JOHN R. BROWN, Circuit Judge.
Involving the vacating of an Order suspending proposed rates, this case
is a parallel of Amarillo-Borger Express v. United States, D.C.N.D.Tex., 138 F. Supp. 411 (three-Judge), and the variation in Long Island Railroad Co. v. United States, D.C.E.D.N.Y., 140 F. Supp. 823 (three-Judge), expressly approving it. We too, without the necessity of restating the matter so fully developed there, adopt the opinion, conclusion and reasoning of that case. The only substantial factual difference is that here the proposed rates required express Section Four approval by the Commission under the Long and Short Haul provision, 49 U.S.C.A. § 4(1) of the National Transportation Act, 49 U.S.C.A. § 1 et seq.
The Railroads, to regain a competitive position lost to interstate Water and Motor Carriers largely as the result, they claimed, of voluntary
ex parte
increases (Ex Parte 162, 166, 168, 175) in railroad rates, on September 19, 1955, published (to become effective October 26, 1955) drastic reductions in their rates for the movement of steel and’ wrought-iron pipe, in carloads, moving from the mills in the industrial areas East of the Mississippi River to destinations in the States of Arkansas, Louisiana, Oklahoma and Texas. Concealed in the lexicography of .the complex tariff papers is the battle for transportation revenues running annually, it is asserted, from $6,000,000 to $9,000,000 and consti
tu ting about 15% of water carrier revenues for the movement of fabricated steel pipe for current and immediate use in- the oil fields and for pipeline transmission facilities in the great Southwest.
This case does not involve the question of the extent of the right, so often asserted by the Railroads, as a part of management responsibility, to publish reduced rates to meet competition, see Atlanta & St. Andrews Bay Ry. Co. v. United States, D.C.M.D.Ala., 104 F.Supp. 193, 198, and which would, subject only to the possibility of suspension for a seven months period under 49 U.S.C.A. § 15(7), make them effective until determined by hearing to be unlawful. For here, by the choice of the Railroads, the proposed rates were less for the longer distance from the steel mill areas to rail-head delivery points in the Southwest than rates for the movement of the same commodity for shorter distances within both origin and destination territories. They were thus confessedly in violation of the Act
unless,
upon application and after investigation by the Commission, finding it to be a special case, and the rates reasonably compensatory for the services performed, express approval were given.
Consequently, as permitted by the Act, the Railroads simultaneously filed (September 19, 1955) Fourth Section Application No. 31120 for approval of the rates. But until the Fourth Section Application was granted, the rates could not go into effect. Conversely, so long as they were suspended, they could not be effective and approval under Fourth Section would be a sterile, useless academic decision.
Water and Motor Carriers then filed Protests against Fourth Section approval and Petitions for Suspension, each of which normally are administratively handled by separate Boards
of Commission employees. On October 20, 1955, the Suspension Board, on positive findings
identical with Amarillo-Borger,
supra, ordered an investigation into the lawfulness of the rates and suspended them for the full seven months to May 25, 1956. With the rates suspended, there was nothing which the I & S Board could do on FSA 31120.
The Railroads, presumably accepting the findings, note 4, supra, as an adequate, árticulate “statement' in writing of [the Commission’s] reasons for such suspension”
since no complaint by them has yet been made, filed on October 26, 1955, a Petition in I & S 649.1 for reconsideration of the suspension order and, omthe same day, filed in FSA 31120 a “Petition of Railroad Applicants for Immediate Issuance of the Authority Sought by Application herein, dated September 16, 1955.” This was not
a Petition for reconsideration and those preparing and proposing it treated it as a Petition for initial action on the original Fourth Section Application.
Through Commission administrative channels the Petition for Reconsideration of the Suspension Order came before Division 2 acting as an appellate division. On December 7, 1955, by aii Order
in all respects identical with that roundly condemned in Amarillo-Borger, supra, the Suspension Order was vacated; and on December 9, 1955, an order of ambiguous
origin was entered grant
ing temporary Fourth Section relief effective December 17, 1955.
The Water and Motor Carriers then filed separate Petitions for Reconsideration of the Orders of December 7 and 9 requesting in those Petitions the Stay granted by the Act
where the initial Order is handed down by a Board or Division. By notice dated December 15, 1955, the full Commission declined to act and on the following day, December 16, notice and order were issued
denying the Petitions in I & S 6491.
Thus the matter stood when, on February 16, 1956, this verified complaint was filed. And on that record, we are of the clear opinion that the Order of December 7, vacating the prior suspension, is invalid. The simple phrase “and good cause appearing therefor” is inadequate to upset prior positive findings, and for the reasons
set forth in
Amarillo-Borger cannot, on judicial review,
stand.
Nor, do we think, does the matter stand differently because of sub
sequent efforts
of the Commission to indicate that it had in fact met the teachings of that case. This was not a permissible
nunc pro tunc
order correcting clerical, ministerial errors or omissions. It was an attempt to substitute reasons where none had appeared
or been recorded. Moreover, we agree with Long Island Railroad Co., supra, 140 F.Supp. 823, at page 828 (in which, at the very-same time, March 1, 1956, a similar “corrected order” was entered), applying Amarillo-Borger, that in the face of positive, strong findings of probable illegality merely to restate the conclusion in negative form is inadequate. We do not regard this in a technical light at all. If administrative agencies, no matter how highly motivated their particular action may be, can, under the form of
nunc pro tunc
Free access — add to your briefcase to read the full text and ask questions with AI
JOHN R. BROWN, Circuit Judge.
Involving the vacating of an Order suspending proposed rates, this case
is a parallel of Amarillo-Borger Express v. United States, D.C.N.D.Tex., 138 F. Supp. 411 (three-Judge), and the variation in Long Island Railroad Co. v. United States, D.C.E.D.N.Y., 140 F. Supp. 823 (three-Judge), expressly approving it. We too, without the necessity of restating the matter so fully developed there, adopt the opinion, conclusion and reasoning of that case. The only substantial factual difference is that here the proposed rates required express Section Four approval by the Commission under the Long and Short Haul provision, 49 U.S.C.A. § 4(1) of the National Transportation Act, 49 U.S.C.A. § 1 et seq.
The Railroads, to regain a competitive position lost to interstate Water and Motor Carriers largely as the result, they claimed, of voluntary
ex parte
increases (Ex Parte 162, 166, 168, 175) in railroad rates, on September 19, 1955, published (to become effective October 26, 1955) drastic reductions in their rates for the movement of steel and’ wrought-iron pipe, in carloads, moving from the mills in the industrial areas East of the Mississippi River to destinations in the States of Arkansas, Louisiana, Oklahoma and Texas. Concealed in the lexicography of .the complex tariff papers is the battle for transportation revenues running annually, it is asserted, from $6,000,000 to $9,000,000 and consti
tu ting about 15% of water carrier revenues for the movement of fabricated steel pipe for current and immediate use in- the oil fields and for pipeline transmission facilities in the great Southwest.
This case does not involve the question of the extent of the right, so often asserted by the Railroads, as a part of management responsibility, to publish reduced rates to meet competition, see Atlanta & St. Andrews Bay Ry. Co. v. United States, D.C.M.D.Ala., 104 F.Supp. 193, 198, and which would, subject only to the possibility of suspension for a seven months period under 49 U.S.C.A. § 15(7), make them effective until determined by hearing to be unlawful. For here, by the choice of the Railroads, the proposed rates were less for the longer distance from the steel mill areas to rail-head delivery points in the Southwest than rates for the movement of the same commodity for shorter distances within both origin and destination territories. They were thus confessedly in violation of the Act
unless,
upon application and after investigation by the Commission, finding it to be a special case, and the rates reasonably compensatory for the services performed, express approval were given.
Consequently, as permitted by the Act, the Railroads simultaneously filed (September 19, 1955) Fourth Section Application No. 31120 for approval of the rates. But until the Fourth Section Application was granted, the rates could not go into effect. Conversely, so long as they were suspended, they could not be effective and approval under Fourth Section would be a sterile, useless academic decision.
Water and Motor Carriers then filed Protests against Fourth Section approval and Petitions for Suspension, each of which normally are administratively handled by separate Boards
of Commission employees. On October 20, 1955, the Suspension Board, on positive findings
identical with Amarillo-Borger,
supra, ordered an investigation into the lawfulness of the rates and suspended them for the full seven months to May 25, 1956. With the rates suspended, there was nothing which the I & S Board could do on FSA 31120.
The Railroads, presumably accepting the findings, note 4, supra, as an adequate, árticulate “statement' in writing of [the Commission’s] reasons for such suspension”
since no complaint by them has yet been made, filed on October 26, 1955, a Petition in I & S 649.1 for reconsideration of the suspension order and, omthe same day, filed in FSA 31120 a “Petition of Railroad Applicants for Immediate Issuance of the Authority Sought by Application herein, dated September 16, 1955.” This was not
a Petition for reconsideration and those preparing and proposing it treated it as a Petition for initial action on the original Fourth Section Application.
Through Commission administrative channels the Petition for Reconsideration of the Suspension Order came before Division 2 acting as an appellate division. On December 7, 1955, by aii Order
in all respects identical with that roundly condemned in Amarillo-Borger, supra, the Suspension Order was vacated; and on December 9, 1955, an order of ambiguous
origin was entered grant
ing temporary Fourth Section relief effective December 17, 1955.
The Water and Motor Carriers then filed separate Petitions for Reconsideration of the Orders of December 7 and 9 requesting in those Petitions the Stay granted by the Act
where the initial Order is handed down by a Board or Division. By notice dated December 15, 1955, the full Commission declined to act and on the following day, December 16, notice and order were issued
denying the Petitions in I & S 6491.
Thus the matter stood when, on February 16, 1956, this verified complaint was filed. And on that record, we are of the clear opinion that the Order of December 7, vacating the prior suspension, is invalid. The simple phrase “and good cause appearing therefor” is inadequate to upset prior positive findings, and for the reasons
set forth in
Amarillo-Borger cannot, on judicial review,
stand.
Nor, do we think, does the matter stand differently because of sub
sequent efforts
of the Commission to indicate that it had in fact met the teachings of that case. This was not a permissible
nunc pro tunc
order correcting clerical, ministerial errors or omissions. It was an attempt to substitute reasons where none had appeared
or been recorded. Moreover, we agree with Long Island Railroad Co., supra, 140 F.Supp. 823, at page 828 (in which, at the very-same time, March 1, 1956, a similar “corrected order” was entered), applying Amarillo-Borger, that in the face of positive, strong findings of probable illegality merely to restate the conclusion in negative form is inadequate. We do not regard this in a technical light at all. If administrative agencies, no matter how highly motivated their particular action may be, can, under the form of
nunc pro tunc
corrective orders, presumably “correct” the subject order to meet the objections specifically urged in a petition for judicial review, effective review would be denied. The vice of the “and good cause appearing” technique is that it affords nothing the parties or court can take hold of to scrutinize and measure as the basis for the action. That is compounded if, on a challenge, review is then thwarted by substituting something else. There is no way to tell whether, in the processes of deliberation and adjudication, the Division meant “and good cause appearing” to be the negative of the initial suspension findings or - something different. Whatever it was, “these suitors were justly entitled to a recital of what it was that indicated the disappearance of the prima facie case, and the necessity for an investigation, namely, that the announced result was the exercise of a discretion based upon sound reasoning”, Long Island Railroad Co., supra, 140 F. Supp. 823, at page 828.
The order of December 7, 1955, vacating the suspension must therefore be set aside, and the matter remanded to the Commission for further and not inconsistent proceedings. The question is not the simple one of a suspension beyond the statutory maximum of seven months (expired May 25, 1956) for this is all intertwined
with the Fourth Section Application. And rates which have been approved under the Fourth Section Application which would not, and could not, have been effectually deter
mined so long as the rates were suspended, must resume their former status.
That leads us to the plaintiffs’ further contention that under these circumstances the Order of December 9, 1955, approving the Fourth Section Application is invalid. In this they contend that
temporary
approval (i. e., pending a hearing) is not authorized by the statute and is hence ineffective. But this is a point we need not decide.
As in the case of suspensions, we are not at this time claiming or exercising the existence of a power to determine whether the proposed rates were a “special” case meriting approval. We are concerned with the narrower, but still important, question of whether the procedures thus far followed by the Commission are in accordance with law.
Assuming,
arguendo,
that temporary relief may be granted and that the “investigation” required by Section 4 to permit that temporary relief need not be the full dress adversary hearing required before final determination of the lawfulness of the proposed rates, we think there must be some determination, and disclosure of the basic reasons why temporary relief is granted. Unless this is done, there is no way for those immediately affected — e. g., “short haul” shippers who pay higher rates, intermediate communities, or competing carriers
— to ascertain whether action having a devastating potential is the product of reason and judgment within the mandate of the National Transportation Policy, 49 U.S.C.A. note preceding section 1 to “recognize and preserve the inherent advantages of each” mode of transportation and preserve a “national transportation system by water, highway, and rail * * * adequate to meet the needs of the commerce of the United States * * * ” or is, on the other hand, hasty, ill-considered action creating undue and illegal preferences.
Nor is there any way for a Court on petition of any such interested and aggrieved parties to test its legality. So-called temporary approval is that in name only for, unlike suspensions which carry a statutory maximum, the Fourth Section approval may continue for many months or years until the investigation
hearings are completed and judicial review exhausted. So far as the affected competing carriers are concerned, the approval is a definite, positive act having final characteristics, Phillips Petroleum Co. v. Federal Power Commission, supra; Atlantic Seaboard Corporation v. Federal Power Commission, supra, for even though the ultimate decision disapproves the rates and denies the Fourth Section Application, the traffic lost to them in the interim is irretrievable, and no means exists to recoup losses from shippers or the other carriers who have enjoyed the benefit of the Fourth Section rates.
This is in harmony with the philosophy of Section 4 that variations from its sweeping prohibitions are permitted, Intermountain Rate Cases, United States v. Atchison, T. & S. F. R. Co., 234 U.S. 476, 34 S.Ct. 986, 58 L.Ed. 1408, only in
special
cases, and then only after investigation affords the basis for a conclusion that it is “special.” Before the Commission can permit that which the statute forbids, at least two things must be reflected: (1) that it is a “special” case, and this means something more than a label as such; and (2) that its classification as a special case has been determined by “an investigation” — a very important condition since, “The requirement of section 4 that such authorization shall be made, if at all, ‘after investigation’ clearly implies that the question shall be determined upon testimony and after a hearing”, Louisville & N. R. Co. v. United States, D.C. W.D.Ky., 225 F. 571, 580, (three-judge), affirmed 245 U.S. 463, 38 S.Ct. 141, 62 L.Ed. 400; and see.note 12(c), supra. For administrative action permissible only under limited circumstances after satisfying statutory conditions, it is plain that this is the type of situation which Congress had in mind in requiring that “all decisions (including initial, recommended, or tentative decisions) shall become part of the record and include a statement of (1) findings and conclusions, as well as the reasons or basis therefor, upon all the material issues of fact, law, or discretion presented on the record; * * * ”, Section 8, Administrative Procedure Act, 5 U.S. C.A. § 1007.
This is particularly so where, as here, by strong emphatic language condemning the rates for specific reasons (note 4, supra) and generally as violative of the criteria of Transcontinental Cases of 1922, note 16, supra, relief is first denied but, without any other or further showing, is then granted. Courts and administrative agencies have, and must have, power to change their minds. But if it is the rule of law which controls, there must be some basis to indicate that it is reason and judgment that has brought about the change.
All of this is aggravated by the fact that this serious question of whether competing water and motor carriers are to be exposed to what they describe as “suicidal” rates for the indefinite period of investigation, has been treated too much as a matter of pure paper form. When the verified complaint and supporting memorandum brief filed here pointed out that these protestants were entitled, 42 U.S.C.A. § 17(8), note 9, supra,, to a stay of the order of December 9, 1955, (stated to have been issued by the Fourth Section Board, note 8, supra) until decision by Division 2, the Commission on March 2, 1956, “corrected” that to make it appear that this was by Division 2 acting as an appellate division. But since Division 2 could act only as an appellate division on a matter
appealed
to it for reconsideration, the Commission then entered, on April 27, 1956, a still further corrected order of December 16 stating, contrary to available record facts (note 6, supra) that
Division 2 was “acting as an appellate division, upon consideration of a petition by respondents [Railroads] requesting that the action of the Fourth Section Board in voting to withhold relief in Fourth Section Application No. 31120 * * * be reversed * *
The action of Division 2 was not appellate. It was initial. Pending decision on the petition for reconsideration of that action of December 9, the protestants were entitled to a stay. An order entered months after the judicial review has been set in motion and based on recitations not borne out by the available record does not change it. On the contrary, it dramatizes again the danger, under our system, of circumventing judicial review by claiming to find and then belatedly record that which was known in fact but imperfectly reflected in the official papers.
The orders appealed from are, therefore, invalid and for the reasons set forth are set aside and the matter remanded to the Commission for further and not inconsistent proceedings.
Reversed and remanded to the Commission.