could sit on his discovery for three years and collect the windfall of a massive overcharge judgment. This is particularly capricious, the Carriers continue, since the shipper is not even required to show injury: in other words, an otherwise reasonable increase may be declared retroactively invalid up to three years after going into effect just because the carrier neglected to symbolize it. Finally, the NMFTA, which publishes the National Motor Freight Classification, complains particularly that the new regulation is arbitrary and capricious because it fails to make concessions for unavoidable errors that occur whenever a new (or newly amended) rate classification creates a dispute over which rate applies to a certain commodity. 15 67 The Commission replies that efficient symbolization is crucial to tariff users' right to lodge timely protests against proposed rate changes. Since the Commission can no longer afford to police the thousands of rate changes that are published weekly, it must shift the burden of ensuring exact compliance with symbolization requirements to the carriers themselves. It has concluded that the best means of compelling carriers to assume this burden is to adopt the new policy under which unsymbolized rate increases are considered unlawful and, therefore, void ab initio. The threat of substantial liability is the surest means of encouraging thorough compliance. No carrier need ever repay an overcharge, after all, if it exercises care to symbolize its rate increases as required. In defense of the three-year limitations period, the Commission points out that this is merely the time limit mandated by 49 U.S.C. § 11706(b) for any civil action to recover overcharges under § 11705(b)(1). As for the uncertainties predicted by NMFTA, the Commission responds that tariff publishers who are uncertain of a new or amended classification's ultimate effect on rates can apply to the Commission for a waiver of the symbolization requirement. Moreover, the Commission points out that it retains sufficient discretion under the new regulation to take account of special cases in determining liability. 68 Admittedly, the petitioners have voiced robust objections to the new regulation. Allowing shippers three years in which to file a claim for overcharges based on a symbolization error is a potentially harsh remedy. Also of concern is the absence of any injury-in-fact prerequisite to such a claim. Shippers who could not possibly have challenged a newly-filed rate increase as unreasonable may be able to secure its subsequent revocation simply because they did not have the opportunity to offer a futile protest. Moreover, a shipper with actual notice of the increase can seek damages for the absence of a symbol whose purpose is to provide notice. 69 These problems reflect severity, however, not caprice. The Commission has provided a rational explanation for its decision. Pleading necessity, the Commission has opted for what comes down to a rule of strict liability for noncompliance with its symbolization regulations. Having persuasively described the necessity of shifting monitorial duties to the carriers themselves, where the ultimate legal responsibility always has lain, the Commission is not unreasonable in concluding that overcharge liability is the most appropriate means of encouraging the carriers to check and recheck thoroughly all tariff revisions. The predicted decline in intentional or negligent symbolization errors compensates, at least arguably, for the possibility of recovery by an unharmed shipper. After all, it is clear that a carrier is not entitled to a rate increase, just or otherwise, that has not been filed in the prescribed manner. Moreover, the Commission is correct in pointing out that the carriers can prevent windfall recoveries simply by carefully carrying out their own legal obligation to mark their rate increases. 70 The need is clear for a symbol to indicate rate increases which are part of long and detailed rate schedules. The ordering of a refund for overcharges remains discretionary, however, and the Commission retains the right to fashion relief appropriate to individual circumstances. 16 Thus, with regard to petitioner NMFTA's particular objections, we do not strike down a rule as arbitrary and capricious on the basis of a suggestion that the agency might, in hypothetical situations, administer it arbitrarily and capriciously. Virtually every new regulation, no matter how easily and fairly it may work in the majority of cases, carries the possibility of an arbitrary adjudication in some future circumstance. The Commission has clearly stated that it will take action on a symbolization error only after providing notice and a hearing pursuant to 49 U.S.C. § 11701. In the concrete disputes that arise under this procedure, the Commission undoubtedly will encounter situations in which the duty to symbolize a rate as increased was not apparent at the time of filing. If, as the result of some future adjudication, a carrier believes that the Commission has arbitrarily struck down a tariff because of a symbolization error that was truly unavoidable, the carrier may petition for judicial review of the Commission's order on that basis. See 28 U.S.C. §§ 2321(a), 2342(5). 71 We conclude that the challenged regulation is authorized by §§ 10762(b)(1), 10762(e), and 11705(b)(1), and that the Commission's decision to exercise this authority was, in view of the facts described and reasons submitted, neither arbitrary nor capricious. 72 Stay VACATED and Petitions for Review DENIED.