Document: 426 U.S. 500 96 S.Ct. 2318 49 L.Ed.2d 14 UNITED STATES and Interstate Commerce Commission, Appellants,v.The CHESAPEAKE AND OHIO RAILWAY COMPANY et al. No. 75-420. Argued April 26-27, 1976. Decided June 17, Syllabus In 1974, virtually all the Nation's railroads, including appellees, Chessie System, filed with Commission (ICC) a joint petition for general revenue increase, stating as reason therefor that "billions of dollars are needed immediately in coming decade maintenance improvement rail transportation plant." Though ICC on 3, suspended operation new schedules, it authorized railroads to file tariffs subject conditions would assure additional be expended "delayed capital improvements" "deferred maintenance" plant equipment, defining those terms subsequent order, which also permitted up 3% Of derived from increase applied higher nonfuel material supply costs. Thereafter, alleging they had no or qualify under ICC's definitions; were precluded applying revenues earlier commitments; placed at competitive disadvantage could meet conditions, sought reconsideration ICC. Dissatisfied response, appellees brought this suit attacking lawfulness imposed seeking have orders set aside. The District Court issued an injunction prohibiting enforcing against portions challenged required spent specified purposes, concluding "Congress has not control carrier's expenditure funds condition withholding suspension rates." Held: may, suspending subsequently investigating proposed tariff, require devote purposes carriers invoked support increase. Pp. 509-515. (a) Imposition precedent immediate implementation rate was directly related C's statutory mandate assess reasonableness rates suspend them if there question their legality. Instead seven-month period, done, offered alternative more precisely tailored particular circumstances presented. P. 514. (b) Since held did power impose refiling consider appellees' contention inability use makes action arbitrary capricious them, choose, raised remand. 515. D.C., 392 F.Supp. 358, reversed remanded. Doyle S. Morris, Gen. Counsel, Cleveland, Ohio, appellees. Daniel M. Friedman, Washington, D. C., appellants. Mr. Chief Justice BURGER delivered opinion Court. 1 This case is here direct appeal, pursuant 28 U.S.C. §§ 1253,1 2325, order permanently enjoined enforcing, appellee railway system,2 requing application increased deferred improvements nonsuspension increases. 358 (ED Va.1975). 2 railroads,3 "with respect needs by railroad operating United States." App. 97. Ex parte 305, Nationwide Increase Ten Percent Freight Rates Charges, 1974. included 10% level freight rates. petition, alleged part: 3 "The industry capital-intensive must generate huge amounts annually just replace stationary facilities equipment becomes worn out obsolete. When earnings inadequate spending, now, then process asset liquidation occurs accelerating consumed traffic. Even assets arrested sufficient replacement further need modernize expand capacity able sharply increasing demands upon economic efficient transportation. There presently abundance data analysis reliably establishes billions 107. 4 On entered noted "that nation's offset recently incurred costs materials, other than fuel, provide improved . ." Jurisdictional Statement 42a. found "in danger deterioration detrimental public interest .," Ibid., recognized "without charges, insufficient enable honest, economical management adequate services Ibid. concluded "the increases would, become effective, prevent improve service." At same time, "if schedules effective without designed promote service improvements, unjust unreasonable contrary dictates national policy Id., 42a-43a. therefore, but tariffs, providing generated "should amount cost, fuel." 46a.4 5 July 18, second pertinent case. defined maintenance"5 improvements."6 T provided "up percentage points 10-percent authorization may excluding such been incurred." (Id., 59a.) income taxes excluded determining balance delayed improvements. 6 30, System Commission's 18 "for definitions will unable apply any 305 proceeding (other earmarked costs) projects now scheduled foreseeable future." 222. improvements": 7 "No worthwhile project its shipping ever because financing funding available. None long levels enough attract capital. never stinted expenditures customers." (Emphasis original.) 223. 8 Cheie made significant six months prior order. It pointed these definition committed before 1, "had available." 224. Unless commitments, contended Chessie, "(t)hey simply lie dormant sterile, segregated account result several serious consequences both public." 225. Basically, argued consequence place "at distinct vis-a-vis one another within meaning These lines buy cars while System's money fallow. effect, penalizes rewards only inefficient." specifically asked permit valid corporate purpose first "exceeded authority conditioning might applied." 226. 9 By dated August 9, denied significantly clarify orders. While reiterating intention increases, over above supplies, used exclusively reducing left "to managemes' decision how accordance shall various specific items properties." 81a. verified statements officials herein replete references great, unspecified, 81a-82a. note "certain anticipated initiating projects, scheduling otherwise committing recognizing budgets 1974." 82a. Under circumstances, qualified stated "consistent applied" projects. 10 present commenced 15, aside Commission. No joined action. single Judge temporary restraining prohibited "enforcing limiting plaintiffs' certain reporting (the) Orders 33. 11 16, most country's clarification modification reopened matter oral argumentn 27. Appellee resisted appearing argument ground filing complaint States deprived jurisdiction it. however, ordered counsel representing prepared orally "show cause why change should requirements contained outstanding proceeding." 91a-92a. 12 October "unable full "expend advanced approval obtained 104a. amended challenge well. claimed "new improvement," 37, since "over undertaken, 38. 13 purposes. After rejecting preliminary defenses court unlawful. began proposition can expressly impliedly law. found, course, express Act condion spent. Examining possibility implied authority, previously conditioned railroad's expenditures, that, considered precise issue presented However, held, contexts, lacks spend funds. Missouri Pacific R. Co. v. Norwood, 42 F.2d 765 (WD Ark.1930), aff'd, 283 249, 51 458, 75 L.Ed. 1010 (1931); ex rel. Los Angeles, 280 52, 70, 50 53, 56, 74 163 (1929). cases, said Court, "unmistakenly establish expenditures. provision (49 U.S.C.) § 15(7), authorizing implies exercise, incident suspension, Congress withheld it." F.Supp., 367. therefore We probable jurisdiction. 423 923, 264, 46 248 (1975). case, impression narrow one. justify grounds, confronted whether which, allege, justifies 15 overall ratemaking proceedings can, quite simply. charged task "just reasonable." 1(5).7 fulfilling obligation, backdrop National Transportation Policy, 54 Stat. 899, preceding reference criteria forth guide ratesetting process.8 provisions, short, ensure traveling economically sound system. 16 regulatory scheme setting mandated Act, 24 379, amended, Et seq. See SCRAP, 412 669, 672-674, 93 2405, 2408, 37 254 (1973). Rates, instance, railroads. notice given public. 30 days' (or shorter ICC), effective. 6(3). during 30-day tariff maximum seven investigate 15(7).9 end sevenmonth t unless has, deadline, completed investigation generally Arrow Southern Co., 372 658, 83 984, 52 (1963). here, "general applicable commodity group commodities, average charged. 17 pending tool added Mann-Elkins 1910, 36 552. Its protect irreparable harm resulting unjustified costs10 giving "full opportunity investigation"11 Before became "means checking threshold adjustments prove discriminatory, safeguarding community losses fully essential maintain reasonable charges proper relationships." I. Sharfman, 59 (1931). exigencies competition, seasonal demand trends, influences economy period make mechanism particularly potent tool. That potency well recognized, even creation. Senator Elkins referred "tremendous power."12 Cummins characterized "an nature injunction,"13 characterization later attributed almost identical statute. Air Forwarder Assn., C.A.B. 469, 474 (1947). incree originally period. Instead, pursued measured course far representation justified, least part, take care If did, fact, perceived undertake lengthy and, consequently, frustrate clear congressional intent reasonable" implemented. Delay through aggravated already poor some hand, cognizant history financial planning regard outlays nature. Supra, 504 n. 4. once received, indeed warranted. 19 upholding what we find legitimate, reasonable, adjunct explicit investigation, do imply involve itself carriers. taken conceptually functionally different attempt action, operational nature; specied priorities. deciding broadly areas maintenance," justified two areas. were, submit imposing revenue. They option continue insist unconditional proof successful, collect based tariffs. 20 situation capricious. submits evidence demonstrate fact expended. Moreover, join cancellation original address question. so chooses, raise remand 21 Accordingly, judgment reversed, remanded consistent opinion. 22 Reversed 23 POWELL took part consideration APPENDIX TO OPINION OF THE COURT Selected Sections Railroad Revitalization Regulatory Reform Pub.L. 94-210, 90 31: 25 Sec. 202. Section 1(5) 1(5)) inserting "(a)" after "(5)" adding thereof following sentence: provisions subdivision common part." 26 1(5)), subsection section, subdivisions: 27 "(b) Each rendered persons property carrier reasonable. A contributes contribute going concern value unreasonable, shown below minimum rendered. equals exceeds variable (as determined formulas prescribed Commission) presumed, presumption rebutted convincing evidence, proposing (hereafter paragraph 'proponent carrier'). costs, shall, request rate, determine question, except where cost information include expenses vary Notwithstanding rendered, proponent market dominance service. finding create exceed maximum. Nothing prohibit reduces For sentence, does incremental rendering applies presumed "(c) As 29 "(i) 'market dominance' refers absence competition modes transportation, traffic movement applies; "(ii) 'rate' means charge property. 31 "(d) Within 240 days date enactment subdivision, establish, rule, standards procedures determining, section 15(9) when possesses Such rules practical determination administrative delay. solicit recommendations Attorney General Federal Trade establishing rules." 32 (e) 15), 33 (1) (7) "This part."; 34 (2) (8) follows: 35 "(8)(a) Whenever schedule individual fare, charge, classification, regulation, practice affecting interested party own initiative, hearing concerning practice. conducted answer formal pleading, parties. final unless, expiratn 7-month reports writing render together explanation report Congress, schedule. time regulation go into effect expiration remain thereafter if, party, finds Pending (a), suspended, (d), beyond conditions: limit (c), 2, or, promulgation 1(5)(d) dominance, 1(5)(c)(i) 38 decrease, constitutes unfair, destructive, predatory undermines necessary interest. 39 limitations changes subdivisions (b)(i) (ii) cnges applicability substantially classes 40 decrease years subdivision; 41 notifies wishes "(iii) aggregate decreases clauses (i) 365 per centum January 1976; 43 "(iv) day-period 1977. 44 appears facts person 45 substantial injury complainant represented complainant; likely prevail merits. burden matters subdivision. construed excess limits (iii) (iv) (c) unlawful suspended. 47 "(e) initiated thereon, involved keep received until issues date, whichever occurs, hearings extended elapse, occurs. specify whom whose behalf paid. refund paid portion plus equal yield (on filed) marketable securities duration days. With decreased ultimately lawful, available basis shippers who participated according relative shipped charge. 48 "(f) show changed consider, hearing, adverse (in violation part) posture consignees affected thereby. give preference relating earliest practicable time." 205. 15a 15a) (3) redesignating (4) (6), paragraph: "(4) railroad, paragraph, develop promulgate (and revise maintain) establishment economical, cover total expenses, depreciation obsolescence, fair, profit return both) employed business. flow net prudent outlays, repayment debt, raising equity capital, effects inflation insure retention attraction system States. continuing effort assist attaining levels. mode commission reduce charging rate." 53 STEVENS, STEWART joins, dissenting. desirable wisely. clearly is. authorize regulate maintenance, material. could. extent grant authority.1 55 purports exercise really exists, rather surprising lain disavowed often.2 Nowhere voluminous language quoted I authorizatioto controls Nor either decisions, see decisions Quite contrary, holdings 163, lacked compel construct passenger station, Pennsylvania 242 208, 95, 61 251, furnish tank oil, power.3 56 directly, equally impermissible indirectly attaching increases.4 periodic inevitable response ever-present pressures assert grounds adjustments. variety overlapping reasons: wages, materials; rates; access markets; existing equipment; demand; disparity between past rates.5 Any justifications could, Court's rationale, predicate heretofore regarded prerogative management. work form conditional approvals, valid, slightly less pervasive affirmatively.6 57 believe supported sort inherent equitable performance commitment made. description entirely accurate. purport describe each country. financially like vastly bankrupt near lines.7 principally concerned serve appropriate industrywide areawide basis. Louisiana, 290 , 28, 78 181, impossible instead adjudicating large territory deemed typical whole structure, (the obliged carrying schedule." 75-76, S.Ct., 31. primary Indeed, contain representations addressed attached unchallenged accuracy.8 misdescription Chessie. 58 But misrepresented prosperous remedy Chessie.9 step forced competing lower hence improvements.10 Thus, position integrity process, very purposes: strong making profits weak railroads;11 railroads.12 served 1920, 456, "Recapture Clause," "net unreasonably fair transportation." 422, 489. Recapture Clause one-half special fund loans remainder kept reserve 489-491. Together 1920 proceedings, 488, enabling high return.13 repealed, redistributed, Emergency 1933, 205, 206, 220. repeal attributable distress Great Depression, impressed reasons permanent character. House Committee Foreign reported repealer favorably, relying testimony chairman legislative committee Commission: 60 " 'There something incongruous earn ought earn, meets difficulty taking away received.' H.R.Rep. 193, 73d Cong., 1st Sess., (1933). parallel purported forbid striking. difference asserts authorization, broad prescribe rates" 15a(2) read recent amendment.14 Ironically, enacted repealed Clause, 205 doubtful former confer, implication, broader granted Clause. inconceivable intended 62 affirm cases March 1975, review appeals possible writ certiorari 93-584, 88 1917. 1975. Appellees Chesapeake Ohio Railway Baltimore Western Maryland known throughout Except Long Island Railroad. elaborated: expressed dissatisfaction introduced respondents proceedings. proceeding, satisfactory, especially, example, respondents' failure identify quantify maintenance." 47a. ". indicated, intends herein, Service improved. expects expend evaluate compliance directive. Respondents' increases." 48a. "(T)he accrued deficiency physical track structures, locomotives, and/or properly produces operations partially wholly resulted diminishing railroads' ability 56a. "(A)ctually planned, identified scheduled, not, projected be, exclude progress add carriers' usefulness, capacity, durability efficiency, capitalizable accounts accounting regulations February 5, 1976, pending, 202(a) 34. Appendix text. 15a(2), provided: "In due consideration, among factors, prescribed; need, lowest furnishing service; carriers, 15(7) 384, (n. 7, Supra ). "Whenever have, given, initiative complaint, once, pleading notice, enter practice; thereon delivering thereby statement defer practice, longer effect; goes thereto period; property, accurate detail specifying paid, completion refund, interest, justified. involving September 1940, questions decide speedily possible." 202(e) Supra). See, e. g., S.Rep. 94-499, p. (1975), U.S.Code Cong. & Admin.News 26, "Without pass consumers. Upon unlawful, seek Thus element interest." Cong.Rec. 3471 (1910) (statement Sen. speaking majority report). 6500. Cf. NAACP FPC, 425 662, 665, 1806, 1809, 284. 673-674, 1813 (Burger, C. J., concurring judgment) (emphasizing caution Power business practices regulated agency). 1971, Referring double facilities, stated: development investments type recommended remains function measure hoped earning command investment debt concerns problem 265, Increased 1970 339 I.C.C. 125, 180-181 (1971) (emphasis added). repeatedly purchase Duralite Inc. Erie Lackawanna 312, 314 (1971); Adequacies Passenger Pac. 335 415, 423-425 (1969); Oliver Mfg. Supply Reading 297 654, 658 (1956); Jacksonville Port Terminal Operators Assn. Alabama, T. N. 263 111, 116 (1945); Joseph A. Goddard Realty New York, St. L. 229 497, 502 (1938). Congress. 86th Annual Report (1972); 84th (1970); 70th (1956). distinguishes Angeles presumably categories themselves exercised powers remained free Ante, 514-515. third discussed Infra, 523-525, 6. plainly insufficient, intrusion managerial decisionmaking scope great Because general: allocate stake approximately $29.7 million three quarters 346, 357, 368, 390, 401, 412, 423, 434. Nationwide, estimated produce $1.5 billion annual industry, 70%, taxes, disputed condition. 1974; Apr. May 28a, 33a, 59a. An allowing sense equivalent purpose. enforced actions injunctions forfeitures. 16(7)-(9), (12). latter, rescind "unjust unreasonable." 15(1). itself, think unreasonable," intentional misrepresentation supra ; 101-119. power, relies, 512-515, cannot powers, accomplish coerce "consenting" submitting effect. One payrolls accelerate bankruptcy reorganization program. 109-110, 112. supra, Schedules B; 95-124, 142-154. amendments, contemplates 510-512, nn. 8, 517-521. candidly railroads: theory discipline misled about uses put collected permission line's requiring refunds. compete (freight usually sent using routes reach destination), offending compelled follow improvements." Brief Appellants 22. mean Chessie's excessive rate. somewhat broader: failed amounts, receive Order Consequently, receiving return, avoid thus putting pressure much: "(5) Inasmuch (without commerce whole) uniform adequately sustain engaged indispensable communities hereby declared receives hold excess, hereinafter prescribed, trustee for, pay 510, 8.

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