Document: 387 U.S. 326 87 S.Ct. 1585 18 L.Ed.2d 803 CHICAGO AND NORTH WESTERN RAILWAY COMPANY et al., Appellants,v.The ATCHISON, TOPEKA SNT A FE al. UNITED STATES Appellants, v. The SANTA Nos. 8 and 23. Argued April 19, 1967. Decided May 29, [Syllabus from pages 326-328 intentionally omitted] Arthur J. Cerra Hugh B. Cox, Washington, D.C., for appellants. Howard Trienens, George L. Saunders, Jr., Chicago, Ill., Calvin Rampton, Salt Lake City, Utah, Cyril M. Saroyan, San Francisco, Cal., the appellees. Mr. Justice STEWART delivered opinion of Court. 1 This is a controversy between Mountain-Pacific railroads certain Midwestern railroads, involving proper division them joint rates through freight service in which they both participate. Dissatisfied with their share existing divisions, carriers called upon Interstate Commerce Commission's statutory authority to determine that rate divisions 'are or will be unjust, unreasonable, inequitable, unduly preferential,' prescribe 'just, reasonable, equitable divisions' place.1 Commission found were unlawful, established new which, on average, gave greater rates.2 District Court set aside order ground its findings deficient.3 We noted probable jurisdiction, 383 964, 86 1269, 16 307, consider important questions regarding powers procedures raised by Court's decision. I. 2 There originally three groups involved proceedings before Commission: Eastern, Midwestern, carriers. Eastern operate northeastern area United States extending south Ohio River parts Virginia west central Illinois. Territory lies Rocky Mountains, rest constitutes Territory. latter subdivided into Transcontinental Territory—comprising bordering Pacific, Nevada, Arizona, Idaho, New Mexico—and Intermountain operating Southern Territory, includes southeastern States, not Commission.4 3 Railroads customarily establish interterritorial service, these rates, fixed agreement, what tariffs each several participating receives. See St. Louis S.W.R. Co. 245 136, 139—140, n. 2, 38 49, 50, 62 L.Ed. 199. In 1954 filed complaint seeking tariff traffic east Shortly thereafter, also complaint, requesting higher (1) intermediate Eastern-Transcontinental traffic, (2) thir Some lines had long believed enjoyed an high categories traffic. When western first 1870's, divided basis miles carriage rendered but 50% inflation mileage factor.5 1925, after begun, yet completed investigation agreed modest increases railroads' rates. have remained unchanged since time.6 4 Commission, consolidated complaints, only defended sought 10% increase share. Regulatory commissions intervened. affecting about 300 voluntarily aligned themselves groups—Eastern, Mountain-Pacific—and submitted evidence tried case this group basis. great deal time was consumed compiling introducing massive amounts evidence—more than 800 exhibits over 11,200 testimony. Hearing Examiners made recommended report 1960. After considering written briefs oral arguments various parties, issued original March 1963. prescribed increased carriers, effective July 1, 5 exercising 'just reasonable' under § 15(6) Act, required to: 6 '(G)ive due consideration, among other things, efficiency concerned are operated, amount revenue pay respective expenses, taxes, fair return railway property held used transportation, importance public transportation services such carriers; whether any particular carrier originating, intermediate, delivering line, fact circumstance would ordinarily, without regard haul, entitle one less proportion another rate, fare charge.'7 7 reviewing nature special claims groups, 'none contending more efficiently operated another,' 'there no differences attributable carriers.' Its decision thus turned direct financial considerations, devoted substantial part lengthy report. Under practice, considerations 'cost service' 'revenue needs.' former consists out-of-pocket expenses directly associated including costs, four percent involved. 'Revenue needs' refers broader requirements funds excess investment. determining cost relied study prepared introduced modifications produced different results. revenues exceeded costs 57%, while received 43% 22% more, respectively, contributed. On Midwestern-Transcontinental 71% above cost, 39% cost; bore 31.5% total 27.1% revenue. 9 assessing comparative needs, average 1946—1958, based net income all as percentage value invested property,8 3.40% roads, 3.49% group, 4.64% most favorable record trend volume revenues, least favorable, roads occupying position. response carriers' fast investment recent years, primarily disproportionate passenger deficits offset services. discounted contention entitled provide investment, finding needs appreciably different. claim pressing need rejected Commission. 10 From evidence, concluded 'that there should (the carriers') reflecting well cost.' While very poor position elements prescribing went find controlling factor divisions: 'As (Mountain-Pacific railroads) (Midwestern) earning power marked, our consideration bearing previously discussed convinces us primary midwestern whole too low.' 11 establishing percentages governing well-defined subareas points simply merly traffic.9 However, it could follow procedure respect If subgroupings some cases properly related distance. Thus feasible assemble common apply shares Instead, resorted weighted apportionment, determined use divisional scales. has frequently scales past, suggested system adopted, contributed broken down 50-mile blocks. scale chosen assigns block number. large number assigned block, smaller successive increments; designed reflect terminal standby incurred regardless length Each then receives sum numbers corresponding contribution. To 29886 scale—so named because developed docket number.10 65 12 increment.11 decided unadjusted scale, same factors inflated mountainous West. Thus, carriage, enjoy 72 13 increments.12 For translate contributions numbers, divide proceeds so obtained.13 essentially basis, weight 50 overall favoring effect revised 'produce moderate divisions.' entertaining petitions reconsideration, adopted supplemental late time, few abandoned three-group prior been conducted. Requests treatment behalf road, Denver & Rio Grande, two Missouri-Kansas-Texas (Katy) Louis-San Francisco (Frisco), harsh them.14 considered largely criticisms decision, substantially reaffirming making minor technical modifications. Eleven brought action enjoin orders succeeded obtaining preliminary injunctions. Other state regulatory commissions, Katy Frisco intervened plaintiffs, side Government defendants. January 1965 handed setting orders. court need, importance, etc., insufficient view Court, Act make involved, individual further obliged precise dollar amount, railroad, again establishes. conclusion stated:15 14 '(T)hat comply * Administrative Procedure Acts affirmative disclose Section met therein considered, affected said groups; must revenue, terms dollars, prescribed, ol lars extent produce *.' 15 defendants, appealed Thereafter, carriers16 reached settlement agreements covering them. accordingly vacated judgment settling remanded relevant portions appeals instructions dismiss moot. 832, 1236, 297; 384 888, 1912, 994. principal dispute remaining concerns eight appellants No. 8.17 II. None appellees now defends espoused separate it. But error position, rejects 40 years consistent administrative requires comment. 17 15(6), England Divisions Case, 261 184, 43 270, 67 605, upheld take Speaking unanimous Brandeis 'actual necessities administration' rate-making cases, similar practice appropriate cases. complexity subject matter multiplicity typically wooden requirement regulation impossible. permits proceed rely 'evidence assumed typical character, ample quantity' justify findings, reasoning that: 'Obviously, Congress intended method pursued task, imposed performed. require specific adjudication, carrier, tantamount denying possibility granting relief. assume knew U.S., at 196—197, 275. 19 Both Court18 Commission19 consistently adhered construction Act's rejection error.20 20 pragmatic justifications obvious. Even voluminous until nearly complaints filed. demand inflate prolong adjudication paralyzed. 21 Nor do fairness disregard necessities. premise proceedings, Case explicitly recognized, pertaining members. 196—199, S.Ct., 275—276. Beaumont, S.L. W.R. 282 74, 82—83, 51 4—5, 75 221. It always accepted may challenge and, showing, receive independent if situation atypical inclusion inappropriate. accord when request made.21 requests during hearings presentation case. presented asked situation, obligated own motion Departure practicalities justified real given carrier; themselves, closest understanding interests, normally parties show exists. 22 Katy, did reconsideration Their below Part VI opinion, point raise treatment. Moreover, basically unrepresentative, rather impact disposition erroneous, requiring III. 23 Among errors failure amount. defending contend dte rmine urge needs. believe, however, case's present posture misdirected. 24 increasing alone raising conclusions report, stated 'reflecting cost,' next sentence say 'differences reliance confirmed even needs: 'It (increases divisions) supported concerning proposal undue claimed need.'22 Since those longer issue settled committed relevant.23 assuming attach limited significance we cannot conclude legally inadequate. 25 reports computing examined trends services, separately. placed considerable emphasis discussion Following book urged calculating base.24 disclosed return, opposed lines, lines. suggestion express absolute totally novel unreasonable. seems stem misconception function divisioins tasks transfer lump sums cash another, 'make colloquially fair.' Baltimore O.R. 298 349, 357, 56 797, 802, 80 1209.25 relative strength key see .S . 189 192, 273—274, obviously exercise judgment. Rates familiar tool analysis community. form cases,26 passing performance never ultimate required.27 Appellees unable suggest clear purpose served findings. decline impose rigid mechanical foundation precedent, policy. 26 Appellees, especially vigorously showing heavily inappropriate overlooked might questioned forcing country accept lower otherwise sensible means Far reach elsewhere: 27 'We agree carriers) commissions) interest warrants mountain-Pacific source enlarged facilities commensurate industrial development region. sections faced continuing necessity additions betterments equipment, recognize difference degree urgency territorial groups.' 28 convince factually incorrect, invade province second-guess matters within expert 359, 803, 1209; Alabama G.S.R 340 216, 227—228, 71 264, 271—272, 95 225. 29 erred deficits. discussing pointed out 1950—1952 Moutain-Pacific declined. relatively constant, likely continue. complained that, despite recently made, reply, observed impressive revenues. 30 argue almost exclusively They invalid grounds constituted unfair procedural surprise, statute does permit differentiate assesses case, statistical increased, capable improvement reducing service. 31 assumption attached fanciful. As already noted, entirely considerations. significant factor. occurred context ofco mparing emphasized much successful curbing losses Any prejudiced rejecting argument done poorer job halting swell Furthermore, ignore either 32 surprise strained light differentiated cases.28 become down, statistics record, opportunity debate exceptions Examiners' And sometimes acted cases,29 issues quite when, argued subsidize operations elsewhere. 33 give discuss depth here. negligible relevance order. IV. 34 Rejection appellees' attacks exhaust arsenal. infected serious error. 35 All apply. throughout sharp ascertaining costs. At beginning hearings, principally standard Rail Form A, formulation data 'has widely acceptable comparing costs.' took averages yardstick measuring contested maintained, distinctive characteristics. system, studyof responded material, conducted linehaul Disputes applicability approaches occupied proceedings. observed: 36 'The studies extensive. addition detailed testimony analysts who planned supervised compilation, many witnesses operating, statistical, engineering, mathematical aspects projects. criticism (Eastern general bulk.' 37 carefully base adjustments adjustment accurately reflected true substituted ratio empty-car returns, derived devised summarized reasons choice report: 39 difficult ascribe empty movement car commodity class variety lading, cars occasionally hauling transcontinental times serve uses, local movements territory *. defendants included (Rail A) tending empty-return ratios territories. Here accounted 'Many undertaken result. deficiencies (MountainPacific general-purpose boxcar render value. adhere 7-day uniform how afford reliable comparison issue.' 41 disagreed study's 'constant cost' element road unrelated accounting methods distribute accurate. favored improperly ascribing maintenance branch light-density main showed: 42 line small cause unit territory. clearly density 76 Midwest. 'Although per mile somewhat territory, shared tons ton-mile lower. 44 Midwest causes (their) These bridge is, therefore, correct charge proportionate maintaining moves.' 45 Comis sion locomotive costs; objections directed engine districts issue. ignored actual item. Again, divisions. equipment issue, chose 4% figure traditionally employed purpose, 6% And, harmony measure study.30 46 study, adjusted particulars, margin reason 47 generally attacked claiming approach particularly maintained forced study. come forward data, 48 'In prehearing conference instant advisability instituting suggestion, dropped. eastern complainants withheld vital merely conceptions facts developed.' 49 contended factual premises allocation erroneous cost. contentions, stating cryptically issues, 'it unnecessary issues). inference drawn (cost issues), numbered decide future time.'31 failed pass precluded doing so. 'to review instance.' Great Northern R. Co., 343 562, 578, 985, 994, 96 1142; Seaboard Air Line 382 154, 157, 277, 278, 223. think policy applicable cns tituted dominant thoroughly explored problems relating complex peculiarities railroad industry. Our previous description sufficient reasoned York 331 284, 328, 335, 1207, 1230, 1234—1241, 91 1492. Thirteen elapsed legal validity insubstantial useful infirmity V. 52 adapted circumstances sufficiently explain exact contentions merit warrant 53 modified stated: 54 broad connection territories, defined (Eastern-Transcontinental) based, instances appear lieu (Midwestern-Transcontinental) formulate authorize apparently course. readjusting extensively record.' 55 witness previously, costs: 'Consistency intraterritorial makes logical here, opinion. shown appendix C difference. 57 Burlington Truck Lines 371 156, 83 239, 207, appellees, inapposite. stressed 'no analysis' remedy, indication exercised discretion.' 167, 245. Gilbertville Trucking 115, 129—131, 217, 225—226, 177. explained why escorted scale; 'expert discretion' role play explanation G.S.R. 225; Board Trade Kansas Mo. 314 534, 548, 366, 372, 432. 58 changes start scratch construct data. view, like constructed se invalid. restrictions range remedies choose. Territories, costs.32 constructing alternative mechanisms dividing conformity evidence.33 What may, accumulating experience, devise remedial techniques ones formerly unlawful.34 every division. others, actually reduced. expected negotiation found, well-defined. Cf. 86—88, 5—6, dictated divisions; remedy appropriately calculated achieve 59 effect, views dealt undertake money meet had, substance contentions. But, details operationmi ght foresee, calculation dubious requirement, past.35 event, figures, charts, tables concocted evidence. 227 228, 60 Finally, quarrel prescription minimum 15%. incur 'Both bases past decisions having short hauls, usually percent. increasingly burdensome persuasive 15-percent justified.' weighing interpreting finding. 1209. reasons, reject VI. 61 finally single Frisco. dissimilar whom rule inapplicable, therefore required, motion, guess none A. Tucker Lines, 344 33, 37, 73 67, 69, 97 54. resolved intentional relinquishment known right roads.'36 language criminal trial proceeding. Reconciling efficient concern different, difficult, problem. resolve problem ramifications. limited. treating 63 result decrease shares; Commisson order, highly profitable negotiated lumber 'was fully foreshadowed examiners' petitioners surprise.' tardy vested negotiated. prescriptive privileges, mere caused reduction invalidity far fairly '(w)e exception findings' 64 apportioning aspect affect insofar jointly silent respect. produced, any, small. Grande complains reductions whose course expected. states competitive geographical bear allegedly disastrous effects income. 66 participates Utah gateways (Ogden City) Pueblo, Colorado, border interchanges Missouri beyond. Union Pacific operates itself route gateways. Western Pacific. break Colorado junctions, subdivisions result, competitor, unaffected not, interchange contends obtain squeezed. alleges lose $8,500,000 10,500,000. competing Utah-Missouri routes equalized system. equalied gateways, resisted outside pleadings. Grande's accurate obvious, unless Nevertheless, joined 68 ask fix equalizing routes. dealing contention, sharply differentiated. desirability free equalize question 500 inside Such beyond proceeding.' 69 belated concluding 'problem left precisely where insisted left.' modification defendants.' 70 Of course, notions estoppel infliction injury serving public. still clear, alleged Grande. hinges, part, able negotiate voluntary instance taking itself.37 acceded specifically providing decisions, speculative uncertain, available. turn circumstances, rearrange foundations nor embark claims. appears severe feared. cited $850,000 $8,500,000. We, rso lve refusing plenary fellow unfairly ability jeopardized, suppose relief promptly forthcoming meritorious.38 Case: 'To wisdom entered, province. way open unjustly respect.' 204, 278. VII. 74 hold valid, aside. entered interlocutory injunctions against orders, protective conditions. provided eventually upheld, deemed 1963, 30, 1964, resettle interim accordance Pending appeal final stayed execution permanently remanding Commission; consent conditions continued effect. adopt facilitate eventual implementation uphold necessary assistance appropriate, supervise resettlement reversed, ordered. Reversed remanded. Stat. 486, U.S.C. 15(6). 1(4) 900, 1(4), provides, pertinent shall duty fares, charges, just, thereof, prefer prejudice 321 I.C.C. 17, 322 491. 238 F.Supp. 528. Certain participate relation perform Governors' Conference Southeastern Association Railroad Utilities Commissioners, pending litigation amicus brief Assume 1,000 carrier. straight fare, two-thirds one-third. described text, credited 1,500 500. three-fourths-one-fourth 1929, undertook 1934, termed 'most unsatisfactory,' 'we unlawful.' Freight Rates, 203 299, 335. proceeding, ascribed 1934 'of little moment intervening years.' 72. valuations Bureau Valuation. Buffalo-Pittsburgh near coast, leaving 78% Chicago. Official-Southwestern Divisions, 287 553. increments 13. table, 13, infra. 15. follows: Scales Divisional Factors. Miles One Two Three 1,100 318 292 350 100 77 85 1,150 330 304 363 150 89 98 1,200 342 316 376 200 101 111 1,250 354 328 389 250 113 124 1,300 367 341 404 125 99 138 1,350 379 353 417 137 151 1,400 391 365 430 400 149 123 164 1,450 403 443 450 161 135 177 415 457 174 148 191 1,550 427 470 550 186 160 205 1,600 439 483 600 198 172 218 1,650 451 496 650 210 184 231 1,700 463 509 700 222 196 1,750 475 523 750 234 208 257 1,800 487 536 246 220 271 1,850 499 549 850 258 232 284 1,900 511 562 900 270 244 297 1,950 575 950 256 310 2,000 535 589 294 268 323 2,050 547 602 1,050 306 280 337 2,100 559 615 DEFINITIONS. Column provides haul. applies illustrate operation additional gives 294, 323. 617. 294/617, 48% 323/617, 52% rate. Wabash petition (hereafter referred case). F.Supp., 539. nonsettling include 8, Chicago North Western, Milwaukee, Paul Green Bay Gulf, Mobile Ohio, Illinois Central, Soo Line, short-line connections. Also roads. five comprising areas Indiana. operations, active 15% V 221; Boston Maine 26, 117, 95, affirming D.., 661. E.g., Southwestern-Official 135; Official 175; Trunk 269 765; Official-Southern 497; Official-South-western 553, 289 11; 325 1. notion 237, amended, §§ 551—559 (1964 ed. Supp. II), overruled precedents example, 449, Norfolk disassociated That indicated rejection, proposed 'understate lines.' supra. ICC Hoboken Manufacturers' 320 368, 381, 159, 166, 88 107, partition property. administer interest.' 195, 275, 605. 196, 202; Mississippi A., T. S.F.R. 385, 402 403; 457, 476; Atlantic Coast Arcade A.R. 194 729, 752—755, 375, 382—384; 342; 216 687, 701—702, 739; 135, 146, 148; 497, 503—504; 564, 11, 12. State 329, 347—349, 1231, 1240 1241, M., P. P.R. Illinois, 355 300, 78 304, 292, apposite. 13(4) 383, 13(4). ordered fares intrastate run Milwaukee Road, cover indirect 'undue, unjust discrimination' Road's interstate operations. instead taken together. footnote, holding satisfactorily $77,000 commuter service's 309—310, 309—310. derived. scrutinized 'with suitable principle whenever federal exerted domain power, justification appear.' Florida 14, 211—212, 119, 124, 291. Pub. Service Comm. 356 421, 425—426, 796, 798—799, 886. 474—475; 753, 755; 698, 708; East 235 211, 236—237; 765, 772; Gardner Akron, C. Y.R. 272 529, 573—577. Increased 1948, 276 9, 35. King 254, 263—264, 259, 264—265, 301. Also, charged 100% technique challenged 540. 449. requested cost-constructed scale. F.2d 789, 799. Georgia Public 283 775, 619, 623, 1397. Virginian 658, 665—666, 222, 225 226, 463. nn. 27, supra, accompanying text. told 'Any legitimate threat equalization premature. arise can negotiations contemplated Recommended Report.' 450, avoid injustice excepted differing circumstances. Where demonstrated competent carrier's preservation level presently whole, maintain Nation's rendering service.'

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