Brief for Appellee — Aberdeen & Rockfish R. Co. v. Students Challenging Regulatory Agency Procedures (SCRAP)

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IN THE

Supreme Court of the United States

Ocroser Term, 1974

Nos. 73-1966 and 73-1971

UNITED STaTEs OF AMERICA and INTERSTATE COMMERCE

COMMISSION, Appellants

Vv.

STUDENTS CHALLENGING REGULATORY AGENCY

Procepures (8.C.R.A.P.) Ev AL.. Appellees

ABERDEEN AND RockrisH Rarroap CoMPANY, Er AL...

Appellants

Vv.

STUDENTS CHALLENGING REGULATORY AGENCY

Procepurgs (S8.C.R.A.P.) Er At... Appellees

On Appeal from the United States District Court for the

District of Columbia

BRIEF FOR APPELLEES NATIONAL ASSOCIATION

OF RECYCLING INDUSTRIES, INC., COMMERCIAL

METALS CoO., I. V. SUTPHIN CO. AND

FRAI’KEL BROS. & CO. INC.

Epwarp L. MERRIGAN

Attorney for Appellees

NART et al.

888 17th Street, N. W.

Washington, D. C. 20006

Press or Byron S. ADAMS Printine, Inc., WasHrncton, D. C.

TABLE OF CONTENTS

ee ee ne ee ee ee

pL RE ET ee Oe Fe eRe EY SNe

Se OED 6 k.k vdvcecntcccccussscsdécedevic

CouNTER-STATEMENT OF THE CASE .................-.

BORED ind un o6hnddencedtbedeesdhneckesésaecnéescs

I. This Court Lacks Jurisdiction Over Appellants’

Il.

Direct Appeals Under 28 U.S.C. § 1253. The

Appeals Should Therefore Be Dismissed .....

The District Court Clearly Had Jurisdiction To

Determine Whether the Commission Had Com-

plied With the National Environmental Policy

Act and To Grant Appropriate Relief When It

Found The Commission Had Not .............

III. The Commission’s Post-Mortem Environmental

IV.

Impact Statement, Drafted for the First Time

Five Months After the Commission’s Final Re-

port and Order of October 4, 1972 and There-

after Issued in Final Form Seven Months After

the Commission’s Said Final Report and Order,

Is Totally in Violation of NEPA and Is Thus

ee GD GHEE oneccccnndédesedossdsecduddus

The Commission’s Final Environmental Impact

Statement, Issued After the Commission’s

Order of Investigation of November 7, 1972,

Without a Hearing and Without the Right

of Confrontation, Is Unconstitutional and Vio-

lative of the Interstate Commerce Act, the Ad-

ministrative Procedures Act and the CEQ Guide-

lines Under the National Environmental Policy

BD 000b09000608dsene cesakecestecedseseuséss

. The Commission Has Constantly Exhibited Hos-

tility and Contempt for the Requirements of

NEPA, Both in This Case and in Other Statu-

tory Proceedings. Accordingly, the District

Court Properly Exercised Its Judicial Power To

ii Table of Contents Continued

Page

Review Not Only the Form of the Commission’s

Belated Asserted Compliance With NEPA in

This Case, but the Substance As Well ......... 44

VI. The Nation’s Urgent Interests in Resouree Con-

servation, Resource Recovery, Restriction of

Unnecessary Foreign Imports of Critical Mate-

rials and Energy Conservation Will All Be

Seriously Damaged If This Court Is Misled by

Some of the False Assertions Presently Ad-

vanced by Appellants in This Case. .......... 51

(1) The Commission’s Assertion That the Basic

Rate Structure For All Recyclable Com-

modities Is the Subject of Investigation

Se GPO cc ncdndecdéccnasciceéesins 51

(2) The Government’s Assertion That Constant

Rate Increases for Recyclables Are Neces-

sary Because the Railroads Are in Desper-

ate Financial Condition .................. 52

ee ee de geebeaueduansbeussewsa 54

pS Ee nr EE Ee eer la

EEE én ccudecsstbssenddeds esaesbbeossekonns 3a

TABLE OF CITATIONS

CAsEs:

Alabama Power Co. v. United States, D.C.D.C. 1969, 316

F. Supp. 337, affd. by divided court, 400 U.S. 73... 26

Algoma Coal & Coke Co. y. United States, D.C.E.D. Va.,

Bee BS Fe BU, GE occccccdcccccescoceesecces 26

Atchison, Topeka & Santa Fe Railway Co. v, United

States, 284 U.S. 248, 262 (1932) ........cccccess 40

Baltimore & O.R.R. v. U.S., 386 U.S. 372 (1967) ...... 23

Calvert Cliffs’ Coordinating Commission v. United

States Atomic Energy Commission, 146 U.S. App.

ee 25, 26, 28, 46

City of New York v. United States, E.D.N.Y., 337 F.

Ps cittadudddacckeucanesdddiewnade 28, 44, 45

City of New York v. United States, U.S.D.C. E.D.N.Y.,

Se We ES GP Seecedccsecdsecccceseses 39

Table of Contents Continued iii

Page

Committee for Nuclear Responsibility, Inc. v. Seaborg,

_ 149 U.S. App. D.C, 380, 463 F.2d 783 ........... 25, 26

ae Columbia v. Volpe, 3 E.R.C. 1143 (D.C. Cir.

Electronic Industries Assn. v. United States, D.C. D.C.

1970, 310 F. Supp. 1286, affd. per curiam, 401

ie oe anheueses sbenndeecunnkéuedumassnnececs 26

Environmental Defense Fund vy. Corps of Engineers,

E.D. Arb., 1972, 342 F. Supp. 1211, 1214 ........ 46

Goldberg v. Kelly, 397 U.S. 254, 90 S.Ct. 1011 (1970)

36,

Greene County Planning Board vy. Federal Power Com- “

mission, CCA 2, 1972, 455 F.2d 41s, cert. denied,

Se Ge CR, BS Cee ccccccoscces 28, 29, 30, 31, 38, 44, 46

Gunn v. University Committee to End the War, 399

U.S. 383, 391, 90 S. Ct. 2013 (1970) ............. 23

Harlem Valley Transportation Association et al v.

Stafford, Chairman, Interstate Commerce Com-

mission, CCA 2, 1974, 500 F.2d 328 ............ 29, 46

Hutcherson v. Lehtin, 399 U.S. 522, 90 S. Ct. 2238

DE 6udaeseanddaenddennsedeehuséudnontedane 23

Interstate Commerce Commission v. Louisville & Nash-

ville Railroad, 227 U.S. 88 (1913) .............. 37, 38

Koppers Co. vy. United States, D.C. W.D., Pa. 1955,

et is SE EP ntkducdentidcunewscanekasenans

Mitchell v. Donovan, 398 U.S. 427, 90 S. Ct. 1763, 26

Ss % § fF — Se eer rey 23

Northeast Airlines, Inc. vy. Civil Aeronautics Board,

CCA 5, 1965, 345 F.2d 484, cert. denied 382 U.S.

Sy I OU 42

Public Service Commission of Missouri vy. Brashear

Freight Lines, Inc., 306 U.S. 204, 59 S. Ct. 480, 83

i Ce CD sctecneehedecasdanddsdsdunsons 23

Rockefeller v. Catholic Medical Center, 397 U.S. 820, 90

S. Ct. 1517, 25 L.Ed. 2d 806 (1970) ............. 23

SCRAP v. United States, 346 F. Supp. 193 ..... eeeen 18

SCRAP vy, United States, 412 U.S. 669 (1973) ........ 20

SCRAP vy. United States, 371 F. Supp. 1291 ....20, 21, 22,

23, 41, 50

Sierra Club v. Froehlke, D.C. Wis., 1972, 345 F. Supp.

SEE sn endssneckocsedcdsdsedensendscsiavens 47

United States vy. Allegheny-Ludlum Steel Corp., 406

ek HT ED kd sb bennceedduneneenevendeunad 23, 24

iv Table of Contents Continued

Page

ICC Ex Parte Rate Increase Proceepinas:

I i i iad ee ee ela 51, 52

Ex Se SO EE peda sevusvacdéeukenks 2, 17, 18, 19, 20,

24, 27, 31, 35, 45

oo agi che i vee 6 eas wees 7

I A a re 6, 7,8

SN i a oe 03

STATUTES:

Administrative Procedure Act:

5 USC, Section 554(a)(c) ........cccccccccecs 40, 41, 42

EE eee ccc eb Lica cepa cuneuuued 40, 41, 42

en ale ie ee ee 40, 41, 42

EE Er eee manne le 41

Interstate Commerce Act:

Section 15(7), 49 USC § 15(7) ............ 2, 3, 26, 40, 54

National Environmental Policy Act:

Section 101 et seq., 42 USC § 4331 et seq. .......... 2

Section 162(2)(c), 42 USC § 4332 (2) (e) ....... 2, 3, 16

ad ar NN a 2, 22, 23, 24

Sa I ar sa ara ee 25

EE AY Pony Prom e nm nts 15

Supreme Court, 57 FRD 573 aS 24

Council on Environmental Quality Guidelines, 40 CFR,

§§ 1500.7(d), 1500.14, January 28,1973 ......... 40, 43

MISCELLANEOUS:

Mandate of the National Environmental Policy Act:

The Preparation of Environmental Impact State-

ments, 41 Journal of the Bar Association of the

District of Columbia, No. 1, January-June, 1974 .. 29

Federal Maritime Commission Docket 72-35, Pacific

Westbound Conference—Waste Paper and Wood-

pulp Investigation, Record .................... 10

IN THE

Supreme Court of the United States

OcToBER TERM, 1974

Nos. 73-1966 and 73-1971

UNITED STATES OF AMERICA and INTERSTATE COMMERCE

COMMISSION, Appellants

Vv.

STUDENTS CHALLENGING REGULATORY AGENCY

Procepures (8.C.R.A.P.) Er Ax., A ppellees

ABERDEEN AND ROCKFISH RAILROAD Company, Er AL.,

Appellants

Vv.

STUDENTS CHALLENGING REGULATORY AGENCY

ProcepurES (8.C.R.A.P.) Er At., Appellees

On Appeal from the United States District Court for the

District of Columbia

BRIEF FOR APPELLEES NATIONAL ASSOCIATION

OF RECYCLING INDUSTRIES, INC., COMMERCIAL

METALS CO., I. V. SUTPHIN CO. AND

FRANKEL BROS. & CO. INC.

OPINIONS BELOW

The opinion of the three-judge district court is

reported at 3871 F. Supp. 1291. The Interstate ‘“om-

merece Commission’s opinion and order issued October

4, 1972 is reported at 341 LC.C. 290. The Com-

mission’s final environmental impact statement in Er

Parte 281 is reported at 346 LC.C. 88. The Commis-

sion’s order of May 2, 1973 is not reported, but can be

found in Appendix E to the Government’s Jurisdie-

tional Statement in this case.

JURISDICTION

Appellees contend this Court has no jurisdiction

over the two direct appeals here involved under the

provisions of 28 U.S.C. § 1253, and they urge the Court

to reconsider appellees’ earlier motion to dismiss for

lack of direct appellate jurisdiction.

QUESTIONS PRESENTED

1, Whether appellants are entitled, under 28

U.S.C, § 1253, to maintain a direct appeal to this Court

from a district court order which refused to grant

injunctive relief and where no appeals have been taken

by those who were denied injunctive relief.

2. Whether the district court had jurisdietion to

review orders issued by the Interstate Commerce Com-

mission under 49 U.S.C, §15(7) in response to com-

plaints alleging that said orders violated provisions of

another federal statute, the National Environmental

Policy Act (NEPA), 42 U.S.C. § 4331 et seq.

5. Whether the Interstate Commerce Commission,

which has an established record of adamantly refusing

to comply with the plain requirements of Section

102(2)(C) of the National Environmental Poliey Act

(NEPA), 42 U.S.C. § 4332(2)(C), may lawfully ignore

those statutory directives by arbitrarily failing and

refusing to prepare any acceptable or sustainable En-

vironmental Impact Statement prior to the rendition

of its final decision and order in a nationwide freight

‘ate Increase proceeding, wherein it expressly approved

another across-the-board, unreasonable, diserimina-

tory, pyramidie increase in transportation rates for

recyclable wastepaper, textiles and scrap metal.

4. Whether the Interstate Commerce Commission

may lawfully defeat and cireumvent the plain require-

ments of Section 102(2)(C) of NEPA by waiting until

several months after it has already rendered a final de-

cision and order in a nationwide freight rate increase

proceeding, wherein it expressly approved another

across-the-board increase in transportation rates for

recyclable commodities, to prepare for the first time, a

post-mortem Environmental Impact Statement, the sole

purpose of which is to rationalize, nune pro tune, the

rate increase theretofore approved seven months be-

fore.

Dd. Whether the Interstate Commerce Commission,

which is obliged by Section 15(7) of the Interstate

Commerce Act, 49 U.S.C, § 15(7), to hold meaningful

hearings to determine the ‘“/awfulness’’ of proposed

rate increases, may properly issue a final order approv-

ing such rate increases and only thereafter consider

the “lawfulness” of such approved increases under the

National Environmental Policy Act in post-decision

proceedings that flatly deny the right to any hearing on

the new issues thus belatedly raised.

6. Whether in a case of this nature where the Com-

mission has constantly exhibited hostility to the require-

ments of the National Environmental Policy Act, the

district court properly exercised its judicial power to

review not only the form of the Commission’s alleged,

belated compliance with NEPA, but the substance of

that alleged compliance as well; and where the court

found the Commission's alleged compliance to be seri-

ously inadequate or capricious, was it proper for the

court to remand the case to the Commission for further

administrative proceedings consistent with the court’s

decree.

COUNTER-STATEMENT OF THE CASE

Appellee National Association of Reeveling Indus-

tries, Inc. (NARI) is the trade association for the

wastepaper, textile and non-ferrous metals recycling in-

dustries. NARI intervened as a plaintiff in the ease

below to represent the interests of its 700 members, all

of whom engage in the collection, processing or manu-

facturing utilization of the aforementioned recyclable

commodities.

Appellees Commercial Metals Co. of Dallas, Texas,

[.V. Sutphin Co. of Cincinnati, Ohio, and Frankel Bros.

& Co. Ine. of Rochester, New York also intervened as

plaintiffs in the district court. Each is engaged in the

recyeling of solid waste materials which, if not so

utilized, would have been burned, buried or otherwise

disposed at publie expense, with obvious adverse effects

on the environment; and all, of course, use the nation’s

railroads to ship recyclable commodities.

Recyclable wastepaper utilized by NARI’s member-

ship competes with virgin pulpwood or woodpulp in the

nation’s paper and boxboard manufacturing industries.

Similarly, reeyelable non-ferrous metals (aluminum,

copper, lead, zine, etc.) and virgin non-ferrous ores and

concentrates are competing raw materials in metal man-

ufacturing, while recyclable textiles compete with vir-

gin fibers throughout the textile manufacturing indus-

try. By and large, these competing virgin and reeyel-

able commodities are interchangeable in manufactur-

ing processes, and where they are not completely sub-

stitutable, manufacturers use one as a supplement for

the other to produce various types and grades of goods

and products. 4

Almost without exception, the virgin commodities in

each of the industries mentioned above are able to de-

mand raw material prices far in excess of those manu-

facturers are willing to pay for competing recyclable

counterparts. Pulpwood or woodpulp, for example, is

typically sold at prices far higher that those simultane-

ously paid for competing wastepaper, and the same

situation applies to competing sales of virgin ores and

recyclable scrap, and those involving virgin and re-

cyclable textiles.

Thus, from the very outset, one is tempted automa-

tically to conclude that certainly the high-priced virgin

commodities must be paying higher transportation

‘ates than those exacted for the movement of compet-

ing, low-priced recyclable commodities. | Unfortu-

nately, however, the record in this case demonstrates

that this is not true. On the contrary, the record before

this Court shows that the railroad freight rate system

administered by the Interstate Commerce Commission,

in partnership with the nation’s railroads, has created

an abominable, incongruous situation where environ-

mentally-charged, low-priced recyclable commodities

have been compelled, for a long period of years, to pay

rates far higher than these charged for the transporta-

tion of competing virgin commodities, and that the

situation is getting worse with each passing year. In

this connection, the record shows: '

Rate Increase Case Year ©) Inerease

Ex Parte 281 1972 2.5°. surcharge,

_ plus 3%

Pulp v. Wastepaper

(1) In 1959, the average nationwide rates

eharged by the railroads for the transportation of

competing pulp and wastepaper were:

Pulp l7.4¢ per ewt,

Wastepaper dloe per ewt.

Net Difference: 13.9¢ per ewt. in favor

of virgin pulp.

(2) By 1971, as a result of © rate increases

sought by the railroads and approved by the Com-

mission in a series of Ex Purte proceedings, the

average nationwide rates for the transportation of

these two commodities had changed as follows:

Pulp 24.4¢ per ewt.

Wastepaper 43.06 per ewt.

Net Ditterence: 18.6¢ per ewt. in favor

of virgin pulp.

(3) Since 1971, the railroads have continued

to seek, and the Commission has either approved

or is in the process of studying, the following addi-

tional © rate increases for the transportation of

these competing commodities (in some cases, how-

ever, pulp was expressly exempted from any in-

crease Whatsoever) :

* See Commission's Environmental Impact Statement, Ex Parte

251, App. 146, 147.

Ex Parte 295, Sub. 1 1973 3%

Ex Parte 299 1974 2.8%

Ex Parte 303 1974 33° plus 10%?

Ex Parte 310 1975 7%*

When and if the two last mentioned ©; increases

go into effect as have the others mentioned above,

the competitive trausportation situation for com-

peting pulp and wastepaper will be as follows, on

an average nationwide rate basis:

Pulp s0¢ per ewt.

Wastepaper d8¢ per ewt.

Net Difference: 28¢ per ewt. in favor

of virgin pulp.

Non-Ferrous Ores y. Metal Scrap

The picture is very much the same for competing

non-ferrous ores or concentrates and metal scrap. The

record before the Court demonstrates that—

(i) In 1959, the virgin ores enjoyed a favor-

able 13.3¢ per ewt. average nationwide rate differ-

ential ;

(ii) By 1971, the differential in favor of the

virgin commodity had grown to 17.7¢ per ewt.; and

(iii) In 1975, the differential in favor of the

virgin commodity will expand to 34¢ per ewt., when

*The Commission authorized the railroads to put the 10% in-

crease into effect by individual tariff filings, and the railroads, as

a group, are now proceeding to put the increase into effect.

*The railroads’ application is now before the Commission for

action.

and if the Ev Parte 305 and 310 inereases are put

into effect as aforesaid.’

The severe adverse impact of these constantly-ex-

panding rate disparities on the ability of recyclable

commodities to compete with their virgin competitors In

the marketplace is not fully understood until one real-

izes, as conceded by the Government in its brief,® that

(a) transportation costs often far exceed the price paid

for low-value recyclable wastepaper, textiles and serap,

and (b) manufacturing plants are traditionally lo-

eated much nearer to the mines and forests where vir-

gin commodities are found than to the large metropoli-

tan areas where wastepaper, reevelable cans and textiles

are collected from the solid waste stream—meaning, of

course, that longer travel distances necessarily impose

greater transportation costs, at disproportionately

higher rates, on the competing recyelable materials.

This explains in large part, therefore, why our na-

tional recveling rates have actually declined in recent

vears and are threatened with further deterioration.

Statisties compiled by the Environmental Protection

Agency and made available to the Commission demon-

strate that the following national recycling rates inter

via are already dangerously low—

Current Reeveling

Commodities Rates

Textiles 4°

Zine 13%

Aluminum 18%

Wastepaper 19%

‘Similar inexplicable rate disparities exist in favor of virgin

textile fibers, which, as aforesaid, compete with recyclable textile

materials.

®> See Government's brief, pg. 30.

6 ee

In wastepaper, for example, the EPA statisties show

that, as recently as 1952, our national recycling rate

was 27‘; and that in other countries such as Japan, the

present recycling rate is far higher. Moreover, while

our recycling rates have been declining, the national

production of solid waste materiais has been dramat-

ically increasing. In textiles, EPA warns that while

the recycling rate is an almost meaningless 4°, the

production of textiles in this country will increase from

10 billion pounds in 1970 to 15 billion pounds in 1980,

The same statistics, which were available to the Com-

mission in this case, demonstrate that, in paper, the na-

tional production in 1969 was 58.5 million tons, less than

20% of which was recycled, leaving more than 42 mil-

lion tons to be burned or buried. By 1980, EPA and

the paper industry itself project that the consumption

of paper in the United States will grow to 80 million

tons a year, and that unless the current recyeling rate

of only 19°; is significantly increased, rather than de-

creased, our nation is in danger of being buried in its

own undisposed, unreeyeled trash.*

Simultaneously, of course, other agencies of the Fed-

eral Government have repeatedly warned the Congress

and the President that our nation is also in danger of

exhausting its supplies of precious ores and pulp in the

vears ahead, and that unless we reduce our voracious

industrial consumption of these virgin materials, we

will be forced to depend on foreign imports, particul-

®See also 1970 Report to Congress, President’s Council on En-

vironmental Quality, pgs. 105-108; June 1, 1972 Report to the

President, Citizens’ Advisory Committee on Environmental Qual-

ity; March, 1973 Report to EPA by National League of Cities-U.S.

Conference of Mayors, entitled ‘‘Cities and the Nation’s Disposal

Crisis."’

arly in metals—and, of course, increased dependence on

imports submits the United States to new foreign sour-

ces of cartel pricing and commodity embargoes, as well

as serious damage to our already strained balance of

payments position.’ In 1973, the Director of EPA’s

Office of Solid Waste Management deseribed the situa-

tion in pulp, in sworn testimony as follows:°

‘The U.S. Forest Service has predicted that by

the vear 2,000 a shortage of 20 billion board feet

of softwood saw timber will exist. ... The short-

age would reach 10 billion board feet by 1980.

1 million tons of wastepaper recycled saves 1.4

billion board feet of timber, which could to some

extent be used to offset this projected timber short-

age....

‘The land commitment required to produce an

annual timber growth sufficient to vield 1 million

tons of pulp per vear is roughly 2.5 million aeres.

‘**Each ton of paper reeyeled would allow land to

he used for other purposes, such as lumber pro-

duction or for a non-forestry function, such as ree-

reation.”’

7 See 1970 Report to Congress, President’s Council on Environ-

mental Quality, pg. 158; June 1973 Final Report to the Presi-

dent and the Congress, The National Commission on Materials

Policy: 1973 Report to Congress. Environmental Protection

Agency; March, 1973 Report to EPA by National League of

Cities-T.S, Conference of Mayors, entitled ‘‘Cities and the Nation’s

Disposal Crisis’: April 5, 1973 Report of The Couneil of State

Governments, entitled ** The States’ Roles in Solid Waste Manage-

ment’*; May 21, 1973 issue of Newsweek magazine, which stated:

‘‘As Government officials and environmentalists search for ways

to cut the drain on the nation’s natural resources, their thoughts

turn increasingly to recycling.’’

* Federal Maritime Commission Docket 72-35, Pacific Westbound

Conference--Waste Paper and Woodpulp Investigation, Record,

654-655.

NS Ee at et a ON OR a At

Similarly, in metals, the U.S. Geological Survey, in

a publication entitled ‘*United States Mineral Re-

sourees’’ (U.S. Geological Survey Paper No. 820

1973), geographically illustrated the dangerous ten-

deney of growing U.S. dependence on foreign basic

raw materials. In summary, the Survey reported that,

of the 13 basic industrial raw materials required, the

U.S. in 1950 was dependent on imports for more than

\% of its supplies of four — aluminum, manganese,

nickel and tin; by 1970, the list had increased to Sir,

as zine and chromium were added; by 1985, the U.S.

will depend on imports for more than 1 of its supplies

of nine basic raw materials—ak Tead and tungsten are

added to the list; and by the end of the century, our

country will depend on foreign sources for more than

14 of its supply of each of the 13 raw materials except

phosphate. (See also Geological Survey Circular No.

698, entitled ‘‘Mineral Resources: Potentials and

Problems’’)

Faced with these gloomy predictions, the Deputy As-

sistant Secretary of the Interior for Mineral Resources,

described the ultimate financial implications for the

United States in this manner: °

‘‘In the case of metals, the forecast indicates a

continuing rapid rise in demand, but at the same

time, a very small increase in supply from domes-

tie sources,

‘This results in a forecast that, in metals, reli-

ance on foreign sources will increase from Five

Billion in 1970 to an annual level of Sixteen Bil-

lion Dollars by 1985 and to a staggering Thirty-

Six Billion Dollars by the year 2000.

‘‘And that is what can happen unless something

is done.’’

***Minerals In The Future,’’ June 16, 1973 by Dep. Asst. Seere-

tary of the Interior Rigg; See also May 21, 1973 issue of News-

week Magazine.

Finally, in the vitally important energy area, the

Atomie Energy Commission and EPA conducted sepa-

rate studies which proved that industrial utilization

of recyclable commodities in place of competing virgin

materials results in vast savings of precious oil and gas.

In a report entitled ‘‘Energy In Solid Waste,”’ issued

in early 1975, the President’s Advisory Committee on

Environmental Quality stated, at page 5:

‘From an energy conservation point of view, the

... recycling of paper requires /ess than one-third

of the fossil fuel energy needed to make paper from

primary sourees. If, as EPA’s Second Report to

Congress indicates, it is technically possible to re-

cover half of the 70°, of the mixed wastepaper,

the recycling of this portion (13.7 million tons)

plus the 11.7 million tens of the easily separable

items could mean a fossil fuel energy saving equiv-

alent to 2.4 billion gallons of gasoline per year.

This exceeds the fuel energy equivalent of 2.2 bil-

lion gallons of gasoline that could be produced an-

nually by burning the same amount of trash paper.

... Thus, the reeyeling of paper—as opposed to

burning—would produce a net energy benefit of

about 200 million gallons of gasoline, enough to

drive 270,000 cars 10,000 miles a year at a rate of

13.3 miles per gallon.” (Italies supplied.)

In the metals area, the President’s Committee re-

ported, at page 7:

‘*... reeyeled aluminum requires /ess than 3°

of the energy needed to produce aluminum from

hauxite ore. Recycled steel requires less than half

the energy needed to produce steel from virgin ore.

When it is assumed that about 70% of the alumi-

num and 90°; of the steel in the 1971 National

Trash Can could be recovered, these factors trans-

late to a potential recycling energy equivalent sav-

rent cise nd < 5 peek ok eh Te en

ing of 226.5 trillien BTU’s or 1.8 billion gallons

of gasoline—enough to make nearly 7 million one-

way car trips per year from New York to San

Francisco on the basis of 13.3 miles per gallon.”’

(Italies supplied.)

Considering all of these divergent factors of urgent

national interest, it is hardly surprising that there has

been a mounting clamor from all levels of Federal,

State, and local government calling upon the Inter-

state Commerce Commission immediately to eliminate

the outrageous disparity in freight rates for the trans-

portation of recyclable commodities—and in each ease,

the Commission has been urged not to license any fur-

ther “ rate increases until the basie disparities here-

inabove described have been eliminated. In its June,

1972 Report to the President, his Citizens’ Advisory

Committee on Environmental Quality, chaired by

Laurence Rockefeller, stated, at pages 33-41:

‘Solid waste problems have become staggering.

There are few environmentally effective ways to

handle it. In a very short time urban areas will

have run out of landfill sites. ... Large-scale, low-

cost incineration which does not contribute to air

pollution is not yet available. ...

“*Freight Rates

‘Traditionally, freight rates established by the

Interstate Commerce Commission (ICC) for the

most part discourage recycling. ... (T)hey work

against recovery of solid waste. ...

‘*. .. In our 1971 Report, the Committee ree-

ommended that ICC initiate comprehensive reme-

dial action as soon as possible. We urge prompt

further action.”’

Similarly, in its March, 1973 report entitled ‘‘Cities

and the Nation’s Disposal Crisis,’ the U.S. Confer-

ence of Mayors states (at page 1-21):

‘The disposal of wastes and the conservation of

resources are two of the greatest problems to be

understood and solved by this nation in the latter

third of the century....

‘Recycling and resource recovery as a solution

is potentially the most environmentally cost effee-

tive and responsible approach. .. .

‘Discriminatory freight rates are . . . contrib-

uting te a disadvantaged marketing position for

recycled solid wastes. ... Before secondary mate-

rials handlers can buy and sell recycled municipal

wastes in a competitive market and before cities

can attempt rail haul of wastes to distant sites for

major land reclamation efforts, rate adjustments

must be made. Since regulatory rates of the In-

terstate Commerce Commission have exacerbated

the unfavorable economics of waste transport, fed-

eral action is required.”’

An almost identical position was expressed by The

Council of State Governments in its April 5, 1973 Re-

port entitled ‘*The States’ Roles In Solid Waste Man-

agement,’’ at pages 41-44, where it is stated:

“Freight Rates

‘*A substantial difference in freight rates

charged by rail carriers exists between virgin raw

materials and reeycled materials. ... Therefore,

freight rates established hy the Interstate Com-

merece Commission should be set in a manner that

does not give an advantage to either type of mate-

rial through set tariff charges.”’

In June, 1973, The National Commission on Mate-

rials Policy, established by Congress and appointed by

the President under Title IT of the Resource Recovery

Act of 1970, P.L. 91-512, issued its final report to the

President and the Congress, in which it too coneluded,

at pages 4D17, 18:

‘Rail freight rates are an important factor in

the economics of recycling. Transportation costs

are a large percentage of the total cost of using

some secondary materials. Often they determine

whether recycling can be profitable. Certain rail-

road freight rates appear to discriminate against

secondary materials in favor of virgin mate-

rials....

‘*Cost data available .. . indicate obvious dis-

crimination against scrap. Two different studies,

one published by the ICC and the other by the

Department of Transportation, show that shippers

of scrap materials pay freight rates that more than

cover the full costs of transportation service re-

ceived. Shippers of virgin materials often do not.

“We recommend that... the Federal Govern-

ment take the necessary steps to correct the exist-

ing freight rate differentials between secondary

and primary materials,”

More particularly, in Ex Parte 281, the case now be-

fore this Court, the President’s Council on Environ-

mental Quality, the Environmental Protection Agency,

the Departments of Commerce and Interior and the

General Services Administration all appeared to urge

the Interstate Commerce Commission not to grant any

further % increases in the existing rates for recyclable

commodities until the Commission first eliminates the

basic disparities in rates for competing virgin and re-

eyclable materials. Indeed, these agencies and appel-

lee NARI have been appearing in various ICC Ez

Parte rate increase proceedings since 1968 to assert

that same position, but the Commission repeatedly

turned a deaf ear and continued, as hereinabove dem-

onstrated, to raise the rates on recyclables in such a

manner that the net disparities in rates for competing

virgin and reeyelable commodities have automatically

been exacerbated and expanded beyond the limits of

reasonable explanation or understanding.

In 1969, while the Commission was proceeding in the

manner just described, Congress passed the National

Environmental Policy Act (42 U.S.C. § 4521 et seq.).

That statute states, at 42 U.S.C. § 4331(b):

‘*(b) In order to carry out the policy set forth

in this chapter, it is the continuing responsibility

of the Federal Government to use all practicable

means, cousistent with other essential considera-

tions of national policy, to improve and coordinate

Federal planus, functions, programs, and resources

to the end that the Nation mav—....

(6) enhance the quality of renewable re-

sources and approach the maximum attainable

recycling of depletable resources.”

Section 102 of NEPA (42 U.S.C. § 4332) thereupon

provides:

‘The Congress authorizes and directs that, to the

fullest extent possible:

‘“*(1) the policies, regulations, and publie

laws of the United States shall be interpreted

and administered in accordance with the policies

set forth in this chapter, and

**(2) all agencies of the Federal Govern-

ment shall—...

*“(C) include in every recommendation

or report on... major Federal actions sig-

nificantly affecting the quality of the human

environment, a detailed statement by the re-

sponsible official on—

(i) the environmental impact of the

proposed action,

(ii) any adverse, environmental effects

which cannot be avoided should the proposal

be implemented,

(iii) alternatives to the proposed ac-

tion,

(iv) the relationship between local

short-term uses of man’s environment and

the maintenance and enhancement of long-

term productivity, and

(v) any irreversible and irretrievable

commitments of resourees which would be

involved in the proposed action should it be

implemented.

‘*Prior to making any detailed statement, the

responsible Federal official shall consult with and

obtain the comments of any Federal ageney which

has jurisdiction by law or special expertise with

respect to the environmental impact involved.

Copies of such statement and the comments and

views of the appropriate Federal, State, and loeal

agencies, Which are authorized to develop and en-

force environmental standards, shall be made avail-

able to the President, the Council on Environ-

mental Quality and to the public... and shall ae-

company the proposal through the existing agency

review processes.”’

Accordingly, when the railroads filed an application

in late 1971 in Ex Parte 281—Increased Freight Rates

and Charges, 1972 requesting permission to add

another 2.5°% surcharge to the existing freight rates

for recyclable commodities, the original plaintiffs in

SE a a

this case (S.C.R.A.P.) demanded that the Commission

fully comply with the mandates of the new statute

NEPA before any detinitive action was taken on the

‘ailroads’ latest ‘, rate increase proposal. The Com-

mission, however, in line with the myopic attitude

toward environmental issues it had repeatedly exhib-

ited prior to the enactment of NEPA, failed to pre-

pare any draft or final Environmental Impact State-

ment as required by Section 102(2)(C)(2), and on

February 1, 1972, it issued a blunt order approving

the proposed 2.5°, surcharge, in which it simply

eoneluded (See 346 F. Supp. 193) :

‘the involved general increase will have no

significant adverse effect on... the quality of the

human environment within the meaning of the

Knuvironmental Policy Act of 1949.”

The railroads thereafter filed a further request in

Ex Parte 281 for another permanent ‘; rate inerease

of 4.1°7, such increase to become effective no earlier

than May 1, 1972. In the meantime, S.C.R.A.P. and

others were engaged in negotiations with the Commis-

sion in an effort to secure compliance with NEPA. On

February 8, 1972, S.C.LR.A.P. and 1CC entered into

a ‘‘Memorandum of Understanding’? whereby

S.C.R.A.P. agreed not to seek an injunction against

the Commission’s February 1 order in exehange for

ICC’s promise to ‘tissue a draft environmental state-

ment in accordance with the requirements of NEPA

and... otherwise to comply with the requirements of

the Act in Ex Parte 281.” (See 346 F. Supp. 193.)

In response to this pressure from S8.C.R.A.P. and

other appellees in this case, the Commission did issue

a six-page document called a ‘Draft Environmental

Impact Statement’’ on March 6, 1972. The Nature of

this draft statement, upon which the Commission now

relies so heavily in the Government’s brief before this

Court, was described by the district court, as follows

in its July 10, 1972 decision in this case (See 346 F.

Supp. 193, 194):

‘The Commission has never adequately ex-

plained why it bothered to prepare a draft state-

ment premised on facts it knew to be false, and

the reason why the ICC finds itself with the re-

sources necessary to prepare draft statements on

false hypotheses while it is assertedly without re-

sourees to prepare impact statements as required

by NEPA based on real facts remains one of the

enduring mysteries of this case.”

In any event, the extremely brief draft statement

prepared by the Commission in March, 1972 aimlessly

concluded (346 F. Supp. 194) :

‘*. .. it is impossible at this point in the investi-

gation to assess with any certainty the environ-

mental impact of assessment of, or failure to assess,

a surcharge on various recyclable commodities. ”’

The Commission thus allowed the 2.5‘. surcharge

to remain in effect allegedly without any knowledge

of the impact that action might have on the recyclables

involved, but it did solemnly promise the district court

a detailed final impact statement would be filed before

a final order was issued regarding the proposed per-

manent rate increases '’-—a promise it later broke, as

hereinbelow set forth.

At this point in the Av Parte 281 proceedings, ap-

pellee S.C.R.A.P. commenced the instant action. The

various legal proceedings that subsequently ensued are

See 346 F. Supp. 194.

detailed in this Cowrt’s earlier opinion in this case

reported at 412 U.S. 669 (1973). Indeed, while this

case was before this Court on the earlier appeal, the

Commission also promised the Chief Justice that it was

developing an impact statement under NEPA, and

that same would be issued before the final rate deci-

sion in Er Parte 281 was announced—but the Commis-

sion thereafter procecded likewise to ignore and violate

that further undertaking to this Court (See 371 F.

Supp. 1291, 1294). In fact, vo statement was prepared

for distribution to the parties or for consideration by

the Commission before the Commission issued its final

report in Ev Parte 281 on October 4, 1972, in which it,

approved the additional permanent rate increases for

the transportation of recyclables requested by the rail-

roads (See 371 F. Supp. 1294).

Once again, without the preparation of a NEPA

statement, the Commission arbitrarily concluded, in its

final report of October 4, 1972, that the new approved

% increases on recyclables ‘*would not significantly

affect the quality of the human environment”? (See 371

F. Supp. 1294). The Commission thus asserted (See

371 F. Supp. 1294)—

“there is thus no necessity for a formal impact

statement.”’

The Commission’s failure to prepare a NEPA state-

ment provoked vehement protestations from the Presi-

dent’s Council on Environmental Quality, the Envi-

ronmental Protection Agency, and appellees (See 371

F. Supp. 1294). CEQ, in its letter to the Commission,

felt that the Commission’s action was totally ‘‘unre-

sponsive to the language of our NEPA guidelines”

(See 371 F. Supp. 1294, ftn. 8).

Appellee SCRAP thereupon filed a motion for in-

junctive relief against the Commission. On the same

day, November 7, 1972, the Commission suddenly

shifted its position, and suspended until June, 1973,

the already-approved rate increases on reeyelables

(See 371 F. Supp. 1294). The Commission thereupon

announced that it intended to conduet a post-mortem

proceeding for the “limited purpose of further evalu-

ating ... the environmental effects of increased rail-

road freight rates and charges on .. . commodities

being transported for the purpose of reeyeling’’ (See

371 F. Supp. 1294).

On March 5, 1975, 5 months after the Commission

issued its final report of October 4, 1972 approving the

new rate increase on recyclables, the Commission finally

issued its post-mortem draft environmental impact

statement now before the Court in this ease.

Although numerous Executive agencies and depart-

ments, including EPA, CEQ, GSA, and the Depart-

ments of Commerce and Interior, filed extensive com-

ments that were highly critical of the Commission’s

draft statement and the arbitrary conclusions therein

contained, the Commission, on May 7, 1973, 7 months

after it issued its final report of October 4, 1972 ap-

proving the new rate increase for reevelables, issued

another post-mortem order whieh adopted the draft

impact statement theretofore issued without substan-

tial change (371 F. Supp. 1295).

Appellees thereupon filed motions for summary

judgment in the pending court proceedings, which

the district court granted on February 19, 1974.

The court vacated the Commission’s post-mortem

order of May, 1973 which put the previously-approved

EE SO

rate increases into effect, and it remanded the

ease to the Commission ‘‘for fulfillment of its NEPA

obligations”. The district court then proceeded to

rule (371 F. Supp. 1293):

‘*However, because of our uncertainty concerning

the meaning of the Supreme Court’s decision last

term in Atchison, Topeka d Santa Fe R. Co, V.

Wichita Bourd of Trade, 412 U.S. 800 (1973), we

refrain from issuing an injunction restraining the

railroads from collecting the increased rates pend-

ing the Conumission’s reconsideration,”

Appellant railroads and the Government appealed.

Injunctive relief having been completely denied, how-

ever, shippers of recyclable commodities have been

forced to pay another $8 to 10 million a year sinee

June, 1973 in new, arbitrary rate increases while this

case has proceeded through the courts.

ARGUMENT

This Court Lacks Jurisdiction Over Appellants’ Direct Appeals

Under 28 U.S.C. § 1253. The Appeals Should Therefore

Be Dismissed.

soth Government appellants and railroad appellants

rely exclusively on 28 U.S.C. § 1253 to support their

direct appeals to this Court from the district court’s

judgment of February 19, 1974." But, 28 U.S.C.

§ 1253 allows direct appeals to this Court on/y from

judgments ‘‘granting or denying ... an interlocutory

or permanent injunction”’,

These two appeals, however, are not appeals ‘from

an order granting or denying... an... injunction’’.

See Government's brief, pg. 2; railroads’ brief, pg. 2.

While the district court did deny an injunction which

had been sought by appellees (371 F. Supp. 1307-10),

appellees have not perfected appeals from that denial.

Appellants, on the other hand, having clearly pre-

vailed on the injunction issue below so that the

railroads are still collecting the new rate increase

of $10 million a year authorized by the Commis-

sion, have no standing to appeal from that mas-

sive victory (Public Service Commission of Mis-

sourt V. Brashear Freight Lines, Inc., 306 U.S.

204, 59 S. Ct. 480, 83 L.Ed. 608 (1939); Gunn

v. University Committee To End The War, 399

U.S. 383, 391, 90'S. Ct. 2013 (1970); Rockefeller v.

Catholic Medical Center, 397 U.S. 820, 90 S. Ct. 1517,

25 L. Ed. 2d 806 (1970). In this case, the district

court expressly ruled (371 F. Supp. 1291, 1293) :

‘o.. (Woe refrain from issuing an injunction

restraining the railroads from collecting the in-

creased rates pending the Commission's reconsid-

eration.”’

Patently, therefore, both direct appeals to this Court

must be dismissed for lack of jurisdiction under 28

U.S.C. § 1253 (Public Service Commission Vv. Brashear

Freight Lines, supra; llutcherson v. Lehtin, 399 US.

522, 90 S. Ct. 2238 (1969); Mitchell v. Donovan, 398

U.S. 427, 90 S. Ct. 1763, 26 L. Ed. 2d 378 (1970).

The two cases upon which appellants rely to support

their jurisdictional claims are plainly inapposite be-

cause, contrary to the situation here, both involved

appeals from orders granting or denying an injunction.

Baltimore & O. RR. v. ULS., 386 U.S. 372 (1967) in-

volved an appeal by losing parties who had sought an

injunction which was denied by the court below. United

States v. Allegheny-Ludlum Steel Corp., 406 U.S. 742

(1972), in turn, involved two cases, one in which an

appealing party requested injunctive relief that was

denied, and the other in which the Interstate Com-

merce Commission opposed an injunction that had been

granted by the district court.

Appellants have continuously contended that cases

involving LCC actions should be placed in some sort of

‘special category’, so that direct appeals to this Court

should be allowed under 28 U.S.C. § 1253 even in eases

where no injunctive relief is present. The short answer

to that claim is found in the recent Report of the Study

Group on the Caseload of the Supreme Court, which

stated at 57 F.R.D. 573, 597 (1972) :

“Since many ICC cases are not of sufficient im-

portance to require review by the Supreme Court,

it is clear that the unique treatment of ICC orders

is a burden on the Supreme Court that can no

longer be justified.”

Here, therefore, the direct appeals, which have no

foundation whatsoever umder 28 U.S.C. § 1253, should

plainly be dismissed.

II.

The District Court Clearly Had Jurisdiction To Determine

Whether the Commission Had Complied With the National

Environmental Policy Act and To Grant Appropriate Re-

lief When It Found the Commission Had Not.

Railroad appellants speciously argue that the district

court lacked jurisdietion to determine whether the

Interstate Commerce Commission properly complied

with NEPA in Ev Parte 281. Government appellants

seemingly do wot join in that contention.

In any event, it is perfectly clear that the district

court did possess the necessary jurisdiction. Indeed,

;

’

when this case was last here in 1973, this Court seem-

ingly readily agreed that (93 8. Ct. 2420)—

‘*. .. there is general judicial power to determine

if an ageney has complied with NEPA, and to

grant equitable relief if it has not.’’

At that time, this Court appeared to cite with ap-

proval the earlier holdings of the Cireuit Court of Ap-

peals for the District of Columbia in Calvert Cliffs’

Coordinating Committee v. United States Atomic En-

ergy Commission, 146 U.S. App. D.C. 33, 449 F.2d 1109

and Committee for Nuclear Responsibility, Ine. v. Sea-

borg, 149 U.S. App. D.C. 380, 463 F.2d 783, wherein it

was ruled that district courts have full jurisdiction to

determine if federal agencies have complied with

NEPA, and to grant effective relief when such com-

pliance was either lacking or inadequate. In this re-

gard, this Court stated, at 93S. Ct. 2420:

“Calvert Cliffs’ held that a federal court had

power to review rules promulgated by the Atomic

Energy Commission, and there the court ordered

further consideration of the rules on the ground

there had not been compliance with NEPA. In

Committee for Nuclear Responsibility it was held

that federal courts had jurisdiction to consider

whether an executive decision to conduct a nuclear

test had satisfied the procedural requirements of

NEPA...”

Moreover, there can be no question about the statu-

tory jurisdiction of the district court to review orders of

the Interstate Commerce Commission. 28 U.S.C. 1336

states:

‘Except as otherwise provided by Act of Congress,

the district courts shall have jurisdiction of any

civil action to enforce, enjoin, set aside, annul or

suspend, in whole or in part, any order of the In-

terstate Commerce Commission.’”’

Appellants, of course, have pointed to no Act of

Congress which deprived the district court of jurisdic-

tion in cases of this kind. On the contrary, through the

National Environmental Policy Act, Congress has ac-

tually provided an additional, separate basis for

such jurisdiction over cases of this nature (Calvert

Cliffs’, supra; Committee for Nuclear Respousibility,

supra; City of New York vy. United States, ED. N.Y...

337 F. Supp. 150).

For these reasons, therefore, cases such as Algoma

Coal & Coke Co vy. United States, DC, ELD. Va., 1935,

11 F. Supp. 487, Koppers Co. v. United States, D.C.

W.D., Pa. 1955, 132 F. Supp. 159, Alabama Power Co.

v. United States, D.C. D.C. 1969, 316 F. Supp. 337,

affd. by divided court, 400 U.S. 73, and Electronic Tn-

dustries Assn. Vv. United States, D.C. D.C. 1970, 510

F. Supp. 1286. affd. per curiam, 401 U.S. 967, wpon

whieh the railroads rely so heavily, are totally inap-

posite. None of those cases involved NEPA, or a com-

plaint that the Commission had completely failed to

comply with a separate federal statute (NEPA) in its

proceedings under Section 15(7) of the Interstate

Commerce Act.

Il.

The Commission’s Post-Mortem Environmental Impact State-

ment, Drafted for the First Time Five Months After the

Commission's Final Report and Order of October 4, 1972

and Thereafter Issued in Final Form Seven Months After

the Commission's Said Final Report and Order, Is Totally

in Violation of NEPA and Is Thus Null and Void.

On October 4, 1972, after the conclusion of statutory

hearings under the Interstate Commerce Act on April

20, 1972, the Commission issued its final statutory

ee eee

report and order in Ev Parte 281, Increased Freight

Rates and Charges, 1972, 341 LC.C. 288. In that final

report, the Commission stated (See 341 L.C.C, 314):

‘Inasmuch as we conclude that our actions herein

will neither actually nor potentially significantly

affect the quality of the human environment, we

have not ineluded in our report an extensive

formal impact statement.”’

On November 7, 1972, after plaintiff S.C.R.A.P.

moved for further injunctive relief in this action to

prevent the rate increases thus authorized by the Com-

mission from going into effect, the Commission sud-

denly reopened Ex Parte 281 to *tevaluate the environ-

mental effects of (these) increased rates and charges

on the movements of commodities being transported

for the purposes of recycling’? (App. 91). No further

hearings were thereafter held by the Commission. On

March 5, 1973, approximately five months after the

Commission issued its report and crder of October

4, 1972 licensing permanent 1972 increases in rates

for recyclables, the Commission finaliy issued a ‘‘draft

impact statement.”’ That ‘‘ post-mortem” draft state-

ment simply concluded (App. 92, 93) :

‘*... the selective freight rate increases (already )

approved in this proceeding as to commodities

moving for the purposes of reeycling would not

have a significant adverse impact upon the equality

of the human environment. It wis found that

any environmental costs which may result from

that action would be outweighed by the economic

benefits derived by the railroads...”

Thereafter, on May 2, 1973, approximately seven

months after the Commission's rate-increase report and

order of October 4, 1972, the Commission prepared

and issued a Final Environmental Impact Statement,

which the Commission itself described as follows (App.

89) :

“This report represents, in accordance with the

National Environmental Policy Act of 1969

(NEPA), 42 U.S.C. 4321 et seq., our final state-

ment as to the environmental effects of these in-

creases in the railroad freight rates and charges on

movements of commodities being transported for

the purposes of recyeling found in our prior report

and order (341 1.C.C. 288) to be just, reasonable,

and otherwise lawful.”

Once again, the commission concluded, in * post-

mortem’ fashion long after the issuance of its final

report and order of October 4, 1972 (App. 256):

‘In conclusion, we do not believe that the action

we take in this proceeding will have a significant

adverse impact upon the quality of our human

environment. Had we found, however, that our

action would have some adverse effects upon the

environment, it would not preclude our granting

the relief sought by the respondent (railroads) to

the extent permitted in this decision.”’

Based on this record, we respectfully submit that

the Commission’s said Environmental Impact State-

ment, drafted for the first time five full months after

the Commission’s rate-inerease report and order of

October 4, 1972 and thereafter released in final form

seven full mouths after the said report and order, was

totally violative of NEPA and was thus null and void

ab initio (Calvert Cliffs Coordinating Committee et al

v. United States Atomic Energy Commission, 146 U.S.

App. D.C. 33, 449 F.2d 1109 (1971); Greene County

Planning Board vy. Federal Power Commission, CCA

ee ee wt NU ae Ones oes

2, 1972, 455 F.2d 412, cert. denied, 93 S. Ct. 56 (1972) ;

Harlem Valley Transportation Association et al vy.

Stafford, Chairman, Interstate Commerce Commission

CCA 2, 1974, 500 F.2d 328).

The rule to be applied here was succinctly sum-

marized in a recent article entitled ‘Mandate of the

National Environmental Policy Act: The Prepara-

tion of Environmental Impact Statements’’, written by

anattorney from the Department of Justice and printed

in The Journal of the Bar Association of the District

of Columbia, Vol. 41, No. 1, January-June, 1974 issue,

at page 50:

“Timing and Responsibility For The Prepara-

tion of Environmental Impact Statements

“The time to prepare the statement—NEPA

states in Section 102(2)(¢) that the environmental

impact statement and the comments received shall

accompany the proposal through ‘the existing

agency review processes.’ The CEQ Guidelines

(38 Fed. Reg. 20552, Sect. 1500.7(a)) state that

‘draft statements on administrative actions should

be prepared and circulated for comment prior to

the first significant point of decision in the agency

review process.” For the analysis presented in an

environmental impact statement to be fully inte-

grated into agency decision making, the NEPA

process should be well underway prior to the ren-

dering of firm decisions by the agencies.’

(Italics supplied)

In Greene County Planning Board vy. Federal Power

Commission, supra, the Federal Power Commission

argued it had no obligation to prepare an Environ-

mental Impact Statement under NEPA “until it files

its final decision’’ (See 455 F.2d 418, 419). The Second

Circuit rejected even that contention, holding that

NEPA coutains a Congressional mandate to regulatory

agencies such as FPC and ICC which requires that

they carefully consider cuvironmental values ‘at every

distinctive and comprehensive state of the [agency's]

process; ”’ and that they issue their own draft environ-

mental impact statement in each case “prior to any

formal hearings’” (See 455 F.2d 412, 419-20).

The Second Cireuit meticulously explained in Greene

County that “NEPA went far bevond the requirement

that the agency merely consider environmental factors

aud include those factors in the record subject to re-

view by the courts’’ (See 455 F.2d 412). Under NEPA,

the court wrote, agencies such as FPC and LCC have

the ‘‘nondelegable responsibility” to prepare detailed

environmental statcments al the earliest possible stage

of every environmentally-charged agency proceeding,

and to consider the environmental values thus involved

“at every distinctive and comprehensive stage of the

agency's process”” (See 495 F.2d 420). In fact, the

Second Cireuit, in Greene County heavily relied on the

prior decision of the District of Columbia Cireuit in

Calvert Cliffs’ Coordinating Committee vy. Atomie En-

ergy Commission, supra, whereix it was stated, at pages

1117, 1118:

*... NEPA was meant to do more than regulate

the flow of papers in the federal bureaucracy.

The word ‘accompany’ in Section 102(2)(e)

must not be read so narrowly as to make the Act

ludicrous. It must, rather, be read to indicate a

Congressional intent that environmental factors,

as compiled in the ‘‘¢ctailed statement,’ be con-

sidered through agency review processes.

‘Beyond Section 102(2)(¢), NEPA requires

that agencies consider the environmental impact

of their actions *‘to the fullest extent possible.”’

The Act is addressed to agencies as a whole, not

only to their professional staffs. Compliance to the

“fullest”? possible exteut would seem to demand

that environmental issues be considered at every

important stage im the decision making process

concerning a particular action—at every stage

where an overall balancing of environmental fac-

tors is appropriate aud where alterations might be

made in the proposed action to minimize environ-

mental costs.”’

(Italies supplied)

There can be no doubt, we submit, about the complete

correctness of the Second Cireuit’s ruling in Greene

County and the D. C. Cireuit’s holding in Calvert

Cliffs. Both decisions do no more than fully sustain

the statutory requirement of Section 102(2)(e) of

NEPA (42 U.S.C. § 4822(2)(¢)) which states:

‘Copies of such [environmental impact] state-

ment and the comments and views of the appro-

priate Federal, State, and local agencies ... shall

accompany the proposal through the existing

agency review processes.”

(Italics supplied)

The briefs filed by the railroads and the Government

imphedly concede the correctness of this rule which

has become so firmly established in the various cir-

cuits. Llowever, they now belatedly contend that sonie-

how the Commission, which arbitrarily failed and re-

fused to have the necessary impact statement available

at every meaningful stage of the agency proceeding,

somehow nevertheless complied with NEPA by simply

continuing to rule throughout that indeed no statement

was required because its actions allegedly would have

no significant impact on the environment. The utter

fallaciousness of that position, however, is laid bare

by the Commission’s own belated admission that

it had not properly complied with NEPA prior to the

rendition of its tinal decision of October 4, 1972, and

that accordingly it would have to spend seven months

in the preparation of a post-mortem impact statement

in an attempt to rationalize the final decision it had

already issued.

In conclusion, therefore, we urge the Court to hold—

(i) that the Commission violated NEPA when it

failed to prepare or issue any impact statement to

support the final decision it released on October 4,

1972 in Ex Parte 281, in which it approved an-

other cumulative ‘, rate increase for the transpor-

tation of recyclables, and that accordingly, the rate

increase so licensed was unlawful; and

(ii) that the Commission further violated NEPA

when it prepared for the first time, five months after

its final order of October 4, 1972, a post-mortem NEPA

statement, the only purpose of which was to try to

‘ationalize the new rate increase on recyclables it had

already approved in final form many months before.

IV.

The Commission’s Final Environmental Impact Statement,

Issued After the Commission’s Order of Investigation of

November 7, 1972, Without a Hearing and Without the

Right of Confrontation, Is Unconstitutional and Violative

of the Interstate Commerce Act, the Administrative Pro-

cedures Act and the CEQ Guidelines Under the National

Environmental Policy Act.

On October 4, 1972, the Commission issued its final

report and order in Ex Parte 281 without preparing

or filing any environmental impact statement pursuant

to NEPA. Petitions vehemently protesting the Com-

mission’s conduct were thereupon filed by ChQ, EPA,

appellees and other parties. On November 7, 1972,

therefore, the Commission issued an Order of Investi-

gation in Ex Parte 281, which read in part as follows:

“Tt is ordered, That the above-entitled proceed-

ing be, and it is hereby, reopened for the limited

purpose of further evaluating, in accordance with

the National Environmental Policy Act of 1969

(42 U.S.C. 4521 et seq.). the environmental effects

of increased railroad freight rates and charges on

the movements of commodities being transported

for the purpose of reeyeling. .. .

“Tt is further ordered, That in view of the fore-

going actions, and because there is reason to believe

that the tariff schedules identified in the appendix

to this order may, if permitted to become effective,

result in... rates and charges, rules, regulations,

or practices which would not be in conformity

with the report in Ew Parte No. 281, Increased

Freight Rates and Charges, 1972, 341 I.C.C, 288,

decided September 27, 1972, as modified by this

order, an investigation be, and it is hereby, insti-

tuted into and concerning the rates, charges, and

regulations contained in said schedules, with a view

to making such findings and orders as the facts

and circumstances shall warrant. ...

“Tt is further ordered, That the investigation in

this proceeding shall not be confined to the matters

and issues hereinbefore stated as the reason for

instituting this investigation, but may include all

matters and issues with respect to the lawfulness

of the said schedules under the Interstate Com-

merce Act... .”’

(Italics supplied)

Plaintiffs and intervenor-plaintiffs thereupon re-

quested that hearings be scheduled with reference to

any and all matters within the scope of said investiga-

tion (App. 93). They also asserted the right to con-

front and cross-examine witnesses and Commission

personnel who might participate in the Commission's

fact-tinding mission, especially those upon whose

expertise the Commission would rely in the prepara-

tion of the belated environmental impact statement

(App. 93). The Commission flatly refused to schedule

any hearings, and it rejected the requests for confron-

tation and cross-examination, stating (App. 102):

“We see no benefit to be derived by allowing

further hearings in this proceeding. ... The pres-

ent environmental record has been developed in

substantial part by our own independent cfforts

and there appears no reasonable basis for now con-

eluding that the parties can make any further

rational contribution to that record. ...

‘The record in this proceeding is complete and

further publie procedures herein would be imprac-

ticable, unnecessary, and contrary to the public

interest.”

(Italics supplied )

It is perfectly clear, of course, that the Commis-

sion’s position in this regard was totally arbitrary

and eapricious. It had nowhere theretofore disclosed

the so-called ‘environmental record’? allegedly pro-

duced as a result of ‘its own independent efforts’’—

certainly, it had never confronted the parties with any

such record for the purpose of cross-examination, refu-

tation or rebuttal. It had not vet issued the draft

environmental impact statement, later released in

March, 1973, and the Commission had theretofore stead-

fastly foreclosed presentation of the true environ-

mental facts by simply concluding unilaterally that

increased freights rates do not adversely affect either

recycling or the human environment. Indeed, even in

its final environmental impact statement of May 1, 1973,

the Commission once again failed to make any findings

regarding the last-mentioned crucial threshhold en-

vironmental issue, stating (App. 102):

*.., Chairman Russell B. Train of CEQ... has

conveyed to us his belief that ‘several rail haul cost

biases currently exist’, and certain of the parties

herein aver that discriminatory railroad rates and

charges impede the movement of waste materials

and favor the transportation of primary materials

with ‘obvious’ adverse consequences to the envir-

onment.

**As recently as the last general rate proceeding,

we pointed out that such a case does not provide

an appropriate vehicle for examining these issues

(lnereased Freight Rates, 1970 and 1971, 339

L.C.C, 125, 189 (1971)). Thus, we do not attempt

to determine whether the particular rates which

result from the increases are maximum reasonable

rates. .'..°

Appellees respectfully submit, therefore, that the

Commission’s refusal to schedule hearings with refer-

ence to all matters covered by its Order of Investiga-

tion of November 7, 1972 in Ex Parte 281 violated the

parties’ rights under the Due Process Clause of the

Fifth Amendment and under the Interstate Commerce

Act, the Administrative Procedure Act and the applie-

able Guidelines issued by CEQ under NEPA.

In Goldberg vy. Kelly, 397 U.S. 254, 90 8.Ct. 1011

(1970), this Court extended ‘rudimentary due process”

to cases involving the termination of federally-assisted

welfare benefits on the basis of the following general

rules which, we submit, should be equally applied in a

‘ase of this nature, where a federal agency is engaged

in the licensing of millions of dollars in inereased

freight rates on recyclable commodities (at 397 U.S.

267-271) :

‘**The fundamental requisite of due process of

law is the opportunity to be heard.’ Grannis V.

Ordean, 234 U.S. 385, 394, 34 S.Ct. 779, 783, 58

L.Ed. 1363 (1914). ‘The hearing must be at

meaningful time and in a meaningful manner.’

Armstrong Vv. Manzo, 380 U.S. 545, 552, 85 S.Ct.

1187, 1191, 14 L. Ed. 2d 62 (1965).

‘The opportunity to be heard must be tailored

to the capacities and cireumstances of those who

are to be heard. It is not enough that a welfare

recipient may present his position in writing. ...

Written submissions are an unrealistic option. ...

Moreover, written submissions do not afford the

flexibility of oral presentations; they do not permit

the recipient to mold his argument to the issues

the decisionmaker appears to regard as import-

ant. .

“In, almost every setting where important deci-

sions turn on questions of fact, due process re-

quires an opportunity to confront and cross-

eramine adverse witnesses.

‘Finally, the decisionmaker’s conclusion

must rest solely on the legal rules and evidence

adduced at the hearing. ...° (Italies supplied)

As early as 1913, of course, this Court applied essen-

tially the same rules of due process of law to rate

ae ts

proceedings before the Interstate Commerce Commis-

sion, and that 1913 decision was relied on by Mr. Jus-

tice Brennan in the majority 1970 decision in Goldbery

v. Kelly, supra. In that case, Interstate Commerce

Commission V. Louisville & Nashville Railroad, 227

U.S. 88 (1913), the Commission contended that its de-

cisions in rate cases were absolutely conclusive and

could not be set aside even where the Commission’s

findings were wholly without substantial evidence to

support them (See 227 U.S. 91). This Court unani-

mously rejected the Commission’s position, stating, at

pages 91, 92:

‘A finding without evidence is arbitrary and

haseless. And if the Government’s contention is

correct, it would mean that the Commission had

a power possessed by no other officer, administra-

tive hody or tribuna! under our Government. It

would mean that where rights depended upon

facts, the Commission could disregard all rules

of evidence, and capriciously make findings by

administrative fiat. Such authority, however bene-

ficently exercised in one case, could be injuriously

exerted in another; is inconsistent with rational

justice, and comes under the Constitution’s eon-

demnation of all arbitrary exercise of power.

‘*In the comparatively few cases in which such

questions have arisen it has been distinctly recog-

nized that administrative orders, quasi-judicial in

character, are void if a hearing was dented; tf that

granted was incdequate or manifestiy unfair; if

the finding was contrary to the ‘indisputable char-

acter of the evidence’ -

‘© |. A finding without evidence is heyond the

power of the Commission. An order hased thereon

is contrary to law and must, in the language of the

statute ‘he set aside by a court of competent juris-

diction’... .7’ (Italies supplied)

In Louisville & Nashville R.R., supra, this Court, in

a further holding particularly relevant to the case at

bar, went on to state, at pages 93, 94:

‘‘The Government further insists that the Com-

meree Act ... requires the Commission to obtain

information necessary to enable it to perform the

duties and carry out the objects for which it was

created, and having been given legislative power

to make rates it can act, as could Congress, on such

information, and therefore its findings must be

presumed to have been supported by such infor-

mation, even though not formally proved at a hear-

ing. But such a construction would nullify the

right to a hearing—for manifestly there is no hear-

ing when the party does not know what evidence

is offered or considered and is not given an oppor-

tunity to test, erplain or refute. ... All parties

must be fully apprised of the evidence submitted

or to be considered, and must be given opportunity

to cross-eramine witnesses, to inspect documents

and to offer evidence in explanation or rebuttal.

In no other way can a party maintain its rights

or make its defense. In no other way ean it test

the sufficiency of the facts to support the finding;

for otherwise, even though it appeared that the

order was without evidence the manifest defi-

cieney could always be-explained on the theory

that the Commission had before it extraneous,

unknown but presumptively sufficient information

to support the finding.’’ (Italies supplied)

Clearly, therefore, these long standing rules of eon-

stitutional law, directly applicable to rate proceedings

before the Commission, explain why the Second Cir-

euit, in Greene County Planning Board v. Federal

Power Commission, supra, ruled, in 1972, that federal

regulatory agencies such as FPC and ICC must issue

their draft environmental impact statements under

ee ee

NEPA “prior to any formal hearings” (See 455 F.2d

419).

These same rules of constitutional law directly ap-

plicable to proceedings before the Commission also

undoubtedly explain why the Interstate Commerce

Commission itself felt constrained to schedule ‘‘fur-

ther hearings’’ in City of New York vy. United States,

U.S.D.C. E.D.N.Y., 1972, 344 F. Supp. 929, when the

district court in New York rejected the Commission’s

earlier order approving the abandonment of railroad

facilities pending full compliance by the Commission

with NEPA. Under obvious scrutiny of the district

court in New York, the Commission let all interested

parties participate fully in these ‘further hearings”

which dealt with the ‘‘environmental questions’’ there

‘aised under NEPA (See 344 F. Supp. 931). Totally

unlike its arbitrary, capricious hearing denial in the

ease at bar, the Commission proceeded as follows in

City of New York, supra, (See 344 F. Supp. 936-939) :

‘Together with its order directing further hear-

ings following remand, the Commission issued a

draft environmental impact statement to provide

a basis for exploration of the Railroad’s abandon-

ment at the hearing... .

‘‘Although not compelled to do so by the terms

of our remand, see 337 F. Supp. at 164, the Com-

mission held five days of hearings, a substantial

portion of which were focused on the environ-

mental questions. All parties were given full op-

portunity to present evidence on the environmental

aspects of the ease... .

“This procedure was consonant with that man-

dated in Greene County Planning Bd. v. FPPC,

supra, 455 F.2d at 422, where the Second Circuit

held that the FPC violated “NEPA by conducting

hearings prior to preparation by its staff of its

own impact statemut.’’ (Italics supplied)

Clearly, therefore, the Commission’s refusal to hold

hearings in the case at bar after issuance of its Order

of Investigation on November 7, 1972 violated appel-

lees’ rights under the Fifth Amendment; and the Com-

mission’s failure to hold any hearings whatsoever after

issuance of its draft environmental impact statement

on March 5, 1973, violated NEPA. as construed by the

Second Circuit in Greene County, supra—a_ ease

wherein this Court denied certiorari.

Moreover, the Commission's procedures in this case

were simultaneously violative of the Interstate Com-

merce Act (Title 49 U.S.C. § 15(7) ), the Administra-

tive Procedure Act (Title 5 U.S.C. §§ 554-556), and

the Guidelines issued by the President’s Council on

Environmental Quality pursuant to NEPA (40 C.F.R.

§ 1500.7(d), effective 128/73, 40 C.F.R. 1500.14).

The Commerce Act (49 U.S.C. § 15(7)) plainly re-

quires a ‘‘full hearing” in all rate cases of this nature

after the Commission decides to investigate **the law-

fulness of such rate.’’ Indeed, in Atchison, Topeka &

Santa Fe Railway Co. v. United States, 284 U.S. 248,

262 (1932), a case like the instant action involving a

reopened rate proceeding, this Court ruled that the

Commerce Act requires the Commission to hold a full,

fair hearing, even in reopened rate procecdings under

the Act, whenever such a hearing ‘tis required by the

essential demands of justice.”*. The Court admonished

the Commission (284 U.S. 262):

‘Tn the discharge of its duty, a fair hearing is

a fundamental requirement. ... In the instant

proceeding, the [original] hearing accorded re-

lated to conditions which had been radically

changed, and a hearing [in the reopened proceed-

ing]... would have permitted the presentation

of evidence relating to existing conditions, was

denied. We think this action was not within tie

permitted range of the Commission’s discretion,

but was a denial of rights. The order of the Com-

mission which was thus made effective, and the

ensuing supplemental order, cannot be sustained.”

In the case at bar, the Commission’s November 7,

1972 Order of Investigation reopened Ex Parte 281

for

‘*(i) the purpose of re-evaluating the environ-

mental effects under NEPA of the inereased

freight rates ordered by the Commission’s report

of September 27, 1972, and

(ii) the purpose of investigating any and all

other matters and issues with respect to the law-

fuluess of the... schedules under the Interstate

Commerce Act.’’

Ergo, appellees were patently entitled to the hearing

they demanded in the said reopened investigation un-

der both NEPA and the Commerce Act itself, and the

Commission violated the latter as well as the former

when it flatly denied that right.

The same conclusion is equally compelling under the

Administrative Procedure Act (5 U.S.C. §§ 554-556)

and the CEQ Guidelines under NEPA. Under 5 U.S.C.

§ 554(a). (c) hearings must be granted, in accordance

with 5 U.S.C. §§ 556 and 557, ‘‘in every case of adjudi-

eation required by statute to be determined on the

record after opportunity for agency hearing.”’ Here,

a hearing is required by the Commerce Act, so 5 U.S.C.

554-556 are entirely apposite to the case at bar. Under

5 U.S.C. § 556, it is provided:

‘‘A party is entitled to present his case... by

oral or documentary evidence, to submit rebuttal

evidence, and to conduct sue +h cross-examination

as may be required for a full and true disclosure

of the facts.”’

Finally, under 5 U.S.C. § 556(e), it is provided:

‘The transcript of testimony and exhibits, to-

gether with all papers and requests filed in the

proceeding, constitutes the erclusive record for

decision... When an agency decision rests on

official notice of a material fact not appearing in

the evidence in the record, a party is entitled, on

timely request, to an opportunity to show the con-

trary.” (Italies supplied)

All of these rights and protections were denied ap-

pellees in this case when the Commission arbitrarily

and unlawfully refused to conduct any hearings after

it reopened Ex Parte 281 in November, 1972 and sched-

nled a further investigation, under both the Commerce

Act and NEPA. In Northeast Airlines, Ine. v. Civil

Aeronautics Board, CCA 5, 1965, 345 F.2d 484, cert.

denied 382 U.S. 845, 86 S.Ct. 41 (1966), a case wherein

the CAB reopened a case theretofore heard by the

Board, CAB elected to rely exclusively on its own data

and statistics and it denied Northeast Airlines’ demand

for a hearing under the Administrative Procedure Act.

The Fifth Cirenit rejected the Board’s procedure,

stating at 345 F.2d 487:

‘* Having opened the door to new data, the Board

was obliged to take a full leok. No useful pur-

pose would be served in our discussing each aspect,

but we suggest that fairness may require that

Northeast’s opportunity to rebut and explain what

the Board has already noticed should extend to as

recent developments as may be available at the

date of the hearing. ...”’

In conelusion, the Court’s attention is directed to the

Guidelines under NEPA published by CEQ and made

effective and applicable ‘‘to all draft and final impact

statements filed with the Council after January 28,

1973.’’ These guidelines state, at 40 C.F.R. 1500.7(d) :

‘‘Agency procedures developed pursuant to

§ 1500.3(a) of these guidelines should indicate as

explicitly as possible those types of agency deci-

sions or actions which utilize hearings as part of

the normal ageney review process, either as a re-

sult of statutory requirement or agency practice.

To the fullest extent possible, all such hearings

shall include consideration of the environmental

aspects of the proposed action. Agency procedures

shall also specifically inelude provision for publie

hearings on major actions with environmental im-

pact.... In deciding whether a public hearing is

appropriate, an agency should consider ... the

degree of interest in the proposal, as evidenced by

requests from the publie and from Federal .

authorities that a hearing be held... Agencies

should make any draft environmental statements

to be issued available to the public at least fifteen

(15) days prior to the time of such hearings.”

(Italies added)

A fortiori, the Commission’s final environmental im-

pact statement of May 2, 1978 in Ex Parte 281 is un-

constitutional, completely unlawful and it must there-

fore be rejected by this Court (See Atchison, Topeka

& Santa Fe Railway Co. v. Wichita Board of Trade,

93 S.Ct. 2367, 2374 wherein this Court recently re-

affirmed the rule that decisions of the Commission in

rate eases may be rejected by the courts ‘‘upon a show-

ing that they ... were made without a hearing, exceed

constitutional limits, or for some reason amount to

abuse of power’’).

The Commission Has Constantly Exhibited Hostility and Con-

tempt for the Requirements of NEPA, Both in This Case

and in Other Statutory Proceedings. Accordingly, the

District Court Properly Exercised Its Judicial Power to

Review Not Only the Form of the Commission’s Belated

Asserted Compliance With NEPA in This Case, but the

Substance as Well.

The Commission, over the years since 1970 when

NEPA became effective, has exhibited almost com-

plete disdain and contempt for the requirements of

that federal statute. As early as 1971, it sought to

intervene in Greene County Board v. Federal Power

Commission, supra, in support of the Federal Power

Commission's attempt to avoid regulatory agency com-

pliance with NEPA. LICC’s intervention was rejected ;

the Second Circuit overruled FPC’s position, and this

Court denied certiorari,

In City of New York v. United States, supra, a 1972

‘ase involving proceedings before the Commission it-

self, ICC directly detied NEPA and endeavored to

license the abandonment of railroad facilities without

the prey sation of a supporting impact statement. A

three-judge court in New York criticized the Commis-

sion for its ‘‘slow reaction”’ to Ni PA, and stated the

Commission is powerless to ‘‘disregard ... the law’’

(337 F. Supp. 158-160). The Court remanded the case

to the Commission, stating, at 337 F. Supp. 160:

“To permit an agency to ignore its duties under

NEPA with impunity because we have serious

ee A ED Se ae Si i

doubts that its ultimate decision will be affected by

compliance would subvert the very purpose of the

Act and encourage further administrative laxity in

this area.... In any event, preservation of the

integrity of NEPA necessitates that the Commis-

sion be required to follow the steps set forth in

§ 102, even if it seems likely that these steps will

lead it to adhere to the present result. Thus, this

proceeding must be remanded to the Commission

ve it to bring itself into compliance with the

aw.

Albeit the deci8ion in City of New York, supra, was

rendered on January 20, 1972, the Commission never-

theless proceeded just 12 days later (on February 1,

1972) in this case to license another increase in rates

for the transportation of recyclables without preparing

any impact statement under NEPA. The Commission

instead arbitrarily continued to rely on the same type

of terse, unsupported conclusion it espoused in City

of New York, to wit, that, in its opinion, the approved

new increase **would have no significant effeet ... . on

the quality of the human enviromument within the mean-

ing of NEPA” (See 341 LC.C. 288, 314).

The Commission’s continued defiance of the law in

Ex Parte 281 thus led to the commencement of this

action, and although the Commission promised both

the district court and the Chief Justice of this Court

that it would fully comply with all of the requirements

of NEPA before it issued its final report in this case,

the record shows that once again, the Commission

rendered that report on October 4, 1972 without pre-

paring a final impact. statement under NEPA.

In the meantime, in still another case simultaneously

pending in New York, the Commission, contrary to the

position taken by the Department of Justice in the

same case, contended that it had no obligation even to

prepare a NEPA intpact statement until it was ready

to reach its final decision in a case—i.e. ICC argued it

had no duty to prepare its statement at any earlier

stage of the proceedings (See Harlem Valley Transpor-

tation Association v. Stafford, Chairman, ICC, 500 F.2d

328 (1974). That contention was bluntly rejected by

the courts in New York, and the Second Cireuit stated:

“>. . (W)hile we recognize there are limits to

what may reasonably be expected from an agency,

we cannot excuse noncompliance with NEPA such

as the ICC here seeks to justify.”’

Ergo, it is plain, we submit, in light of this ree-

ord which demonstrates constant hostility and con-

tempt on the part of the Commission for the require-

ments of NEPA, both in this ease and in all others

recently before the courts, that the district court

clearly had the power and duty to review not only the

form of the Commission’s alleged belated compliance

with NEPA in the case at bar, but the substance of that

compliance as well.

In this regard, the courts have held that federal

agencies must at least make a good faith effort to com-

ply with NEPA (Environmental Defense Fund vy.

Corps of Engineers, &.D. Arb., 1972, 342 F. Supp. 1211,

1214). NEPA does not permit impact statements to be

slanted or biased and it utterly precludes those which

amount to mere pro forma rituals, since clearly such

statements negate the requirement of good faith (En-

vironmental Defense Fund, Inc. v. Corps of Engineers,

supra, at pg. 1214; Calvert Cliffs Coordinating Com-

mittee v. Atomic Energy Commission, supra, at pgs.

1114, 1117, 1128). Indeed, when an impact statement

falls into one of the last mentioned categories, it must

be rejected by the courts because of NEPA’s insistence

‘‘upon unbiased and open-minded evaluations in spite

of the Agency's contradictory roles”’ (District of Co-

lumbia v. Volpe, 3 E.R.C. 1143 (D.C. Cir., 1971) ;

Sierra Club v. Froehlke, D.C. Wis., 1972, 345 F. Supp.

440, 445).

Here, it is plain, we submit, that the post-mortem

Environmental Impact Statement released by the Com-

mission 7 months after the rendition of its final report

in Ev Parte 281 was not ‘‘a good faith effort to comply

with NEPA.”’ Rather, it was a mere pro-forma ritual,

the sole purpose of which was to rationalize the Com-

mission’s earlier conclusion that the rates for transpor-

tation of recyclables should suffer still another % in-

crease and that such action, blindly taken exclusively

with the interests of the railroads in mind, allegedly

would not (in the Commission's judgment) adversely

affect the environment. Any doubt about the absolute

validity of this assessment is dispelled by the following

comments filed by other Federal Government agencies

regarding the Commission’s post-mortem production:

(i) U.S. Department of Commerce— “*.. . the

draft impact statement was written to support the

prior conclusions of (the) Commission and not to

inform the publie’’ (App. 100).

(ii) General Services Administration— “GSA

does not believe recyclables should be required to

bear their full share of the carriers’ revenue re-

quirements. It suggests that where it ean be de-

termined that reduced rail freight levels might

reasonably be expected to result in increased re-

eveling of solid wastes, serious consideration

should be given to the establishment of rate ceil-

ings on such traffic no lower than the compensa-

tory level’’ (App. 271).

(iii) U.S. Department of Interior— **... the

involved statement does not provide a careful

multi-disciplinary examination of the environmen-

tal effect’? (App. 274).

(iv) Environmental Protection Agency— ‘* EPA

has classified the draft environmental impact state-

ment as Category 3—Inadcquate. ... (T)he state-

ment does not adequately assess the environmental

impact of the proposed freight rate increases on

the movement of secondary materials; and... it

does not consider in reasonable detail the range of

alternatives to the proposed action’? (App. 275).

(v) President’s Council on Environmental Qual-

ity—**... (T)he draft statement fails to consider

how freight rates affect longrun decisions on in-

vestment in scrap-intensive production facilities

... and it finds it difficult to believe that the eco-

nomic well-being of the Nation’s railroads is at

stake in this proceeding. CEQ does not under-

stand why the Commission cannot design incentive

‘ates for recyecling.”’

Moreover, the record before the Court demonstrates

that two members of ICC itself dissented from the

Commission's order which approved the post-mortem

impact statement, and both suggested that a mora-

torium should be placed on any further rate increases

for recyclables until the Commission comes to grips

with the basic rate disparities which grow wider with

each % increase in the rates (App. 237, 238).

Based on this record, we respectfully submit it was

absolutely incumbent upon the district court to review

not only the form, but also the substance of the Com-

mission’s post-mortem alleged compliance with NEPA

in this ease. And, upon such review in this case, we

submit further that it was wholly correet and proper

for the court to find—

(1) **The Commission’s mode of preparation

and utilization of the challenged impact statement

here violated both Section 102(2)(C)’s funda-

mental purpose and .. . specific command” (371

F. Supp. 1299).

(2) **The Commission ... neither intended to

give nor actually gave full reconsideration to the

question of the recyclable rate increase’? (371

F. Supp. 1299).

(3) “*[The Commission’s statement] makes no

attempt to integrate the considerations of national

transportation policy justifying the rate increase

with the environmental considerations analyzed in

the impact statement”? (371 F. Supp. 1299).

(4) **[The Commission] refused to hold... a

hearing to reconsider the increase on recyclables.

... (371 F. Supp. 1300).

(5) “*. . . a reader of the statement must be

struck by the combative, defensive and advoeatory

language and style in which it is written’? (371

F Supp. 1302).

(6) ‘*We find the Commission’s failure to alter

its draft impact statement in response to three of

the critical comments of other federal agencies par-

ticularly troublesome’? (371 F. Supp. 1302).

(7) *. .. (T)he draft statement’s . . . most

fundamental and important deficiency (is) the

limitation of its analysis to the marginal impact of

the most recent rate inercase with no discussion of

whether the underlying rate structure itself sig-

nificantly affects the environment’? (371 F. Supp.

1303, 1304).

Considering the aforementioned fact that constant

ously aggravated the nationwide average disparities in

freight rates for the transportation of competing re-

eyelables and virgin natural resoureces—to wit,

(a) in the case of wastepaper and pulp, from

13.9¢ per ewt. in 1959 to 28¢ per ewt. in 1975 in

favor of pulp, and

(b) in the case of non-ferrous metal ores and

scrap, from 13.3¢ per ewt. in 1959 to 24¢ per ewt.

in favor of the virgin ores—

it was likewise perfectly correct and proper for the

district court to hold, at 371 F. Supp. 1504:

“We fail to understand how any considerat on

of the environmental impact of approving the re-

ey¢clable rate increases could be full without an

analysis of how the underlying rate structure itself

affects the environment. Jt is the underlying rate

structure which the percentage increases aggra-

vate; if this structure contributes to the degrada-

tion of our environment, then the inereases would

at least presumptively aggravate that contribution.

. Any impact on the underlying structure could

be eliminated by holding down reeyelable rate in-

ereases each time the railroads requested a general

rate increase. The Commission’s failure to hold

down the rate increases on reeyvelables would thus

have a cumulative impact on the environment.”’

(Italics supplied.)

These findings by the court are in full accord with

the position taken by 5 federal agencies in this case

and by 2 of the ICC Commissioners. They are like-

wise fully responsive to the constant positions taken

in recent years by the League of Cities-U.S. Confer-

ence of Mayors, Council of State Governments, Na-

tional Commission on Materials Policy, and the Presi-

dent’s Citizens Advisory Committee on Environmental

Quality, all of which are a matter of record in this ease.

Ergo, the district court’s decision, based on volumi-

nous supporting evidence before the Court, should

plainly be affirmed.

VI.

The Nation’s Urgent Interests in Resource Conservation, Re-

source Recovery, Restriction of Unnecessary Foreign

Imports of Critical Materials and Energy Conservation

Will All Be Seriously Damaged If This Court Is Misled

by Some of the False Assertions Presently Advanced by

Appellants in This Case.

Before concluding, NARI feels constrained to direct

the Court’s attention to some of the inaccurate, base-

less contentions advanced by appellants in this case,

not only because they threaten a fair and just decision

in the instant action, but also because, if believed, they

could result in serious adverse impacts on our nation’s

vital, urgent interests in resource conservation, reeyel-

ing, restriction of unnecessary foreign imports of

critical raw materials and energy conservation.

(1) THE COMMISSION’S ASSERTION THAT THE BASIC RATE

STRUCTURE FOR RECYCLABLE COMMODITIES IS THE

SUBJECT OF INVESTIGATION IN EX PARTE 270.

Throughout its brief, the Government attempts to

claim that Ex Parte 270, a long, malingering study ICC

has been conducting off and on for the past 4 years and

which will apparently continue for another 4, is the

proper place for an examination of the basic rate struc-

ture for recyclables (Govt’s brief, pgs. 16, 17; 41). The

record before the Court, however, demonstrates that

when NARI applied to Commissioner Hardin, the ICC

Commissioner-in-Charge of Er Parte 270 on No-

vember 7, 1973 for assurance that the basie rate

structure for recyelable wastepaper, textiles and

non-ferrous scrap would be included in the Er

Parte 270 rate investigation proceedings (See Ap-

pendix A hereto), Commissioner Hardin refused to

include those commodities in the Kx Parte 270

investigation proceedings because allegedly the Com-

mission’s ‘investigative abilities are limited in terms

of money and manpower.’’ Commissioner Hardin went

on to state (Appendix B hereto):

“With respect to your... suggestion that a(n)

... investigation be instituted with respect to non-

ferrous metal serap, wastepaper, and the virgin

competitive products, ... 1 am not in a position

to advise .. . when and if such an investigation

will be instituted. ...

‘Rather than await an initiating response from

the Commission, ... [ suggest that you meet with

the railroad industry in order to determine whether

or not it is possible to agree upon a relevant data

base and limit the areas of controversy... .”’

As of this date, the Commission has not embarked

upon any investigation of the rate structure for these

hasie recyclable solid waste materials, and thus it is

absolutely misleading for the Government to take the

position it has regarding Lx Parte 270 in its brief.

(2) THE GOVERNMENT'S ASSERTION THAT CONSTANT RATE

INCREASES FOR RECYCLABI.F'S ARE NECESSARY BECAUSE

THE RAILROADS ARE IN DESPERATE FINANCIAL CONDI-

TION.

The Court certainly knows that fortunately only

some of the nation’s railroads have been mismanaged to

the point of financial embarrassment. Railroads such

en rey poor es

as the Southern System, the Burlington Northern, the

Southern Pacific, the Union Pacific, the Chessie Sys-

tem and others are operating with handsome profits.

Moreover, in each of the general revenue proceed-

ings in recent years, the railroads themselves have

either totally or partially exempted long lists of com-

modities, including some virgin commodities such as

pulp which competes with waste-paper, from the re-

quested rate increases.

The point, therefore, is that the rate inereases sought

on recyclables are not essential to the continued opera-

tion of the railroads, and it is exceedingly unreason-

able and damaging for the railroads constantly to ag-

gravate the existing rate disparities against recyclables

by increasing the rates for those commodities, while

exempting scores of other commodities for reasons

known only to the railroads themselves.

Finally, the Commission itself recently received

extensive evidence in Ex Parte 310— Nationwide

Freight Rate Increases, 1975, which demonstrates, as

the Commission’s records already reflected, that typi-

‘ally, virgin commodities are traveling on the nation’s

railroads at rates far below the railroads’ variable

costs, while recyclable commodities are concomitantly

compelled to pay rates that fur ecceed the railroads’

costs. How, therefore, could the Commission possibly

justify any further increases in transportation rates

for recyclables when virgin commodities are carried at

‘ates substantially below the railroads’ costs?

And, how can the railroads justly demand further

increases for the carriage of recyclables when daily

they transport long lists of other commodities at rates

which do not even defray their own costs ?

CONCLUSION

The two appeals should be dismissed for lack of jur-

isdiction. If the Court reaches the merits, the district

court’s judgment should be affirmed, or in the alterna-

tive, this Court should rule that the 1972 rate increases

on recyclables, approved by the Commission’s order

issued on October 4, 1972, without the preparation of

any impact statement under NEPA, are unlawful; and

the Commission’s post-mortem attempt to legalize

those unlawful rate increases is unsustainable.

Respectfully submitted :

Epwarp L. MERRIGAN

Attorney for Appellees

NARI et al.

888 17th Street, N. W.

Washington, D. C. 20006

APPENDIX A

SMATHERS AND MERRIGAN

ATTORNEYS AND COUNSELLORS AT LAW

888 SEVENTEENTH STREET, N.W.

WASHINGTON, v.c. 20006

November 7, 1973

Honorable Dale W. Hardin

Commissioner

Interstate Commerce Commission

Washington, D. C. 20423

Re: Ex Parte No. 270, Investigation of Railroad

Freight Rate Structure

Dear Commissioner Hardin:

Thank you for your very nice letter of October 23, 1973

and for the information furnished therewith.

Considering the serious problems confronting the Com-

mission, the recycling industry throughout the United

States and, of course, the railroads as a result of the con-

tinuing litigation in Ex Parte No. 281—Increased Freight

Rates, 1972 (S.C.R.A.P. v. United States, et al), we find

it exceedingly difficult to understand why your investiga-

tions announced to date do not include non-ferrous metal

scrap and its competing virgin commodities as well as just

iron ores and scrap iron and steel, and why they do not

include wastepaper and competing wood pulp shipments

instead of just lumber and lumber products.

While we understand the Commission’s assertion that

its investigative abilities are limited in terms of money

and manpower, certainly these additional recyclable com-

modities (non-ferrous metal scrap and wastepaper) should

fairly be added to and considered as part of Ex Parte No.

270 (Sub-No. 5), Ex Parte No. 270 (Sub-No. 6), and Ex

Parte No. 270 (Sub-No. 7), especially in light of the long

malingering litigation problem hereinabove referred to.

Accordingly, we urge you to take whatever actions are

necessary—

(1) To add non-ferrous metal serap to Lx Parte No.

270 (Sub-No. 6) and the competing virgin metal

natural resource commodities to Ha Parte No. 270

(Sub-No. 7), along with wood pulp, which is certainly

one of our most important timber products, or in the

alternative

(3) To commence at the earliest possible date addi-

tional ka Parte No. 270 investigations to cover the

aforementioned recyclable commodities so heavily in-

volved in the basie rate discrimination questions

raised in a Parte No. 251 and the related litigation.

Obviously, NASMI’s committee is ready and anxious to

meet with both you and Mr. Goodman. However, certainly

the first step must be taken by the Commission, to wit, the

commencement of active investigations regarding all of the

important recyclable commodities—not just one of them.

In faet, NASMLI is principally concerned with all reeyel-

able commodities other than serap iron and steel—and

those if represents (non-ferrous metal scrap, wastepaper,

textiles, plastics) are the ones which create the biggest and

most troublesome solid waste disposal problems for our

federal, state and local governments. Accordingly, it is

these which should clearly have some fair preference in

the current freight rate investigation. Indeed, these are

the reeyelable commodities the Federal Maritime Commis-

sion selected for first order of investigation (see Docket

72-35, FMC Investigation of Freight Rates Charged for

Transportation of Wood Pulp and Wastepaper).

Looking forward to your advice in this regard, I am,

Sincerely,

Kpwarp L. Merrican

KLM sek

ee: Leonard S. Goodman, Esq.

APPENDIX B

INTERSTATE COMMERCE COMMISSION

WASHINGTON, D. c. 20423

November 13, 1973

Mr. Edward L. Merrigan

Counsel, National Association of

Secondary Material Industries, Ine.

Smathers and Merrigan

888 Seventeenth Street, N.W.

Washington, D. C. 20006

Dear Mr. Merrigan:

In the Coordinator’s report, served October 10, 1973,

Investigation of Railroad Freight Rate Structure, 345

I.C.C, 1, 2, after announeing that five subumbered investi-

gations were being instituted, I stated that, ‘‘While ship-

pers of various commodities. may believe that the Coordi-

nator should immediately institute investigations into the

aspects of the railroad freight rate strueture of critical

concern to them, they must remember that the resources in

terms of money and manpower of the railroads, the Special

Projects Counsel, and the Commission are not unlimited.’’

I therefore can understand your concern that investiga-

tions were not instituted with respeet to non-ferrous metal

scrap and wastepaper. Further, I appreciate your aware-

ness that. the Commission’s ‘‘investigative abilities are

limited in terms of money and manpower.”’

Although I am also well aware of the long ‘‘malinger-

ing’’ litigation problem surrounding the Commission’s de-

cision in Ex Parte No. 281, cited in your letter of Novem-

ber 7, 1973, I am unable to agree with your proposal to

expand the ex parte subnumbered investigations, Sub-No.

5, Sub-No. 6, and Sub-No. 7. With respect to your alter-

nate suggestion that a subnumbered investigation be insti-

tuted with respect to non-ferrous metal scrap, waste-paper,

and the virgin competitive products, obviously I am not in

a position to advise you by letter when and if such an in-

vestigation will be instituted. You and all interested

parties will be advised of developments in Ex Parte No.

270 by order, notice, or other appropriate means.

Rather than await an initiating response from the Com-

mission, I renew my suggestion of October 23, 1973, that

you meet with the Special Projects Counsel. I would sug-

gest that you also meet with the railroad industry in order

to determine whether or 1.9t it is possible to agree upon a

relevant data base and limit areas of controversy. I can

assure you that such efforts, if successful, will in the long

run prove to be useful in the Commission’s continuing

study of the railroad rate structure.

For the convenience of all, I am arranging to have a

copy of this letter and our previous correspondence in-

cluded in the correspondence section of the basic Ex Parte

No. 270 docket.

Sincerely,

/s/ Date W. Harpin

Dale W. Hardin

Commissioner

CC: Leonard S. Goodman

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.