Csx Transportation v. United States of America and Interstate Commerce Commission, Potomac Electric Power Company, Intervenor

HARRY T. EDWARDS, Circuit Judge,

dissenting:

Under the so-called Chevron test, a federal court reviewing an agency’s interpretation of a statute is required to engage in a two-step analysis. “[0]ur first job is to try to determine congressional intent, using ‘traditional tools of statutory construction.’ If we can do so, then that interpretation must be given effect....” NLRB v. United Food & Commercial Workers Union, Local 23, 484 U.S. 112 , 108 S.Ct. 413, 421 , 98 L.Ed.2d 429 (1987) (quoting INS v. Cardoza-Fonseca, 480 U.S. 421, 446 , 107 S.Ct. 1207, 1220-21 , 94 L.Ed.2d 434 (1987)). If, on the other hand, “the statute is silent or ambiguous with respect to the specific issue,” Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 843 , 104 S.Ct. 2778, 2782 , 81 L.Ed.2d 694 (1984), then the question for us becomes whether the agency’s construction of the statute is “permissible,” id., that is, one that is “rational and consistent with the statute.” United Food & Commercial Workers, 108 S.Ct. at 421 ; accord International Union, United Mine Workers v. Federal Mine Safety & Health Review Comm’n, 840 F.2d 77, 81 (D.C.Cir.1988).

*1445 Chevron’s mandate is perplexing, because the rule of the case appears to violate separation of powers principles:

The American constitutional system is based in part upon conceptions of limited and separated organs of government. The system places significant reliance upon one of those organs, the judiciary, to prevent the other two from infringing citizens’ rights by exercising powers that were not conferred by the basic charter. Similarly, with respect to administrative agencies, “the function of the courts is not one of review but essentially of control — the function of keeping [them] within their statutory authority.”

Of course, if Congress has delegated authority to determine what the statute means, the agency’s interpretation, if reasonable, must be accepted by the courts. But the vital pre-condition for this conclusion is the court’s determination that the agency has been delegated the power to define the statute. To reason, as Chevron does, that silence or ambiguity confers that kind of interpretative authority on the agency is unacceptable, for it assumes the very point in issue and thus “fails to distinguish between statutory ambiguities on the one hand and legislative delegations of law-interpreting power to agencies on the other.”

Byse, Judicial Review of Administrative Interpretation of Statutes: An Analysis of Chevron’s Step Two, 2 Admin.L.J. 255, 261 (1988) (footnotes omitted). As Judge Leventhal aptly noted in his opinion in Ethyl Corporation v. EPA, 541 F.2d 1 (D.C.Cir.) (en banc), cert. denied, 426 U.S. 941 , 96 S.Ct. 2992 , 2993, 49 L.Ed.2d 394 (1976), “Congress has been willing to delegate its legislative powers broadly — and courts have upheld such delegation — because there is court review to assure that the agency exercises the delegated power within statutory limits.... ” 541 F.2d at 68 (Statement of Leventhal, J.) (footnote omitted). See also Sunstein, Constitutionalism After the New Deal, 101 Harv.L.Rev. 421, 465-69 (1987).

The Chevron test is hard to square with the foregoing traditional views of the court’s role in cases of statutory interpretation. Nonetheless, the rule of Chevron is the law of the land, and it must be followed until the Supreme Court instructs otherwise. Unless congressional intent is clear, a court is now bound to defer to the agency’s reasonable interpretation of its governing statute, even if the court believes that another interpretation is preferable. The court cannot avoid deferring to the agency simply by purporting to apply Chevron and finding that the statute is clear when it is not.

In the instant case, the majority purports to find a clear congressional intent to allow rail carriers to take profit-enhancing “ZORF” increases on all rates, including maximum rates prescribed by the ICC prior to the enactment of the Staggers Act. Thus, the majority does not reach the second step under Chevron of deferring to the Commission’s reasonable construction of the Act. In reality, however, the majority is not applying the Chevron framework at all. Rather, the majority has adopted what it believes to be the most reasonable interpretation of the ambiguous provisions of the Staggers Act, without regard to the permissibility of the construction adopted by the agency.

If it were my choice to make, I would readily embrace the majority’s approach. With due respect to the views expressed by the Court in Chevron, I still believe that, in the final analysis, it is the court, not the agency, that should be responsible for construing congressional statutes, using traditional tools of statutory construction. However, this approach has been rejected by the Supreme Court in Chevron and its progeny. Because I find that the Staggers Act is not clear and that the ICC’s interpretation of the Act is a reasonable one, I respectfully dissent.

I.

In this case, we are asked to determine the relationship between two separate provisions of the Interstate Commerce Act (“ICA”), as amended by the Staggers Act. Under ICA section 10704(a)(1), if the ICC *1446 finds that a rail carrier’s rates are unreasonable, the Commission has the authority to prescribe a maximum future rate, and “the affected carrier may not publish, charge, or collect a different rate.” 49 U.S.C. § 10704 (a)(1) (1982). This provision was left completely unchanged and unqualified by the Staggers Act. Under the “ZORF” provision of the Staggers Act, however, a rail carrier may, without prior ICC approval, “increase any rate over which the Commission has jurisdiction” by any amount within the zone of rate flexibility prescribed by the statute. Id. § 10707a(c)(l), (d)(1). These two provisions are in clear conflict, because section 10704(a)(1) prohibits a carrier from raising a prescribed rate, while section 10707a gives carriers the authority to raise “any rate” without Commission approval.

The majority, by focusing on the language of section 10707a alone, finds that the statute unambiguously permits carriers to impose ZORF increases on all rates, including prescribed rates. Yet, “statutory meaning is of course to be derived, not from the reading of a single sentence or section, but from consideration of an entire enactment....” Don’t Tear It Down, Inc. v. Pennsylvania Ave. Dev. Corp., 642 F.2d 527, 533 (D.C.Cir.1980). In order to determine under Chevron whether congressional intent is clear, “the court must look to the particular statutory language at issue, as well as the language and design of the statute as a whole.” K-Mart Corp. v. Cartier, Inc., — U.S. -, 108 S.Ct. 1811, 1817 , 100 L.Ed.2d 313 (1988) (emphasis added). As even the majority acknowledges, there is a “statutory conflict” between sections 10704(a)(1) and 10707a, and this conflict renders the “any rate” language of section 10707a ambiguous.

The majority resolves the conflict between the two provisions by holding that section 10707a has implicitly repealed section 10704(a)(1) to the extent that the two sections conflict. Yet, it is a contradiction in terms to say that Congress expressed a clear and unambiguous intent to effect an implied repeal. Moreover, repeals by implication “are strongly disfavored on the ground that Congress is normally expected to be aware of its previous enactments and to provide a clear statement of repeal if it intends to extinguish an extant remedy.” Samuels v. District of Columbia, 770 F.2d 184 , 194 n. 7 (D.C.Cir.1985); accord Chemical Mfrs. Ass’n v. EPA, 673 F.2d 507, 512 (D.C.Cir.1982) (the implied repeal argument is “an argument that rarely succeeds”). Rather, the court has a “duty ‘to give effect, if possible, to every clause and word of a statute,’ Montclair v. Ramsdell, 107 U.S. 147, 152 , 2 S.Ct. 391, 394 , 27 L.Ed. 431 [ (1882) ], rather than to emasculate an entire section_” United States v. Me-nasche, 348 U.S. 528, 538-39 , 75 S.Ct. 513, 520 , 99 L.Ed. 615 (1955). The majority ignores these principles, undermining the ICC’s power under section 10704(a)(1) to prevent carriers from taking profit-enhancing increases when the Commission has already prescribed a maximum rate, simply in order to preserve a literal reading of the “any rate” language of section 10707a.

The majority supports its conclusion that section 10707a unambiguously allows ZORF increases on prescribed rates by determining that there is no “clearly expressed legislative intent to the contrary” and that “nowhere in section 10707a is it suggested that a carrier must obtain prior Commission approval before taking a ZORF increase on prescribed rates.” Even if this observation were accurate, however, it would prove only that “Congress has not directly addressed the precise question at issue,” Chevron, 467 U.S. at 843 , 104 S.Ct. 2782 , and thus that the statute is ambiguous, not that Congress addressed the question and resolved it in favor of the interpretation urged by the majority.

In fact, however, the legislative history indicates that Congress did consider the interaction between sections 10704(a)(1) and 10707a, and that Congress rejected the majority’s interpretation. As passed by the Senate, the Staggers Act would have amended section 10704(a)(1) to qualify the prohibition on raising prescribed rates, by stating that carriers may not change a prescribed rate “subject to the limitations of sections 10701 and 10701a of this title.” S.1946, 96th Cong., 2d Sess. § 109, 126 *1447 Cong.Rec. 7294, 7297 (1980). Under the Senate bill, the ZORF provisions were added to section 10701, rather than being made into a new section 10707a as in the final bill. See id. § 104, 126 Cong.Rec. at 7295. Thus, the Senate version would have explicitly allowed carriers to impose RCAF and ZORF increases on previously prescribed rates. This qualification of section 10704(a)(1) was deleted in conference, however, further indicating that Congress did not clearly intend to allow ZORF increases on prescribed rates.

II.

Since congressional intent on this issue is not clear, this court must defer to the ICC’s interpretation of the statute if it is reasonable. I conclude that it is.

First, the ICC’s construction is consistent with the long established rule of statutory construction that “gives precedence to the terms of the more specific statute where a general statute and a specific statute speak to the same concern, even if the general provision was enacted later.” Simpson v. United States, 435 U.S. 6, 15 , 98 S.Ct. 909, 914 , 55 L.Ed.2d 70 (1978). To the extent that there is a conflict between sections 10707a and 10704(a)(1), the latter must take precedence over the former, because 10704(a)(1) is a specific provision dealing with a very small category of prescribed rates only, whereas 10707a is a general provision dealing with all rates. The majority refuses to consider this factor, because the Commission did not rely on it in its decision. The majority’s reasoning, however, is inapposite. While on appeal we normally do not consider justifications for agency action that were not relied on by the agency below, we certainly are not precluded from looking to traditional tools of statutory construction in order to assess the reasonableness of an agency’s construction of a statute.

In addition, the ICC’s interpretation is consistent with Congress’ intent in passing the Staggers Act. As this court noted in Coal Exporters Ass’n v. United States, 745 F.2d 76 , 81 & n. 6 (D.C.Cir.1984), cert. denied, 471 U.S. 1072 , 105 S.Ct. 2151 , 85 L.Ed.2d 507 (1985), the Staggers Act was a delicate political compromise, intended to provide greater flexibility to carriers while continuing to protect shippers from unreasonable rates imposed by carriers with monopoly power. Although Congress evidenced faith in marketplace competition as the best regulator, it also made it “crystal clear,” S. Rep. No. 96-470, 96th Cong., 1st Sess. 7 (1979), that the ZORF and RCAF provisions should not be interpreted to frustrate continued protection for shippers, where appropriate.

The instant case is precisely the type of situation in which Congress intended the ICC to be particularly vigilant, and the Commission’s interpretation of the Staggers Act is consistent with this intent. As the Senate committee report noted, the rates on coal, the commodity involved in the present case,

are of particular concern in view of the many substantial increases imposed on this traffic in the last several years.... [I]t is the Committee’s intent that the Commission play an active role in insuring that such traffic bears its fair share of costs and that higher rated captive traffic is not unduly burdened.

Id. PEPCO’s Dickerson coal traffic is such “captive traffic.” PEPCO v. Penn Central Transp. Co., 359 I.C.C. 222 , 240 (1977). In light of Congress’ clear intent to protect shippers in PEPCO’s position, it was a permissible construction of the statute to determine that, when the Commission has already determined that a carrier’s past rates were unreasonable and has prescribed a maximum rate, 1 the ICC retains *1448 the ability to enforce those rates unless the carrier proves that a change in the situation justifies a profit-enhancing increase.

The majority expresses concern that the Commission’s interpretation would lead to the very regulatory delay that Congress sought to avoid in the Staggers Act. However, the possibility of delay is of less concern when the carrier desires to impose a profit-enhancing increase than when it needs the increase in order to keep up with inflation. Under the Commission’s interpretation, carriers could take inflation-based RCAF increases even on prescribed rates without any delay. Only if the carrier wished to increase its profits on a rate that the Commission had already determined to contain the maximum permissible profit would the carrier be forced first to seek Commission approval. The Staggers Act expresses a clear congressional intent to deny ZORF increases to carriers that already are receiving adequate revenues, and it was fully consistent with the statutory scheme to limit a carrier’s ability unilaterally to impose profit-enhancing ZORF increases in the small class of cases in which the Commission has found it necessary to prescribe a maximum rate.

III.

Because I believe that the statute is ambiguous and that the agency’s interpretation is a reasonable one that comports with congressional intent, I would deny the petition for review.

. As the ICC acknowledges, the rates at issue in this case could not be found unreasonably high today using the criteria that the ICC applied in 1977. However, CSX remains free to petition the Commission to vacate the rate prescription if it can show that it is entitled to a higher rate under current standards. See Burlington N. R.R. Co. v. ICC, 679 F.2d 934, 940 (D.C.Cir.1982) (noting that it would be "wholly arbitrary and capricious” for the ICC to refuse to vacate a rate prescription that could not be found unreasonable after enactment of the Staggers Act). In fact, the ICC has shown its willingness to vacate rate prescriptions based on the same standard *1448 as in CSX’s case. See Consolidated Rail Corp., 364 I.C.C. 615 , 619 (1981) (finding that the rate prescription could not be imposed under current standards and that the prescription was inconsistent with the Staggers Act’s policy of giving carriers flexibility to earn adequate revenues).