Opinion ID: 348607
Heading Depth: 2
Heading Rank: 1

Heading: Jurisdiction to Accept Joint International Through Rates For Filing

Text: 36 In challenging the jurisdiction of the ICC to accept joint through rates for filing, petitioner focuses only briefly on the precise language of the relevant sections of the Interstate Commerce Act. 31 Rather, petitioner places primary reliance on the inconsistency between the Commission's 1908 decision in Cosmopolitan Shipping Co. 32 and the current policy as expressed in Ex Parte No. 261. The proper question, however, is whether the ICC has acted in excess of its statutory jurisdiction in promulgating the joint tariff rules in Ex Parte No. 261. We shall in due course address fully petitioner's claim relating to the inconsistent positions taken by the ICC; we must, however, first examine the language of the Interstate Commerce Act for guidance as to whether the Commission's action was within its statutory authority.
37 Section 1(1) of the Interstate Commerce Act defines the parties subject to regulation under Part I of the Act. This section makes the tariff filing requirements and other provisions of Part I applicable to carriers engaged in the 38 transportation of passenger or property . . . partly by railroad and partly by water when both are used under . . . (an) arrangement for a continuous carriage or shipment . . . from or to any place in the United States . . . to or from a foreign country, but only insofar as such transportation . . . takes place within the United States. 33 39 Section 1(2) of the Act defines the subject matter jurisdiction of the ICC; under this provision, the Act applies to such transportation as is described in section 1(1). 34 Thus, the Commission's subject matter jurisdiction extends to foreign commerce insofar as . . . transportation takes place within the United States. 40 As can be seen, section 1(1) quite significantly refers specifically to transportation . . . partly by railroad and partly by water . . . under (an) arrangement for a continuous carriage or shipment . . . . This explicit language of section 1(1) would appear to confer jurisdiction on the ICC over the domestic portion of through routes involving foreign commerce; indeed, these through routes have been defined by the Supreme Court in much the same terminology as is employed in the Act:an arrangement, express or implied, between connecting (carriers) for the continuous carriage of goods from the originating point on a line of one carrier to destination on the line of another. 35 41 Joint through rates are, of course, an integral part of joint through routes; indeed, a joint through rate is itself one of the very arrangements between carriers for continuous carriage which creates a through route and to which reference is apparently made in section 1(1). Therefore, the conferral of jurisdiction in section 1(1) over transportation via through route arrangements clearly supports the propriety of the ICC's action in Ex Parte No. 261 with respect to rail/ocean joint tariffs. Indeed, short of having specifically mentioned the concept of intermodalism, we believe this statutory language constitutes a sufficient delegation of authority by Congress to the ICC to promulgate the rules in Ex Parte No. 261. 36 42 The statutory history of section 1(1) of the Act lends support to the statutory interpretation outlined above. At the time of the Commission's decision in Cosmopolitan Shipping Co., section 1 of the Act distinguished international transportation on the basis of commerce flowing to foreign countries adjacent to the United States, on the one hand, and to and from non-adjacent foreign countries, on the other; ICC jurisdiction extended only to commerce flowing to adjacent countries. 37 The 1908 Commission view, as reflected in the Cosmopolitan Shipping Co. decision, seized on this distinction in partial justification for rejecting joint international rail/ocean tariff filings. 38 43 Whatever plausibility the adjacent language of section 1(1) may have lent to the Commission's rationale in the Cosmopolitan Shipping Co. decision was eliminated by the amendments to section 1(1) contained in the Transportation Act of 1920. 39 The 1920 amendment to section 1 deleted the adjacent foreign country language from the statute. The 1920 revision which continues in effect today resulted in the statement of the ICC's jurisdiction as extending to transportation from or to any place in the United States to or from a foreign country . . . . 40 44 Although the Commission's jurisdiction was broadened by the 1920 amendment to include any foreign country, the Act continued to be construed as if the word adjacent were still present. 41 The Commission exercised jurisdiction over joint through tariffs with respect to all-rail transportation between the United States and the adjacent foreign countries of Canada and Mexico, 42 while at the same time declining to accept the type of joint through rate tariff authorized in Ex Parte No. 261. 45 Although the ICC declined jurisdiction over joint through rates after 1920 in spite of the statutory amendment, the Commission now relies on the 1920 change in language as a jurisdictional basis for the action taken in Ex Parte No. 261. 43 The Commission contends that, in light of the 1920 amendment, its practice of not accepting joint rates from 1920-1970 was a selfimposed restriction on jurisdiction. 44 We agree with this conceptualization of the ICC policy during the period from 1920-1970; our agreement is based on the plain meaning of section 1(1) of the Act which grants authority to regulate through routes between the United States and any foreign country. And, since the joint through rate concept is integrally related to the through route concept, the requirement of filing a voluntarily established joint through rate is a proper exercise of the Commission's jurisdictional and rulemaking powers. 46 Consistent with the ICC's jurisdiction set forth in section 1 of the Act, section 6(1) of the Act provides for the filing of tariffs on joint rates between railroads and any other carrier by railroad, by pipe line, or by water when a through route and joint rate have been established. 45 Similarly, section 6(12) is based on the assumption that these joint rates will include joint rail/ocean rates in foreign commerce. Section 6(12) provides: 46 47 If any common carrier subject to this (Act) enters into arrangements with any water carrier operating from a port in the United States to a foreign country, through the Panama Canal or otherwise, for the handling of through business between interior points of the United States and such foreign country, the Commission may by order require such common carrier to enter into similar arrangements with any or all other lines of steamships operating from said port to the same foreign country. 48 Thus, while the filing requirements of Ex Parte No. 261 are directed at joint rates voluntarily established between carriers, once such arrangements are created, section 6(12) empowers the ICC to require similar arrangements (i. e., joint through routes and rates) with other ocean carriers. If joint ocean/rail rates cannot be created and filed in the first place, section 6(12), with its similar arrangement terminology, would be rendered meaningless. That is, the ICC cannot logically order a railroad to make a similar arrangement with other steamship lines for through transportation from interim points in the United States to a foreign country unless through route arrangements were already in effect and sanctioned by the Act. We believe that section 6(12) contemplates the existence of joint rail/ocean through routes and rates and therefore provides further statutory support for the existence of jurisdiction to require the filing of joint through rates.
49 In addition to the considerations as to statutory construction outlined above, the decision of the ICC in Ex Parte No. 261 draws support from the Supreme Court decision in Canada Packers, Ltd. v. Atchison, T. & S. F. Ry. 47 In this case the Court upheld the long-standing practice of the ICC in accepting joint rate all-rail tariffs to points in Mexico and Canada. 50 The question in Canada Packers was whether the ICC was acting lawfully in going beyond accepting the rate tariff for filing and actually engaging in substantive regulation of the level of reasonableness of the entire joint rate, including the Canadian portion. For historical reasons, the Court permitted the Commission to continue its long-standing practice of determining the reasonableness of the entire joint through rate. The Court, however, expressed serious doubts whether, as an original matter and absent years of contrary rulings undisturbed by Congress, the ICC had jurisdiction to engage in any substantive regulation of the reasonableness of the Canadian portion of the rate. No such doubts were expressed as to the ICC's power to accept such joint rate tariffs for filing (which is the precise issue in question in this petition for review); the power to accept joint rate filings was unquestioned. This decision of the Court, when combined with the 1920 statutory amendment, creates the strong inference that the power to accept joint through rates concerning any foreign country, not just Canada or Mexico, is vested in the Commission by the Act.
51 The decision of the ICC in Ex Parte No. 261 embraces joint through rates entered into between rail-ocean, motor-ocean, and domestic water-ocean carriers. 48 The discussion in Part II.A.I, supra, has focused on the rail-ocean paradigm in exploring the question of ICC jurisdiction. In addition, petitioner raises a separate argument that the ICC in any event has no jurisdiction over motor-ocean or domestic water-ocean joint rates. 49 We disagree. 52
53 Section 302(a) of Part II of the Act broadly confers jurisdiction on the ICC over the transportation of passengers or property by motor carriers engaged in interstate or foreign commerce . . . . 50 Section 303(a)(11) in turn defines foreign commerce as 54 commerce, whether such commerce moves wholly by motor vehicle or partly by motor vehicle and partly by rail, express, or water, (A) between any place in the United States and any place in a foreign country. 51 55 It is necessary to elucidate two points concerning the language of section 303(a)(11) before proceeding to examine additional statutory provisions concerning joint motor/ocean rates. First, it appears clear from the structure of the provisions that the reference to water carriers in section 303(a)(11) is a reference to FMC-regulated carriers operating in foreign commerce. Second, since the definition of foreign commerce in § 303(a)(11) tracks the language of § 1(1), the foreign commerce jurisdiction under Part II is as broad as that under Part I. Therefore, Part II foreign commerce jurisdiction also extends to nonadjacent as well as adjacent foreign countries. 56 Section 316(c) of the Act provides that (c)ommon carriers of property by motor vehicle may establish reasonable through routes and joint rates, charges, and classifications with other such carriers or with common carriers by railroad and/or express and/or water . . . . 52 Furthermore, section 317(a) of the Act provides that 57 (e)very common carrier by motor vehicle shall file with the Commission . . . tariffs showing all the rates . . . in connection (with) foreign commerce . . . between points on its own route and points on the route of any other such carrier, . . . when a through route and joint rate shall have been established. 53 58 The foregoing sections, taken together, represent an explicit conferral of jurisdiction on the ICC to accept for filing joint through rates established by motor and ocean carriers. Indeed, in light of this language, the Commission's prior policy of not accepting the joint rates appears to be the position most inconsistent with the plain statutory mandate, not the rules embodied in Ex Parte No. 261. 59 In challenging the ICC's authority to accept joint motor/ocean rates for filing, petitioner points to the 1962 amendment to section 316(c) which conferred jurisdiction on the ICC over joint motor/ocean rates between Alaska and Hawaii on the one hand and the contiguous forty-eight states. 54 Petitioner suggests that, in the absence of a similar amendment covering foreign commerce, no joint rate authority over foreign commerce exists. 55 We disagree with petitioner on this point. 60 The 1962 amendment to section 316(c) went well beyond purporting to confer the kind of jurisdiction over Alaska/Hawaii joint rates that the ICC has asserted over foreign commerce in the present proceeding. 56 The purpose of the 1962 amendment to section 316(c) was to make Alaska/Hawaii joint rates  subject to the provisions of this part, thereby bringing such joint rates in their entirety under substantive ICC rate regulation and thereby ousting the FMC from jurisdiction over the same rates. 57 Here, by contrast, the ICC has only asserted jurisdiction to accept the joint rates for filing, not to regulate the ocean portion of the rate and not to duplicate or replace the FMC's functions. Thus the 1962 amendment concerning Alaska and Hawaii does not suggest that similar legislation is required in order to support the ICC's action here. 61 Insofar as the 1962 amendment may have been deemed necessary by Congress merely to permit filing of joint motor/ocean Alaska and Hawaii rates, it must be remembered that as of 1962 the ICC was still applying the policy enunciated in Cosmopolitan Shipping Co. against even accepting such rates. Legislation was one way to change this agency practice. A well-reasoned and fully explained change of policy by the agency itself as was done in Ex Parte No. 261 represents another way to accomplish this same result. A congressional intent to ratify the ICC's restrictive 1908 policy decision can hardly be inferred from the fact that Congress rejected this policy in a specific area of commerce where the filing of joint rates was deemed necessary in 1962. 58 62
63 The basic statutory jurisdiction over domestic water carriers involved in through movements in foreign commerce is provided in Part III of the Act. 59 64 In defining foreign commerce transportation subject to Part III of the Act, section 902(i) includes transportation 65 (3) wholly by water, or partly by water and partly by railroad or motor vehicle, from or to a place in the United States to or from a place outside the United States, but only (A) insofar as such transportation by rail or by motor vehicle takes place within the United States, and (B) in the case of a movement to a place outside the United States, only insofar as such transportation by water takes place from any place in the United States to any other place therein prior to transshipment at a place within the United States for movement to a place outside thereof, and, in the case of a movement from a place outside the United States, only insofar as such transportation by water takes place from any place in the United States to any other place therein after transshipment at a place within the United States in a movement from a place outside thereof. 60 Section 905(b) of the Act provides that 66 It shall be the duty of common carriers by water to establish reasonable through routes with other such carriers and with common carriers by railroad, for the transportation of persons or property, and just and reasonable rates, fares, charges, and classifications applicable thereto, and to provide reasonable facilities for operating such through routes, and to make reasonable rules and regulations with respect to their operation and providing for reasonable compensation to those entitled thereto. Common carriers by water may establish reasonable through routes and rates, fares, charges, and classifications applicable thereto with common carriers by motor vehicle. Common carriers by water subject to this chapter may also establish reasonable through routes and joint rates, charges, and classifications with common carriers by water subject to the Shipping Act, 1916, as amended, or the Intercoastal Shipping Act, 1933, as amended (including persons who hold themselves out to transport goods but who do not own or operate vessels) engaged in the transportation of property in interstate or foreign commerce between Alaska or Hawaii on the one hand, and, on the other, the other States of the Union, and such through routes and joint rates, and all classifications regulations, and practices established in connection therewith shall be subject to the provisions of this chapter. In the case of joint rates, fares, or charges it shall be the duty of the carriers parties thereto to establish just, reasonable, and equitable divisions thereof, which shall not unduly prefer or prejudice any of such carriers. 67 Section 906(a) in turn requires all joint rates which are established to be filed with the Commission. 61 68 The only material difference between Part III of the Act and Parts I and II is that section 905(b), supra, does not explicitly authorize domestic water carriers voluntarily to enter into joint rates with water carriers in foreign commerce. 62 However, we find nothing in Part III purporting to prohibit filing voluntarily adopted joint rates in foreign commerce between FMC and ICC-regulated water carriers. 69 The question is whether Congress, without explicitly stating that domestic and foreign water carriers can voluntarily enter into and file joint rates, intended, sub silentio, to preclude the ICC from issuing rules permitting domestic water carriers voluntarily to do so just as their competitors, the rail and motor carriers, do. 70 We do not think that Part III can be read so narrowly or that Congress' silence on this point can be elevated into such significance as to put Part III carriers in a different posture than their motor and rail carrier competitors. Congress did provide in section 302(i) that ICC-regulated water carriers were subject to ICC jurisdiction in performing the domestic leg of movements in foreign commerce. We believe that this is ample authority, together with the rule-making power of section 904, 63 to permit the limited action that the ICC has taken in Ex Parte No. 261. 71
72 The discussion thus far in Part II of this opinion has concerned the jurisdiction of the ICC to accept joint through rate tariffs for filing. In Ex Parte No. 261, however, the Commission decided that it would not simply permit a single factor joint rate to be filed. Rather, the ICC treated the domestic carrier's division, rate, or charge as itself an element required to be separately stated in the tariff and subjected to ICC substantive regulation. At this point in the analysis we consider only the decision of the ICC to require the separate statement of the inland charge. 64 73 In section 904(a) of the Act, Congress has conferred broad power on the ICC to make such general or special rules and regulations . . . as may be necessary to carry out (the) provisions (of the Act.) 65 In requiring a separate statement of the inland portion of a joint rate, we believe that the ICC has properly exercised its rule-making authority to effectuate its foreign commerce jurisdiction outlined at various points above. The need for this type of separate statement is particularly acute in light of the limitation on the ICC's jurisdiction discussed in Part II.B, infra. Therefore, we conclude that the separate statement requirement is a necessary adjunct to the joint rate filing requirements and was not an abuse of discretion on the part of the Commission. 74
75 Having concluded that the ICC did not act in excess of its statutory authority in promulgating the rules embodied in Ex Parte No. 261, we turn to an examination of petitioner's primary argument that the inconsistency between the decisions in Cosmopolitan Shipping Co. (1908) and Ex Parte No. 261 (1976) renders the latter decision an arbitrary and capricious exercise of administrative agency action. 76 Petitioner's argument with respect to inconsistency in agency policy suffers from a fundamental flaw. Petitioner believes that, since the policy of not accepting joint through rates was in effect for a substantial period of time (1908-1970), the ICC must adhere to this policy in the future. Changes in agency policy are not, however, per se arbitrary and capricious action; indeed, in many contexts, such changes are to be encouraged as responses to changed circumstances. 66 When a reviewing court examines a change in agency policy, the key factor that guides the scrutiny is whether the policy change has been adequately explained and justified so that the parties upon whom the policy will have an impact understand the newly adopted agency position. As developed in Part II.A, supra, we believe that the ICC possesses the jurisdiction to accept joint through rates for filing. Given this conclusion, the change of policy expressed in Ex Parte No. 261 emerges as a well-reasoned and adequate justification for the change. 77