Legal Document

410 U.S. 224 93 Supreme Court Reporter 810 35 United States Reports Lawyer’s Edition 2d Series KF101.8 U54 223 UNITED STATES et al., Appellants,v.FLORIDA EAST COAST RAILWAY COMPANY al. Number 70—279. Argued Dec. 7, 1972. Decided Jan. 22, 1973. Samuel Huntington, Washington, D.C., for appellants. Atlantic Alvis Layne, appellee Florida East Coast Railway company Richard Hollander, Richmond, Va., Seaboard Line Railroad Mr. Justice REHNQUIST delivered the opinion of Court. 1 Appellees, two railroad companies, brought this action in District Middle to set aside incentive per diem rates established by appellant Interstate Commerce Commission a rule-making proceeding. Incentive Per Diem Charges—1968, Ex parte 252 (Sub.-No. 1), 337 I.C.C. 217 (1970). They challenged order on both substantive and procedural grounds. The sustained appellees' position that had failed comply with applicable provisions Administrative Procedure Act, 5 Code KF62 § 551 seq., therefore without dealing railroads' other contentions. held language 1(14)(a)1 24 Statutes-at-Large 379, as amended, 49 1(14)(a), required proceeding such act accordance 556(d), Commission's determination receive submissions from appellees only written form was violation section because respondents were 'prejudiced' within meaning section. 2 Following our decision last Term versus Allegheny-Ludlum Steel Corp., 406 742, 92 1941, 32 453 (1972), we noted probable jurisdiction, 407 908, 2431, 682 requested parties brief question whether governed 553,2 or 5563 557,4 Act. We here decide 553 received 'hearing' 1(14)(a) We, therefore, reverse judgment remand case court further consideration contentions raised there, but which do not decide. 3 I. BACKGROUND OF CHRONIC FREIGHT CAR SHORTAGES 4 This arises factual background chronic freight-car shortage Nation's railroads, described supra. Judge Simpson, writing case, '(f)or number years portions nation have been plagued seasonal shortages freight cars ship goods.' 322 F.Supp. 725, 726 (MD Fla.1971). Friendly, three-judge Eastern New York related Long Island R. States, 318 490, 491 (EDNY 1970), 'the latest chapter long history certain regions seasons attempts ease them.' Congressional concern problem manifested enactment 1966 an amendment enlarging authority prescribe charges use one owned another. Public Law 89—430, 80 168. Senate Committee stated its report accompanying legislation: 'Car shortages, once confined Midwest during harvest seasons, become increasingly more frequent, severe, nationwide scope national car supply has plummeted.' S.Rep.No.386, 89th Cong., 1st Sess., 1—2. 6 commenced investigation, 252, Charges, 'to determine information presently available warranted establishment element increase, interim basis, apply pending study investigation.' 332 11, 12 (1967). Statements staff railroads. Hearings conducted at witnesses examined. In October 1967, rendered discontinuing earlier proceeding, announcing program investigation into general subject. 7 December initiated rulemaking procedure giving rise challenge. It directed Class & N Immigration Nationality Decisions II line-haul railroads compile detailed respect demand numerous sample stations selected days week four-week periods, beginning January 29, 1968. 8 Some affected voiced questions about proposed modification procedures outlined notice rulemaking. response petitions setting forth these carriers' views, informal conference April 1968, objections modifications discussed. Twenty including Seaboard, represented conference, sought answer reporting methods accommodate individual circumstances particular adjourned note undoubtedly left impression hearings would be some future date. A sent all before Commission. 9 results thus collected analyzed presented Congress hearing Subcommittee Surface Transportation May 1969. Members expressed dissatisfaction slow pace exercising conferred upon it Amendments Simpson his said: 10 'Members considerable apparent inability take effective steps toward eliminating cars. Comments conducting too many taking little action. Senators pressed less talk, counsel doubt respecting statutory power additional hearings.' F.Supp., 727. 11 describing same event supra, 'To say presentation enthusiasm understatement. displeasure delay under amendment, engaged merriment over what regarded unintelligible discussion methodology . need .. But insisted needed Chairman agreed ..' 494. 13 Commission, now apparently imbued new sense mission, issued 1969 tentative adopt standard boxcars based compiled reached so-called 'incentive' should paid any using lines boxcar another railroad. Before generally thought fix payments limited amount reflected fair return investment owning railroad, regard being desirability prompt line encouragement purchases method investing capital. concluded, however, view could impose spur existing make acquisition financially attractive did so means schedule across-the-board basis common carriers subject Embodied rule adopting conclusions file statements 60 days, couched following language: 14 'That verified facts, briefs, said report, rules regulations appendix order, pertinent matter, are hereby invited submitted pursuant filing below interested person is already party 15 requesting oral shall specificity therefor evidence adduced.' 183, 213. 16 Both filed objecting proposal hearing, 1970, having 'hearings,' supplemental making reached, overruling toto requests appellees. 17 doing violated 556(d) 18 II. APPLICABILITY ADMINISTRATIVE PROCEDURE ACT 19 Act authorizing 'after hearing' equivalent requirement made 'on record after opportunity agency latter term used 553(c) Since proceding, does terms add contained language, result obtain unless contains tantamount requirement. Appellees contend found requiring that: 20 '(T)he give level ownership type factors affecting adequacy supply, shall, consideration, compensation computed 21 While mandate consider there reaching conclusion imposition charges, adds requirements neither expressly nor implication. know no reason think administrative cannot accord those than trial-type argument parties. specified necessary components ultimate decision, specify acquire components.5 22 district courts reviewed concluded proceedings stricter §§ 556 557 rather alone.6 Florida, review, assumption done 'be hearing.' Such inconsistent Allegheny-Ludlum, 23 somewhat different reasoning. That felt 'hearing,' originally enacted 1917, probably thinking roughly contemporaneous ICC Louisville Nashville Co., 227 88, 93, 33 185, 187, 57 L.Ed. 431 (1913). ingredients '(a)ll must fully apprised considered, given cross-examine witnesses, inspect documents offer explanation rebuttal.' Combining congressional understanding comments time adoption legislation regarding necessity had, effect, Insofar grounded belief more, trigger applicability 557, it, too, contrary observed 'rather hard believe sentence few legislative spots where words record' their way statute book.' 496. is, used, since statutes books very words, see e.g., Fulbright Amendment Walsh-Healey 41 43a, 371(e)(3), provision Food Drug adherence render nugatory ineffectual. recognized actual art, proceedings. adhere conclusion, phrase 25 effect. III. 'HEARING' REQUIREMENT THE INTERSTATE COMMERCE 26 Inextricably intertwined below, fell short mandated even though may satisfied states none 'limit repeal imposed otherwise law.' 559. Thus, Though pass contention, closely claim proceed now. 27 If agree reasoning might well violate requirements, consistent 28 legal context host meanings.7 Its will vary, depending rulemaking-type devoted adjudication disputed facts. drafters Esch Car Service 40 101, became first part meant term. intent surely ephemeral if, indeed, 1917 mind anything specific actually refer shed light intended What apparent, though, granting prospective nature. 29 us testimony effect if added ultimately enacted, 'great caution' imposing rates, personnel Certainly, lapse three between issuance lack caution body. Nor generalized references advance inquiry, requires 'hearing'; precise inquiry necessarily include submission testimony, cross-examination, arguments resolved these. 30 Under circumstances, confronted grant enacted,8 reference itself exclusively nature hearings, satisfactory determining statute. Turning convinced therein embrace either right present orally opposing agency's decisionmaker. 31 Section excepts 'interpretative rules, policy, organization, procedure, practice,' 'when good cause finds public thereon impracticable, unnecessary, interest.' exception apply, statute'; cases, interpretative involved, apply. themselves presentation, doubted prior meet standards 553. Court's FPC Texaco Inc., 377 33, 84 1105, 112 (1964), supports broad definition 'hearing.' Similarly, place hearing,' triggering 556, subsection (d) provides 'prejudiced thereby.' Again, makes plain evidentiary only. treatment affords sufficient concluding 1(14)(a); situation acting own force require hear permit cross-examination argument. Here, promulgated draft accorded position, evidence, relevant observations. exactly do, comment, object, submission. final indicates gave here. Given 'open-ended' proceedings, announced willingness proposals operating experience acquired, met. 34 Appellee cite previous decisions manner Although asserted constitutional deprivation cases they rely speak terms, while others clear depend Due Process Clause Fifth Fourteenth Constitution, principles law formulated Morgan 304 1, 58 773, 82 1129 (1938), cited support contention fatally deficient. describes involved 'quasijudicial,' id., 14, S.Ct., 774, presumably distinct Secretary Agriculture involve ratemaking, bears enough resemblance facts warrant examination contention. defective primarily persons who Secretary's adequately he it. Illustrative passage opinion: 36 'The embraces also reasonable claims them. submit implies opportunity; barren one. Those contest Government quasi-judicial aimed control activities entitled fairly advised proposes heard issues command.' Id., 18—19, 776.9 37 reasonableness question, individuals regulated suffered throughout essential formlessness. formlessness denied regulation 'full provided. 38 Assuming, arguendo, differ significantly suffer defect fatal Morgan. initial out detail 1969, scarcely explicit detailed. All findings appropriate objections. 'fairly advised' sufficiently entry them adequate formulate proposal. Morgan, aid 39 (1913), 'quasi-judicial' quite review Hepburn 584, decided, 'primary rates,' U.S., 92, granted aside, shown unreasonable. instituted Orleans Board Trade complaint class commodity charged points unfair, unreasonable, discriminatory. 90, 186. adjudicated shipper carrier ordered inapplicable us. basic distinction illustrated Amendment. Londoner Denver, appellees, 210 373, 708, 52 1103 (1908), due process landowner objected assessed against land share benefit resulting paving street. Local him objection, orally. 'have allegations argument, however brief; and, be, proof, informal.' 386, 714. later Bi-Metallic Investment State Equalization, 239 441, 141, 372 (1915), constitutionally state tax officers Colorado increase valuation taxable property Denver substantial percentage. distinguished stating small 'were exceptionally affected, each grounds.' 446, 142. Later continued observe adverted BiMetallic Ohio Bell Telephone Utilities Comm'n, 301 292, 304—305, 724, 730—731, 81 1093 (1937), fact designed utility refund previously rate charges. not, consistently process, undisclosed never agency. akin case. FCC WJR, 265, 69 1097, 1353 (1949), every regardless dividing always bright one, represent purpose promulgating policy-type standards, hand, adjudicate other. 42 adopted across board No effort single special peculiar circumstances. Indeed, terminating treated differently generality effects disadvantageous change obviously relied inferences source anyone read formulation basically legislative-type judgment, application only, adjudicating 43 Court, disposed opinion. 44 ordered. 45 Reversed remanded. 46 POWELL took 47 DOUGLAS, whom STEWART concurs, dissenting. 48 sharp break traditional concepts process. attack order. Charges fixed nonowning pay tracks former. These months September through February, period greatest use. For example, charge costs $15,000 $17,000 five age younger amounts $5.19 day. Boxcars costing $39,000 $41,000 cost $12.98 fees decrease ages lengthen. Federal Regulations 1036.2. fiat financial liability. allow saddle rate, charge, fee full includes 556(d); 556(a) applies '(w)hen 1(14) (a) fixing certainly adjudicatory, customary sense. 'for form' avoided prejudice comport Act.1 appeals remanding 50 1966, amended investigate alleviate 'and encourage maintenance needs commerce defense.' 1(14)(a). discretion exempt 'in interest,' 'make Ibid. 51 (31 Fed.Reg. 9240) terminated 'produced reliable quantum standards.' 16. subsequent supply-and-demand conditions (32 20987) yielded data containing comment. 183. admittedly uncertain accomplish objective, 191, arguments' contemplated,' impatience militated implementing 1(14)(a).2 Consequently, ejected boxcars. 217. then alleging failure afford proper hearing. 725 argued damaged alleged sudden emphasis specialty unequipped lose some.$1.8 million allegedly hasty experimental significant challenges statistical validity data,3 contended status surfeit 53 argue inadequacy procedures. contends supplanted accuracy findings. 54 indicated arguments. See 187. reasonably expected substantiate elaborate criticisms report. alone 'prejudice'. 'prejudice' when claimed rested finding vulnerable lacked reasoned basis. At least narrow group shown. 55 490 establishing rates. Island, pointed (Id., 499), trial stipulated involving n. 2. caused reach result,4 showing prejudice, fortiori contrast, disputes issue prejudicial. 56 exacting 556—557, applicable, course, 'rules 553(c). 453, concerned strictly promulgation 'car service rules' cars, unloaded, returned direction road cars.' 743, 1944. ground wholly legislative. 'does record" 757, 1950. recognized, talismanic, crucial 'an exercise rulemaking' 'adjudicatory immutable applied railroads.5 Unlike considered creation quasi-legislative, adjudicatory measure responsibility rolling stock road. promulgate conditioned preliminary inadequate. Moreover, threshold made, 'shall ..'6 59 majority 431, 'sufficiently different' differently, where, here, ratemaking evidential normally entails. There carriermade maintained invested power, information, might. urged presume supported 'even formally proved rejected holding included test, explain, refute. documents, 497, cognizant 1917. And debated empowered lost sight importance hearings. Questioned lines, Staggers, House Foreign floor manager bill, responded: 'I gentleman put practice until sides question.' Cong.Rec. 10443 (emphasis added). overlook interpretation initiating notified 'under Part (49 seq.); particularly, (5 553, 557).' Clearly, believed hold record.7 interpretation, 'entitled great weight.' American Trucking Ass'ns, 310 534, 549, 1059, 1067, 1345; Norwegian Nitrogen Products 288 294, 315, 350, 358, 77 796. majority, point, distinguishes (Morgan II), 'quasi-judicial,' here.' easy categorization pigeonholing leads find controlling significance dealt Packers Stockyards 166, purchase sale livestock.8 true characterized 'quasijudicial.' But, 298 468, 906, 1288, Chief Hughes 'distinctive character' proceeeding legislative: 'It looking market agencies.' 479, 911. Nevertheless, establish limitations prescribed Congress. concluded: 'A sort weighing determinations findings, quality resembling judicial Hence frequently character. obvious tradition 480, 61 bestows discretionary devastating line. According debtor millions dollars six-month period. defer abused discretion. 'All insistent need, bestowed freely, 'inexorable safeguard' open integrity.' commission Ohio, 304, 730, 1093. 62 Accordingly, afforded guaranteed affirm provides: may, initiative complaint, regulations, practices chapter, contract, agreement, arrangement locomotive, car, vehicle (and carrier), penalties sanctions nonobservance practices. solely elements expense maintaining value, increased provide just owners, contribute sound (including efficient utilization distribution cars), defense. '§ Rule making. '(a) applies, according thereof, except extent involved— '(1) military foreign affairs function States; '(2) matter relating management property, loans, grants, benefits, contracts. '(b) General published Register, thereto named personally served thereof law. include— statement time, place, proceedings; proposed; '(3) substance description subjects involved. Except statute, apply— '(A) practice; '(B) incorporates reasons issued) interest. '(c) After section, participate data, presentation. presented, incorporate concise purpose. When sections title instead subsection. '(d) publication date, except— grants recognizes exemption relieves restriction; policy; provided rule. '(e) Each petition issuance, rule.' 556. Hearings; presiding employees; powers duties; burden proof; evidence; decision. 554 preside evidence— agency; members body comprises examiners appointed 3105 title. 'This subchapter supersede conduct classes whole part, boards employees specially designated functions participating impartial manner. employee disqualify himself. On faith timely affidavit personal bias disqualification employee, Subject powers, may— administer oaths affirmations; subpenas authorized law; offers proof '(4) depositions taken ends justice served; '(5) regulate course hearing; '(6) conferences settlement simplication consent parties; '(7) dispose similar matters; '(8) recommend title; '(9) subchapter. proponent proof. Any documentary received, policy exclusion irrelevant, immaterial, unduly repetitious evidence. sanction parts reliable, probative, defense rebuttal disclosure money benefits applications licenses prejudiced thereby, form. transcript exhibits, together papers constitutes exclusive payment lawfully costs, rests official material appearing record, entitled, request, show contrary.' 557. Initial decisions; conclusiveness; contents record. reception or, 554(d) title, qualified initially requires, rule, entire certified becomes appeal to, motion of, limit presided licenses— responsible decision; omitted execution imperatively unavoidably requires. recommended, initial, subordinate employees, decisions— conclusions; exceptions recommended supporting conclusions. ruling finding, presented. decisions, of— conclusions, therefor, fact, law, record; sanction, relief, denial thereof.' Appeals Ninth Circuit reach, Pacific European Conference 350 Reporter, 2nd 197 (1965). Construing Maritime 14b Shipping 1916, 813a, '(t)he contracts eight respects include.' F.2d, 201. Notwithstanding directions statute's 'notice bring play opinions handed down appears really proposition dissenting DOUGLAS relies indications stringent agency, primary administering. An involving, carry weight, ascertaining Congress, 'charged responsibility' administering does. 1345 (1940); 796 (1933). free litigants rights choose implication so. K. Davis, Treatise, 6.05 (1958). 1966; 1946 repealed Sept. 6, 378, revised, codified, Title Code, detailing substantially original 4(b), 238. approval Willner Character, 373 96, 105, 83 1175, 1181, (1963), applicant admission bar ex crossexamine. 'sanction imposed' cross-examination. exception, 'In form.' (Emphasis added.) Hearing Commerce, 91st Sess. (1969). argues, attributable variety sampling definitional errors, asserting unrealistic define deficiencies 'deficiency' day request received.' Government's 24-hour seems unresponsive 217, 221. court, speaking 'Whether Island's job examine out. Nothing stood way. If, examining specifics live declined Instead silent greater enable mount deprived Even account representations us, fail established.' 499. 1036.1 'Application.—Each Canada, 1036.2 possession rules. addition currently prescribed. Mexican-owned operation foregoing intrastate, interstate, commerce.' As noted, another's shunted onto tracks, definite controlled variables: fees, year. discusses critical 14—15: 'Before element, long-term, can supply. fleet depends interplay factors, superior importance. Further, produced period, possible changes factors. recent innovations improvements design operation. transportation commodities replaced capable transporting loads damage. grains, converting large covered hopper Shippers lumber plywood modern facilitate products desirable. adaptable trade designed. boxcars, hoppers flatcars various types handle traffic formerly moved refrigerator Their larger size trailer-on-flatcar (TOFC) service, rapid turnaround, enables replaced. 'Valid construction encouraged long-range inadequate requirement, perform types. thorough analysis services desired shipping anticipated future. overall, demands trends precede valid normal lifetime Shipper acceptance equipment factor.' still provisions. I.C.C., 219. depth parameters takes inapposite 'suffer Morgan'—i.e., II, 18—20, 776—777.

Classification Label: 8