National Ass'n of Recycling Industries, Inc. v. Interstate Commerce Commission

627 F.2d 1341, 201 U.S. App. D.C. 355, 1980 U.S. App. LEXIS 18285
Court of Appeals for the D.C. Circuit·Decided April 25, 1980·No. Nos. 78-1680, 78-2074·Published·Cited by 2 cases

Opinion

Opinion for the Court filed by Circuit Judge WILKEY.

WILKEY, Circuit Judge:

The two cases consolidated in this appeal involve challenges by the National Association of Recycling Industries, Inc. and others to decisions of the Interstate Commerce Commission made in general revenue proceedings, which considered proposed across-the-board rate increases for substantially all railroads in the nation or in a region. The railroads have intervened to protect their [357]*357interest in the rate increases approved in those proceedings. This case is closely related to another decided by us today, also captioned National Association of Recycling Industries, Inc. v. Interstate Commerce Commission (hereinafter NARI II).1 At issue here are general revenue proceedings that affected the rate structure for rail shipment of recyclable materials; it is this rate structure which formed the subject of the Commission investigation and order reviewed by us today in NARI II. Because we conclude that the Commission’s action in NARI II effectively resolves the substantive issues in the current consolidated appeals, we dismiss these petitions as moot.

I.

On 26 September 1977 railroads nationwide filed with the Interstate Commerce Commission for authorization of a five percent general increase for rail freight rates. Following an investigation into the lawfulness of the five percent rate increase as applied to seven specific commodity groups, including recyclables, the Commission held that the railroads had failed to justify the five percent increase for recyclables and the other specific commodity groups; that is, they did not adequately justify it by increased costs for these specific freight services. Because of the railroads’ revenue needs, the Commission authorized an increase of three percent on recyclables, and similar increases for the other commodities. This decision and order of the Commission, dated 28 June 1978, was designated Ex Parte No. 343.2

On 1 May 1978 the railroads petitioned the ICC for a further general rate increase, this time of four percent within and between eastern and western territories, and two percent from, to, or within southern territory. Again the Commission selected for investigation certain specific commodities, including recyclables. In a decision and order of 16 January 1979, Ex Parte No. 349, the Commission found the proposed increases not justified as to certain commodities, and just and reasonable as to others.3 Concerning recyclables, however, the Commission held its decision in abeyance pending completion of its renewed investigation upon remand in Ex Parte No. 319 and Ex Parte No. 319 (Sub-No. 1). The investigation was completed on 16 April 1979, and the ICC decision of that date is fully discussed in NARI II decided today. The Commission issued its new findings and order in Ex Parte No. 319 and Ex Parte No. 319 (Sub-No. 1) on 16 April 1979, concluding:

For those commodities for which we determined in this proceeding that the rates are just, reasonable, and nondiscriminatory, we conclude that the Ex Parte 349 rate increases may remain in effect. The reductions ordered for other commodities will, in effect, remove the Ex Parte 349 increases to the extent that the rates in total are unjust, unreasonable, or discriminatory.4

On 11 September 1978 those eastern railroads which are now intervenors in No. 78-2074 petitioned the ICC for further increases of freight rates on certain commodity groups transported within eastern territory at allegedly marginal rates of revenue. Included in this request was a proposed ten percent increase for rail shipping rates of waste paper and textile waste in this region.5 The Commission generally authorized these proposed increases, but placed the rate increase for textile waste and waste [358]*358paper under investigation to determine if the increase was justified by cost and revenue considerations. While this investigation was pending, the challenged increases were allowed to go into effect.6

On 18 May 1979 the Commission rendered a decision in this investigation, Ex Parte No. 349 (Sub-No. 1), concluding that the proposed rates for these two recyclable products were nondiscriminatory and reasonable, and that they were justified by the railroads’ need for revenue.7 The Commission referred to its 16 April 1979 decision on remand in Ex Parte No. 319, which had found rates for waste paper and textile waste in the east to be reasonable. Since the Ex Parte No. 319 investigation on remand considered rates as of a date after the Ex Parte No. 349 (Sub-No. 1) increase had gone into effect, the Commission found that Ex Parte No. 319 had adequately explored the lawfulness of challenged rates for wastepaper and textile waste.8

II.

Petitioner National Association of Recycling Industries (NARI) now seeks review of these three general revenue proceedings on grounds that they were arbitrary and capricious, inconsistent with the Railroad Revitalization and Regulatory Reform Act of 1976,9 and not in compliance with the National Environmental Policy Act. Respondents and intervenors argue that these decisions are not reviewable at this time because petitioner has not exhausted other remedies available before the ICC for claims of unjust or unreasonable rates.

When the ICC approves an across-the-board rate increase in a general revenue proceeding, courts will generally not review challenges based on the alleged unreasonable or discriminatory effect of the increase as applied to particular commodities. The rationale for this limitation on review is that the Commission normally limits general revenue proceedings to the broad issue of the railroads’ need for increased revenues, with the lawfulness of particular rates withheld until a petitioner challenges particular rates under 49 U.S.C. § 11701 (formerly section 13(1)). In such a challenge the petitioner bears the burden of proving the challenged rates to be unreasonable or unjustly discriminatory, while in a general revenue proceeding the railroads have the burden to show that revenue needs justify the increases. The section 11701 and 11704 avenue of challenge constitutes an administrative remedy which must generally be exhausted before one can challenge the reasonableness of particular rates as affected by a general revenue proceeding. Such was our holding in Council of Forest Industries of British Columbia v. Interstate Commerce Commission,10 which thoroughly explained the procedural framework involved in such proceedings.

In the present case, petitioners challenge general revenue proceedings based on their allegedly unreasonable and discriminatory effects on particular rates for recyclable commodities.

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National Ass'n of Recycling Industries, Inc. v. Interstate Commerce Commission, 627 F.2d 1341, 201 U.S. App. D.C. 355, 1980 U.S. App. LEXIS 18285 (D.C. Cir. 1980).

627 F.2d 1341 (National Ass'n of Recycling Industries, Inc. v. Interstate Commerce Commission) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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