626 F.2d 1348
UNION ELECTRIC COMPANY, Missouri Public Service Company;
American Electric Power Service Corporation and
Wisconsin Electric Power Company, Petitioners,
v.
UNITED STATES of America and Interstate Commerce Commission,
Respondents,
Abilene & Southern Railway Company et al., Intervenors-Respondents.
NATIONAL ASSOCIATION OF RECYCLING INDUSTRIES, INC., Petitioner,
v.
INTERSTATE COMMERCE COMMISSION and United States of America,
Respondents,
Abilene & Southern Railway Company et al., Intervenors.
SYSTEMS FUEL, INC., Arkansas Power & Light Company and
Potomac Electric Power Company, Petitioners,
v.
UNITED STATES of America and Interstate Commerce Commission,
Respondents.
CELANESE CHEMICAL COMPANY, INC., Arizona Electric Power
Cooperative, Inc., Petitioners,
v.
UNITED STATES of America and Interstate Commerce Commission,
Respondents.
NORTH DAKOTA STATE WHEAT COMMISSION and North Dakota Public
Service Commission, Petitioners,
v.
INTERSTATE COMMERCE COMMISSION and United States of America,
Respondents,
Abilene & Southern Railway Company et al., Intervenors-Respondents.
NATIONAL INSULATION TRANSPORTATION COMMITTEE, Petitioner,
v.
INTERSTATE COMMERCE COMMISSION and United States of America,
Respondents,
Abilene & Southern Railway Company et al., Intervenors-Respondents.
CONSUMERS POWER COMPANY, Petitioner,
v.
UNITED STATES of America and Interstate Commerce Commission,
Respondent,
Abilene & Southern Railway Company et al., Intervenors-Respondents.
Nos. 79-1844, 79-1898, 79-1920, 79-1921, 79-1972, 80-1015
and 80-1089.
United States Court of Appeals,
Eighth Circuit.
Submitted March 11, 1980.
Decided July 16, 1980.
Charles J. McCarthy, Belnap, McCarthy, Spencer, Sweeney & Harkaway, Edward Merrigan and Charles W. Chapman, Washington, D.C., for petitioners.
H. Glenn Scammel, Atty., I. C. C., Washington, D.C., for respondent, I. C. C.
Richard Flynn, Sidley & Austin, Washington, D.C., for respondents.
Before LAY, Chief Judge, HENLEY, Circuit Judge, and HANSON, Senior District Judge.
LAY, Chief Judge.
Petitioners in these consolidated cases represent shippers of various commodities whose transportation rates were affected by a general increase in railroad carrier freight charges, effective October 15, 1979. They seek review of the Interstate Commerce Commission's, (ICC), decision not to suspend or investigate the increase before it became effective. Ex Parte 368, Increased Freight Rates and Charges, Nationwide 1979. Before proceeding to the merits, we have limited briefs and argument to the question raised by appellee ICC's motion to dismiss: whether this court has jurisdiction to review the ICC decision and order. We conclude it does not.
I. Factual Background.
On July 26, 1979, all railroads and certain water and motor carriers having joint rates with them petitioned the ICC for authority to file tariff schedules increasing freight rates. The carriers submitted 60 verified statements constituting their evidential case, gave notice and served the petition and statements, and furnished data to the public. See Procedures Governing Rail Carrier General Increase Proceedings, 49 C.F.R. §§ 1102.1-.9 (1979). They also filed an evaluation of environmental considerations, pursuant to ICC Revised Guidelines for Implementation of the National Environmental Policy Act of 1969, 49 C.F.R. §§ 1108.1-.20 (1979).
On August 8, 1979, the ICC granted special permission to publish and file the general increase schedules, or master tariff, as requested. It conditioned permission on the tariff taking effect upon not less than 30 days notice and expiring one year thereafter. The permission was given subject to protest and possible suspension and rejection. All prior ICC orders were ordered modified to the extent necessary to allow the filing.
The August 8th order made all common carriers by rail parties to the proceeding. Noting that the Interstate Commerce Act, 49 U.S.C.A. § 10707(c) (Supp.1979), requires filing verified complaints seeking suspension of proposed rate changes, the ICC required any person opposing the increase to file verified statements containing all relevant evidence the party wished the ICC to consider by September 6, 1979. Comments on environmental impact and presidential wage and price guidelines were specifically invited. The carriers were given until September 12th to file and serve replies and rebuttal evidence.
On October 5, 1979, the ICC issued a second decision and order. It concluded that, with one exception, "the record in this proceeding warrants that the Commission decline to suspend or investigate the proposed increase." The order was conditioned upon postponement of the effective date to October 15, 1979.
The ICC based its decision not to suspend the master tariff as a whole upon its finding that the proposed revenue increase was justified by increased railroad costs. It also found requirements of the National Environmental Policy Act of 1969, 42 U.S.C. § 4321 (NEPA), and the presidential wage and price guidelines were met.
The decision mentioned three specific commodity groups. The increase for iron or steel scrap was the exception to the general order: it was ordered suspended and placed under investigation for a consolidated decision with another proceeding. The ICC allowed the general rate increases for recyclables on the condition that criteria of reasonableness and discrimination, established in an earlier, special investigation of recyclable rates, be met. The ICC also refused to exclude special grain tables from the master tariff.
II. Analysis.
A. Increases on Coal and Wheat: Nos. 79-1972, 79-1844, 80-1089, 79-1920, 79-1921.
North Dakota Wheat Commission, (domestic and export grain), Union Electric Company, Consumers Power Company, Systems Fuel Inc., and Celanese Chemical Company, (coal), confine their challenge to the percentage by which the increase on their particular commodity exceeds the average nationwide or region-wide general increases. These petitioners request remand to the ICC with instructions to reconsider and make proper, adequate findings on the reasonableness of the increase as applied to their commodities. We first consider reviewability of the order in the context of their allegations.
The determinative issue is whether the ICC's action was a refusal under 49 U.S.C. § 10707(a) to investigate lawfulness or in the language of the revised Act, to begin a proceeding to determine whether the proposed rate violated the Interstate Commerce Act. If it was, the recent decision by the United States Supreme Court in Southern Railway v. Seaboard Allied Milling Corp., 442 U.S. 444, 99 S.Ct. 2388, 60 L.Ed.2d 1017 (1979), teaches that it is unreviewable.
In Seaboard, a group of railroads filed a seasonal demand rate increase. See 49 U.S.C. § 10727. Shippers petitioned the ICC for suspension and investigation of the increases' lawfulness under what is now section 10707(a) of the Act. A month after the rate filing, the ICC declined to suspend or investigate, and the shippers attempted to appeal that decision. The Court held the decision was not a final determination that the tariff was lawful, but rather a nonfinal decision not to investigate lawfulness. Seaboard, 442 U.S. at 452-54, 99 S.Ct. at 2393-94. The Court also held Congress did not intend review of a section 10707 "no investigation" decision, because the statutory language, design and history show the decision is committed to agency discretion. Additionally, the Court reasoned that review of an ICC decision not to suspend or investigate would require an initial, independent appraisal of the reasonableness of the proposed rate. This would conflict with legislative intent to avoid judicial disruption of the administrative rate-making process prior to final decision. Investigation is linked to ICC power to suspend, the Court stated, and prior Supreme Court cases have held suspension decisions are unreviewable. The Court found support for its decision in the disruptive consequences of requiring judicially reviewable decisions on the legality of proposed tariffs in light of the numerous tariff filings, many of which include thousands of individual rates. Judicial review of refusals to investigate before rates become effective would lessen shipper incentive to initiate investigation and to obtain a final ruling on the reasonableness of their particular commodity's rate after it had become effective. See 49 U.S.C. §§ 11701(b), 10704(a)(1).
Petitioners' request for review is premised on the assumption that the ICC made a final decision on a complete record after investigation, so Seaboard does not control. They claim the August 8th grant of authority to file a master tariff initiated a proceeding/investigation, an evidentiary record was assembled, and the October 5th decision was final. The decision approved the general increase and was not merely a refusal to suspend and to investigate. Some petitioners admit the ICC did not make a final determination on the lawfulness of the increase. However, they argue the ICC did finally decide on distribution of the increase among various commodity groups. Others argue the ICC finally decided the lawfulness of the general increase, i. e., whether general need for increased revenue was shown by the record.
To determine if the ICC order was a refusal to investigate, the Court in Seaboard examined the order's express language in light of the inquiry the ICC makes upon a shipper's request to suspend and investigate a rate increase. We accordingly consider the express language of the October 5th order, mindful that it follows a grant of special permission to file general increase schedules subject to protest and possible suspension.
The order expressly states the record warrants that the Commission "decline to suspend or investigate the proposed increase." The order contains one exception: the increase proposed for iron or steel scrap on certain routes was suspended and placed under investigation. Not only does the express language indicate the decision was a refusal to investigate, but the exception makes little sense if, as petitioners assert, the order was in reality a post-investigation one.
On the other hand, petitioners point out the railroads' petition requested the ICC to institute a proceeding, and the ICC did so, making all railroads parties. Also, the August 8th order invited opponents to submit verified statements for the ICC to consider "with respect to statutory suspension of the rates pending completion of the investigation, as well as evidence relevant to the ultimate decision." (Emphasis added). The underlined portion implies an investigation was begun, whereas in Seaboard there clearly was no investigation. Petitioners also point out section 10707(d) requires carrier refunds when the ICC decides not to suspend a proposed increase "that is the subject of a proceeding under this section," and the August 8th order required that the tariff provide for refunds in the event of ICC disapproval or modification of the increases. It is uncontested that extensive data were submitted, the ICC found cost justification for increased revenue, and the proposed increases went into effect just as they would have if the ICC had affirmatively approved them after an investigation. In fact, the order at one point states that it "authorizes the proposed increases."
Thus upon an initial reading, it appears a final decision was made following an investigation. This superficial interpretation of the order is erroneous, however, because it equates any investigation with an investigation to determine lawfulness under section 10707(a). However, ICC procedures for carrier initiation of a general rate increase are not necessarily equivalent to commencement of an investigation within the meaning of section 10707.
Evaluation of data that ICC regulations require carriers to file in order to initiate a general rate increase and the subsequent finding of revenue need are not inconsistent with a refusal to investigate a proposed general increase. Special procedural rules differentiate initiation of a general rate increase from an increase on one commodity group or one route. See 49 C.F.R. §§ 1102-.9 (1979). Quite apart from a section 10707 investigation, but simply to obtain permission to file general increase rate schedules, carriers must file detailed cost and revenue data concurrently with the schedules. 49 C.F.R. § 1102.1. A condition for permission to file the schedules is that the date the new rates go into effect is at least 30 days from filing, "to enable proper evaluation of the evidence presented." Id. Routine evaluation of the data for each and every proposed general increase is distinct from institution of a formal proceeding. For instance, the regulations provide that if a formal proceeding is instituted, carriers may update their evidence. Id.
It is evident from section 10707 that routine evaluation of evidence filed pursuant to regulations governing initiation of a general increase is distinct from an investigation within the meaning of section 10707. Although the Seaboard opinion and the language of the ICC order here refer to an "investigation," neither section 10707 nor its predecessor, § 15(8), use the term. Section 10707(a) provides the ICC "may begin a proceeding . . . to determine whether the proposed rate . . . violates this subtitle." Section 10707(c)(1) provides that "(p)ending final Commission action in a proceeding under subsection (a) of this section, the Commission may suspend the proposed rate . . . ." Therefore, to investigate under section 10707(a) is to conduct a proceeding to determine whether the proposed rate violates the Act, i. e., whether it is unreasonable. A refusal to suspend and investigate under section 10707 has a precise meaning: it is a refusal to initiate a proceeding to determine lawfulness of the rate. It does not mean refusal to initiate any type of proceeding, consider any evidence, or make any finding.
ICC consideration of evidence submitted to support a temporary, seasonal, area-wide increase in the Seaboard case did not indicate the ICC order was anything other than a refusal to investigate under section 10707(a). The Court stated in Seaboard that when the ICC decides whether to suspend and investigate before a rate becomes effective automatically, it "make(s) a prompt appraisal of the probable and general reasonableness and legality of the proposed schedule which may, as in this case, involve thousands of rates for designated commodities and routes rather than a detailed review of the lawfulness of each individual component of the tariff schedules." Seaboard, 442 U.S. at 453, 99 S.Ct. at 2393. Thus, in a decision whether to investigate, probable and general findings are made upon a limited record. However, they are not equivalent to a final determination of lawfulness following a section 10707(a) proceeding. Similarly, a finding that market dominance does not exist does not convert a limited decision not to investigate under section 10707 into a final decision to approve rates after investigation. See Georgia Power Co. v. United States, 617 F.2d 107, at 109 (5th Cir. 1980). In this case, taking evidence, making a decision on cost justification for a general increase and allowing the increase to become effective, do not convert refusal to investigate into a final, post-investigation decision.
While the factual situation in Seaboard is distinguishable because it was not a nationwide general increase proposal, the proposed increase was area-wide and the schedules included thousands of rates. The Court held no final determination on the legality of each was or could be made in the decision to suspend or investigate. Rather, the decision could only be an appraisal of general reasonableness and legality. 442 U.S. at 453, 99 S.Ct. at 2393. It is also merely an appraisal of probable reasonableness, i. e., it is not a final determination. Id. Here, as in Seaboard, a decision on general and probable reasonableness was made. It cannot be interpreted as a final ruling on the legality of the general increases.
To accept petitioners' basis for distinguishing Seaboard would be to hold that due to procedures for carrier initiation of general rate increases, the ICC can never decline to suspend or investigate a general increase. In their view, once it has permitted filing of the master tariff and evaluated the accompanying verified statements, the ICC has already investigated within the meaning of section 10707(a). However, a final decision on lawfulness can be made in a general increase proceeding after initiation of a section 10707(a) investigation; it is a different decision than a refusal to investigate based on evaluation of the proposed schedules and supporting data. The Court in Aberdeen & Rockfish Railroad v. SCRAP (SCRAP II), 422 U.S. 289, 95 S.Ct. 2336, 45 L.Ed.2d 191 (1975), gave examples of final decisions that could be made in the context of a general rate increase proceeding:
Of course, the ICC has the power in a general revenue proceeding to declare the new rates unlawful and disapprove the increase. It could also, if it chose, declare some of the rates discriminatory, unreasonable, or otherwise unlawful; and it could itself affirmatively approve all or some of the rates as just and reasonable.
Id. at 313-314, 95 S.Ct. at 2353. This type of lawfulness ruling was not made here.
Other language in the order illustrates the limited nature of the ICC inquiry here. The ICC order did not explicitly reserve determinations on the reasonableness of particular rates for sections 11701(b) and 10704(a) refund proceedings, see SCRAP II, 422 U.S. at 313, 95 S.Ct. at 2352. It did refuse to exempt grain tables, however, and stated that the issue would be better considered in a separate, post-effective proceeding initiated by shipper protest. See 49 U.S.C. § 10704(f). The order thus assumes that although the ICC did not initiate a proceeding to determine the legality of each particular commodity's treatment, an administrative remedy under the Act remains open to shippers.
The language of the order, viewed in light of the nature of decisions to suspend and investigate general rate increases, convinces us that the ICC declined to initiate a proceeding under section 10707 to determine the legality of the general increase. Under the holding in Seaboard, that decision is committed to ICC discretion and therefore is not judicially reviewable.
B. Recyclable Materials.
The National Association of Recycling Industries, Inc., (NARI), contends the decision is reviewable as it relates to recyclables, because the ICC did make a lawfulness determination on recyclable rates. NARI argues increases authorized for recyclables were unreasonable and discriminatory.
The ICC stated in its decision that it would "allow the general rate increases proposed for recyclables," on the condition that criteria set recently in a special, statutorily mandated investigation of rates for recyclables, Ex Parte 319, were met. Under Ex Parte 319, a reasonable recyclable rate could not exceed the revenue-to-variable-cost ratio of 180%; a recyclable's variable-cost ratio had to be less than or equal to that for the corresponding virgin commodity for the rate to be nondiscriminatory.
This decision is clearly not merely a refusal to investigate under section 10707(a). It is not a decision on general reasonableness, because it pertains only to a specific commodity group's rate. It is not a ruling on probable reasonableness, because a precise maximum figure was set, a figure that was the final determination of reasonable recyclable rates, established after a recent and thorough investigation. While the ICC did not commence a proceeding to determine lawfulness of rates for recyclables in this general increase proceeding, it also did not merely refuse to investigate: relying entirely upon its former investigation and decision, it affirmatively approved rates within that reasonable maximum.
Thus, the reasoning underlying the Seaboard bar to reviewability does not apply. However, the policy and reasoning of precedent against review of the effect on a particular commodity of a general increase proceeding order does apply, and it precludes NARI's petition.
The law is uncertain on review of orders entered in general increase proceedings, even "final" orders entered after an actual investigation. Courts have even withheld review of the narrow decision that evidence of revenue need justified a general increase, on the ground that a shipper must exhaust administrative remedies under sections 11701(b) and 10704(a). However, it is of greater significance for NARI's challenge that there is uniform precedent against review of a general increase's effect on a particular commodity. See Algoma Coal & Coke Co. v. United States, 11 F.Supp. 487 (E.D.Va.1935); Koppers Co. v. United States, 132 F.Supp. 159 (W.D.Pa.1955); Florida Citrus Commission v. United States, 144 F.Supp. 517 (N.D.Fla.1956), aff'd mem., 352 U.S. 1021, 77 S.Ct. 589, 1 L.Ed.2d 595 (1957); Electronic Industries Association v. United States, 310 F.Supp. 1286 (D.D.C.1970), aff'd mem., 401 U.S. 967, 91 S.Ct. 1188, 28 L.Ed.2d 318 (1971). See also Council of Forest Industries v. ICC, 570 F.2d 1056, 1060-62 (D.C.Cir.1978); National Association of Recycling Industries, Inc. v. ICC., 627 F.2d 1341, at 1344 (NARI III) (D.C.Cir. 1980). The reasoning is that normally the ICC does not finally rule on the reasonableness of a specific commodity's rate in a general revenue proceeding, and it is not an appropriate issue to resolve on the limited record of such a proceeding. Since the ICC does not decide it, it is not ripe for review. To obtain a final and reviewable ruling, an individual, post-effective complaint must be brought under sections 11701(b) and 10704(a) seeking a refund and a declaration of reasonableness.
This precedent would seem to preclude NARI's petition, as NARI challenges the general increase order only insofar as it relates to recyclables. However, the reasoning loses its force when, as here, the ICC does not merely decide to refrain from declaring a general increase lawful or unlawful. As NARI points out, the ICC actually did pass on the specific issue of reasonable and nondiscriminatory rates for recyclables. It did not use a limited and general record compiled for evaluation of a general, across-the-board increase, but relied on a prior, specific investigation of recyclable rates. This weakens policy arguments against immediate review. See Council of Forest Industries v. ICC, 570 F.2d at 1063; NARI III, at 1344.
However, we conclude that the circumstances of this case do not warrant making an exception to the rule of nonreviewability. It is simply not necessary, and perhaps undesirable, to review NARI's contentions in this general revenue proceeding. While the ICC decision on recyclable rates did in fact rest upon an investigation of lawfulness, it was not an investigation initiated in this general revenue proceeding, but the Ex Parte 319 investigation. The decision following that investigation, adhered to by the ICC here, was reviewable and has been reviewed by the District of Columbia Circuit. Furthermore, court-ordered remand of Ex Parte 319 illustrates that NARI's contentions are not best addressed on review of a general increase order.
As NARI points out, the 180% ratio that is the standard of reasonableness set in Ex Parte 319 and adhered to by the ICC in its order here, was vacated on review. National Association of Recycling Industries, Inc. v. ICC, 627 F.2d 1328, at 1340 (NARI II ) No. 79-1393 and consolidated cases (D.C.Cir. April 25, 1980). The court held selection of the 180% figure was completely unsupported by explanatory discussion of fundamental considerations such as justification for the resulting higher-than-normal profit levels. Id. It remanded to the ICC for further proceedings to define what rates for recyclables are reasonable; and until that decision is issued, it ordered revoked any published increases approaching the 180% standard.
Simultaneously, the District of Columbia Circuit decided NARI III, a case with a factual situation nearly identical to the one before us. In it, NARI petitioned for review of general revenue proceedings conducted after Ex Parte 319 was decided, and in which specific rulings on the reasonableness of rates for recyclables were made. The court discussed, but did not decide, whether the general increase order, insofar as it pertained to recyclables, could be reviewed. At 1333. It held NARI could get full relief through the Ex Parte 319 proceedings on remand, because the Ex Parte 319 record had been updated with revenue data from the general increases that NARI sought to challenge. At 1332-1333. Therefore, it held NARI's challenge to the general revenue proceeding order was moot.
Whether or not the revenue data in Ex Parte 319 has been or can be updated to reflect the general increase at issue here, the remand of Ex Parte 319 illustrates that NARI's contentions are not best resolved by review of this general increase order. The ICC did not investigate rates on recyclables in this proceeding, but relied upon Ex Parte 319 and briefly restated the conclusion it had reached there. Both review of the order, and the continuing jurisdiction NARI urges we maintain if we remand, would take our review beyond the record here to the record in Ex Parte 319. That task has already been undertaken and completed by the District of Columbia Circuit. The fact that the ICC may change its decision on remand of Ex Parte 319 in light of NARI II and new knowledge, is further evidence of the limited decision made here and the absence of a need to reopen the proceedings. See SCRAP II, 422 U.S. at 327, 95 S.Ct. at 2359. Proceeding either within Ex Parte 319 on remand, if possible, or by a section 11701(b) complaint, NARI will have the benefit of a more complete record than that compiled in this proceeding. It also can obtain a final ruling, the reviewability of which would not be subject to question.
C. Environmental Considerations.
Both NARI and the National Insulation Transportation Committee (NITCOM), challenge ICC compliance with NEPA and the ICC's implementing regulations, 49 C.F.R. §§ 1108.1-.20 (1979). The ICC ordered stated: "This decision will not significantly affect either the quality of the human environment or conservation of energy resources."
In SCRAP II, 422 U.S. 289, 95 S.Ct. 2336, 45 L.Ed.2d 191 (1975), the Court held that regardless of whether a general increase proceeding order was reviewable, ICC compliance with NEPA in the proceeding was reviewable. The Court reasoned that the ICC had made a final decision on environmental impact, and no relief for inadequate environmental consideration in that proceeding could be obtained by subsequent shipper complaints. Id. at 317-18, 95 S.Ct. at 2354, 2355. Because of the limited and nonfinal nature of a decision not to declare a general increase unlawful, and the more extensive ICC attention to environmental consequences of the commodity's rate structure in another proceeding, the Court held the environmental impact statement was sufficient even though it was quite limited. Id. at 322-28, 95 S.Ct. at 2356-2359.
NARI's challenge to treatment of environmental issues in this general increase proceeding ignores its own major contention on appeal: that the decision on recyclable rates here rested "entirely" on the decision in Ex Parte 319. The District of Columbia Circuit recently held that the ICC in Ex Parte 319 had "sufficiently considered the impact of the recyclables rate structure upon environmental factors." NARI III, at 1345. Environmental consideration sufficient for that particularized investigation is, a priori, sufficient for the more limited and general action taken here in reliance on Ex Parte 319.
Unlike recyclables, insulating materials were not singled out for an arguably final decision on lawfulness, and thus the ICC decision as it affects them is merely a refusal to investigate. SCRAP II 's logic would indicate consideration of environmental issues in even such a limited decision is reviewable. The ICC has finally decided not to consider further the environmental consequences of its refusal to investigate; subsequent proceedings under sections 11701(b) and 10704(a) could not produce relief from inadequate consideration in that earlier proceeding.
However, the SCRAP II post-investigation decision not to declare a general increase unlawful required only a limited environmental assessment. Logically, an even more limited assessment should suffice for a refusal to investigate. The ICC made no attempt in this general proceeding to separately examine the rate structure of insulating materials. It therefore cannot be required to thoroughly examine, independently of the impact of the increases as a general matter, the separate environmental consequence of a particular commodity's increase. NITCOM does not relate its environmental allegation, increased air pollution from the increased rates for insulating materials, to the environmental consequences of the general and limited decision not to investigate the general increases. The issue could be specifically addressed in a proceeding under sections 11701(b) and 10704(a). We may not entertain the challenge at this juncture.
The petitions for review are ordered dismissed for lack of subject matter jurisdiction.