United States v. Students Challenging Regulatory Agency Procedures (SCRAP)

412 U.S. 669, 93 S. Ct. 2405, 37 L. Ed. 2d 254, 1973 U.S. LEXIS 20, 3 Envtl. L. Rep. (Envtl. Law Inst.) 20536, 5 ERC (BNA) 1449
CourtSupreme Court of the United States
DecidedJune 18, 1973
Docket72-535
StatusPublished
Cited by1,734 cases

This text of 412 U.S. 669 (United States v. Students Challenging Regulatory Agency Procedures (SCRAP)) is published on Counsel Stack Legal Research, covering Supreme Court of the United States primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
United States v. Students Challenging Regulatory Agency Procedures (SCRAP), 412 U.S. 669, 93 S. Ct. 2405, 37 L. Ed. 2d 254, 1973 U.S. LEXIS 20, 3 Envtl. L. Rep. (Envtl. Law Inst.) 20536, 5 ERC (BNA) 1449 (1973).

Opinions

Mr. Justice Stewart

delivered the opinion of the Court.

Under the Interstate Commerce Act, the initiative for rate increases remains with the railroads. But in the absence of special permission from the Interstate Commerce Commission, a railroad seeking an increase must provide at least 30 days’ notice to the Commission and the public before putting the new rate into effect. 49 U. S. C. § 6 (3).1 During that 30-day period, the Com[673]*673mission may suspend the operation of the proposed rate for a maximum of seven months pending an investigation and decision on the lawfulness of the new rates. 49 XL S. C. § 15 (7).2 At the end of the seven-month [674]*674period, the carrier may put the suspended rate into effect unless the Commission has earlier completed its investigation and found the rate unlawful.3

Proceeding under this regulatory scheme, on December 13, 1971, substantially all of the railroads in the United States requested Commission authorization to file on 5 days’ notice a 2.5% surcharge on nearly all freight rates. The railroads sought a January 1, 1972, effective date for the new rates. The surcharge was proposed as an interim emergency measure designed to produce some $246 million annually in increased revenues pending adoption of selective rate increases on a permanent basis.

As justification for the proposed surcharge, the railroads alleged increasing costs and severely inadequate revenues. In its last general revenue increase case, less than two years earlier, the Commission had found:

“[T]he financial condition of the railroad industry as a whole, and the financial status of many individual carriers by rail, must be found to be at a dangerously low level. The precipitous decline in working capital and serious loss of liquidity has reduced many carriers to a truly marginal operation. This has been most clearly demonstrated by the recent bankruptcy application of the Penn Central. We think it undeniable that a number of [675]*675other roads are approaching a similar financial crisis.” Ex parte Nos. 265/267, Increased Freight Rates, 1970 and 1971, 339 I. C. C. 125, 173.

The railroads alleged that, since the close of that proceeding, their costs had increased by over $1 billion on an annual basis, including $305 million in increased wages, while economic indicators such as decreased working capital and increased debt obligations pointed toward an ever-worsening financial condition.4

In an order dated December 21, 1971, the Commission acknowledged the need, particularly of some carriers, for increased revenues, but it concluded that five days’ notice and a January 1, 1972, effective date “would preclude the public from effective participation.” Ex parte No. 281, Increased Freight Rates and Charges, 1972, 340 I. C. C. 358, 361. The Commission authorized the railroads to refile the 2.5% surcharge with not less than 30 days’ notice, and an effective date no earlier than February 5, 1972.

On January 5, 1972, the railroads refiled the surcharge, to become effective on February 5, 1972. Shippers, competing carriers, and other interested persons requested the Commission to suspend the tariff for the statutory seven-month period. Various environmental groups, including Students Challenging Regulatory Agency Procedures (SCRAP) and the Environmental Defense Fund (EDF), two of the appellees here, protested that failure to suspend the surcharge would cause their members “economic, [676]*676recreational and aesthetic harm.” Specifically, they claimed that the rate structure would discourage the use of “recyclable” materials, and promote the use of new raw materials that compete with scrap, thereby adversely affecting the environment by encouraging unwarranted mining, lumbering, and other extractive activities. The members of these environmental groups were allegedly forced to pay more for finished products, and their use of forests and streams was allegedly impaired because of unnecessary destruction of timber and extraction of raw materials, and the accumulation of otherwise recyclable solid and liquid waste materials. The railroads replied that since this was a general rate increase, recyclable materials would not be made any less competitive relative to other commodities, and that in the past general rate increases had not discouraged the movement of scrap materials.

The Commission issued an order on February 1, 1972, shortly before the surcharge would have automatically become effective. It recognized that “the railroads have a critical need for additional revenue from their interstate freight rates and charges to offset, in part, recently incurred increased operating costs,” and announced its decision not to suspend the 2.5% surcharge for the seven-month statutory period.5 In anticipation of the proposed permanent selective increases to be filed by the railroads and to avoid further complication of the tariff rates, the Commission specified that its refusal to suspend was conditioned upon the carriers’ setting an expiration date for the surcharge of no later than June 5, 1972.6 The Commission ordered the investigation into [677]*677the railroads’ rates which had been instituted by its December 21 order to be held in abeyance until the carriers requested permission to file the indicated permanent rate increases on a selective basis. With respect to the ap-pellees’ environmental arguments, the Commission found that “the involved general increase will have no significant adverse effect on the movement of traffic by railway or on the quality of the human environment within the meaning of the [National] Environmental Policy Act of 1969.”

The proposed permanent selective increases, averaging 4.1%, were subsequently filed with the Commission, and various parties again requested that these proposed rates also be suspended. By order served March 6, 1972, the Commission did not grant the railroads’ request to have the selective increases go into effect on April 1, 1972, as they had sought but it allowed the carriers to republish their rates to become effective on May 1, 1972, upon not less than 45 days’ notice to the public. The carriers did republish the rates, and on April 24, 1972, the Commission entered an order suspending the proposed selective increase for the full seven-month period allowed by statute, or to and including November 30, 1972.7 The investigation into the increased rates was continued. Since the selective increases were to supplant the temporary surcharge, and since they had been suspended, the Commission modified its February 1 order and authorized the railroads to eliminate the June 5 expiration date for [678]*678the surcharge and to continue collecting the surcharge until November 30, 1972.

I

On May 12, 1972, SCRAP filed the present suit against the United States and the Commission in the District Court for the District of Columbia seeking, along with other relief, a preliminary injunction to restrain enforcement of the Commission’s February 1 and April 24 orders allowing the railroads to collect the 2.5% surcharge.

SCRAP stated in its amended complaint that it was “an unincorporated association formed by five law students, ... in September, 1971.

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Bluebook (online)
412 U.S. 669, 93 S. Ct. 2405, 37 L. Ed. 2d 254, 1973 U.S. LEXIS 20, 3 Envtl. L. Rep. (Envtl. Law Inst.) 20536, 5 ERC (BNA) 1449, Counsel Stack Legal Research, https://law.counselstack.com/opinion/united-states-v-students-challenging-regulatory-agency-procedures-scrap-scotus-1973.