Edison Electric Institute v. Interstate Commerce Commission

765 F.2d 210, 246 U.S. App. D.C. 341
CourtCourt of Appeals for the D.C. Circuit
DecidedJune 21, 1985
DocketNos. 84-1044, 84-1122, 84-1123, 84-1151 and 84-1152
StatusPublished
Cited by2 cases

This text of 765 F.2d 210 (Edison Electric Institute v. Interstate Commerce Commission) is published on Counsel Stack Legal Research, covering Court of Appeals for the D.C. Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Edison Electric Institute v. Interstate Commerce Commission, 765 F.2d 210, 246 U.S. App. D.C. 341 (D.C. Cir. 1985).

Opinion

Opinion for the Court filed by Circuit Judge BORK.

BORK, Circuit Judge:

The petitioners in these consolidated cases1 challenge four final orders issued by the Interstate Commerce Commission (“Commission” or “ICC”) in the course of ongoing proceedings in Ex parte No. 290 (Sub-No. 2), Railroad Cost Recovery Procedures. Each of the orders2 involves the same underlying issue: whether the Northeast Rail Service Act of 1981 (“NERSA”) requires an adjustment to the Rail Cost Adjustment Factor (“RCAF”), which, under the provisions of the Staggers Rail Act of 1980 (“Staggers Act”), allows rail carriers to increase rates by an amount equal to periodic increases in the RCAF without regulatory review by the Commission. Specifically, petitioners challenge on several grounds the Commission’s decision that NERSA requires that the RCAF be calculated using the higher labor costs Consolidated Rail Corporation (“Conrail”) would pay if its costs were determined in accordance with the national contract levels applicable to other railroads rather than the actual labor costs of Conrail. We conclude that we lack jurisdiction to review the ICC’s orders because petitioners’ challenge falls within the exclusive jurisdiction of the Special Court, Regional Rail Reorganization Act (“Special Court”), and we accordingly transfer these cases to the Special Court.

I.

Section 203 of the Staggers Act, Pub.L. No. 96-448, 94 Stat. 1895 (1980), defines the RCAF as

a fraction, the numerator of which is the latest published Index of Railroad Costs (which index shall be compiled or verified by the Commission, with appropriate adjustments to reflect the changing composition of railroad costs, including the quality and mix of material and labor), and the denominator of which is the same index for the fourth quarter of 1980, or for the fourth quarter of 1982 or for the fourth quarter of every fifth year thereafter, as appropriate.

49 U.S.C. § 10707a(a)(2)(B) (1982). Under the Staggers Act the railroads, including Conrail, are in effect automatically allowed to increase rates by an amount equal to quarterly increases in the RCAF, because [344]*344such rate increases “may not be found to exceed a reasonable maximum for the transportation involved.” 49 U.S.C. § 10707a(b)(2). Hence, “[t]hose rate increases that simply follow the [RCAF] inflation adjustment formula are immune from attack.” Western Coal Traffic League v. United States, 677 F.2d 915, 918 (D.C.Cir.), cert. denied, 459 U.S. 1086, 103 S.Ct. 568, 74 L.Ed.2d 931 (1982) (citation omitted). The RCAF, then, serves as “a rapid mechanism for translating cost increases into rate increases.” 677 F.2d at 926.

NERSA, Pub.L. No. 97-35, § 1132 et seq., 95 Stat. 357, 644 (1981), removed federal subsidies from Conrad’s freight operations, and provided that Conrad should be sold as an entity if it could operate profitably without subsidy during a specified test period, but should be sold piecemeal if it could not. 45 U.S.C. §§ 761-765 (1982). One of several provisions in NERSA that were intended to assist Conrail in becoming profitable is section 1159, 45 U.S.C. § 1109 (1982), which specifies that

[a]ny cost reductions resulting from the provisions of or the amendments made by [NERSA] shall not be used to limit the maximum level of any rate charged by Conrail for the provision of rail service, to limit the amount of any increase in any such rate (including rates maintained jointly by Conrail and other rail carriers), or to limit a surcharge or cancellation otherwise lawful under chapter 107 of title 49.

NERSA also set forth a number of subsidiary “[g]oals and objectives,” 45 U.S.C. § 1103 (1982), for Conrail to achieve in order to become profitable. The fourth enumerated goal reads as follows:

(A) Conrail should enter into collective bargaining agreements with its employees which would reduce Conrail’s costs in an amount equal to $200,000,000 a year, beginning April 1, 1981, adjusted annually to reflect inflation.
(B) Agreements under this subparagraph may provide for reductions in wage increases and for changes in fringe benefits common to agreement employees, including vacations and holidays.
(C) The cost reductions required under this subparagraph in the first year of the agreement may be deferred, but the aggregate cost reductions should be no less than an average of $200,000,000 per year for each of the first three one-year periods beginning April 1, 1981.
(D) The amount of cost reductions provided under this paragraph shall be calculated by subtracting the cost of an agreement entered into under this paragraph from (i) the cost that would otherwise result from the application of the national agreement reached by railroad industry and its employees, or (ii) until such national agreement is reached, the cost which the United States Railway Association estimates would result from the application of such a national agreement.

45 U.S.C. § 1103(4). It is undisputed that Conrail has entered into collective bargaining agreements with its employees that set wage levels below the levels prevailing in the industry under the national contract agreement applicable to other railroads, and that the amount of the wage givebacks equals or exceeds the cost reductions mentioned in 45 U.S.C. § 1103(4).

There is, however, a dispute over whether Conrail’s lower labor costs under its collective bargaining agreements are “cost reductions resulting from the provisions of ... [NERSA].” 45 U.S.C. § 1109 (1982). In the orders at issue in these cases, the Commission determined that the wage givebacks should be deemed to have resulted from NERSA. See Determinations on Notice of Proposed Rulemaking, 49 Fed. Reg. 10,955, 10,957 (1984). Noting that Conrail is entitled to unregulated rate increases under the RCAF, the Commission then reasoned that

[i]f Conrad’s actual labor costs (reflecting concessions) were figured into the RCAF, the RCAF would be lower than it would be absent the Conrail wage concessions. The result would be that Conrail’s increases under the RCAF would [345]*345be limited by the concessions, and we believe this result violates NERSA’s plain terms.

Id. at 10,957. Consequently, in the Commission’s view it was required to make some adjustment to the RCAF to “harmoniz[e] the statutes.” Id.

The Commission considered and rejected several alternative methods for revising the RCAF.

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Bluebook (online)
765 F.2d 210, 246 U.S. App. D.C. 341, Counsel Stack Legal Research, https://law.counselstack.com/opinion/edison-electric-institute-v-interstate-commerce-commission-cadc-1985.