Brief for United States — Southern R. Co. v. Seaboard Allied Milling Corp.
Supreme Court brief1979
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Nos. 78-575, 78-597 and 78-604 MAR as
duprems Sourt, U. &-
FILED
1979
, JR,, CLERK
Iu the Supreme Court of the United States
OCTOBER TERM, 1978
SOUTHERN RAILWAY COMPANY, PETITIONER
VU.
SEABOARD ALLIED MILLING CorP., ET AL.
INTERSTATE COMMERCE COMMISSION, PETITIONER
Vv.
SEABOARD ALLIED MILLING CoRP., ET AL.
SEABOARD COAST LINE RAILROAD
COMPANY, ET AL., PETITIONERS
Vv.
SEABOARD ALLIED MILLING CoRP., ET AL.
ON WRIT OF CERTIORARI TO THE UNITED STATES
COURT OF APPEALS FOR THE EIGHTH CIRCUIT
BRIEF FOR THE UNITED STATES
WADE H. McCREE, JR.
Solicitor General
FRANK H. EASTERBROOK
Deputy Solicitor General
RICHARD A, ALLEN
Assistant to the Solicitor General
Department of Justice
Washington, D.C. 20530
SS SOT
EE
STE
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Introduction and summary of argument ........
Argument:
A. The Commission’s decision not to
B.
open an investigation under Section
15(8) (a) is immune from judicial
review only if a statute expressly
precludes review or if the statutory
structure indicates that review is
SS
A decision not to conduct an investi-
gation under Section 15(8) (a) may
be judicially reviewed, but only after
a final Commission decision on the
lawfulness of the rates ......................
1. A decision not to investigate un-
der Section 15(8)(a) is essen-
tially a decision allocating bur-
dens of proof, and judicial review
of such decisions is consistent
with the statutory plan -............
2. Review of the Commission’s de-
cision not to investigate under
Section 15(8)(a) should await a
final decision by the Commission
on the lawfulness of the rates......
10
10
II
Argument—Continued Page
8. The accounting and refund provi-
sions of Section 15(8)(e) are
not relevant to the availability
or timing of judicial review ........ 20
4, The decisions relied on by peti-
tioners do not support their argu-
ment that the Commission’s de-
cision not to investigate under
Section 15(8)(a) is unreview-
EP SRMRTO SECT Mert elias CeO atUW Ne eae aE een 22
C. The Commission’s discretion under
Section 15(8)(a) is broad but not
unlimited, and judicial review is nec-
essary to protect statutory policies.... 32
a esitnnianeiis 37
FE Ok sasicsctecccisssciitacsbsibncacdalpallediledashaniibhaltntist la
RI FD coincidences 6a
CITATIONS
Cases:
Aberdeen & Rockfish R.R. v. SCRAP, 422
OU, I ata 31, 32
Abbott Laboratories v. Gardner, 387 U.S.
LS LONE ORS NOE 9
Alabama Public Service Commission v.
Southern Ry., 341 U.S. 341 -...000002....... 26
Arrow Transportation Co. v. Southern
} Se Bt het menNenee 5, 22, 23
ASG Industries, Inc. v. United States,
I = aati eerie itceniisciitnenackslocs 13
Asphalt Roofing Manufacturers Associa-
tion v. ICC, 567 F.2d 994 ................... 30, 31
Ill
Cases—Continued Page
Atchison, Topeka & Santa Fe Ry. v.
Wichita Board of Trade, 412 U.S. 800.. 4, 11,
13, 24, 35, 36
Boire v. Greyhound Corp., 376 U.S. 473.. 15
Chicago v. North Western Transportation
Co. v. United States, 582 F.2d 10438...... 26
City of Chicago v. United States, 396 U.S.
RA. dedincabiadetacisd caiicedbeidadnadticipsiammesesentiniidaaeniains 11, 24, 25
Confiscation Cases, 74 U.S. (7 Wall.)
I Sriachbeiasiecahehdceniisti tsar eascgiecatdiecniniadan 27
Davis v. Portland Seed Co., 264 U.S. 403.. 13
Dunlop v. Bachowski, 421 U.S. 560 .......... 29, 30
Environmental Defense Fund, Inc. v.
EPA, 548 F.2d 998, cert. denied, 431
ei TTY clean eieiesoietapllciidicen able daniantetamen 13-14
FCC v. National Citizens Committee For
Broadcasting, 486 U.S. 775 -..00..22002..---. 33
FPC v. Transcontinental Gas Pipe Line
ee SRO 19
FTC v. Klesner, 280 U.S. 19 ...............-...- 27
FTC v. Universal-Rundle Corp., 387 U.S.
BO asescaiiehaciahuaassdesebelet sdatnetialiprdilsadciscseiciandadusincatensiin 27
Imber v. Pachtman, 424 U.S. 409 -........... 28
Intermountain Rate Cases, 234 U.S. 476.. 5
McKart v. United States, 395 U.S. 185.... 14
Morris v. Gressette, 482 U.S. 491 _........... 9
Myers v. Bethlehem Shipbuilding Corp.,
BN I ME Saicticcetenticheninhacihiatee Gali inaeacees 15
South Prairie Construction Co. v. Local
627, Operating Engineers, 425 U.S.
SUE saiieiasellbvaiisinibvrsiacepbbiiblaipitesstitnicatadieantinonis 19
Toilet Goods Association v. Gardner, 387
StS Te Nae Aen nn EI OO 15
Trans Alaska Pipeline Rate Cases, 436
SS MIE Setsiidinitactesaseatadipuphsbcactancentacecimadiclebsias 23
IV Vv
Cases—Continued Page |
United States v. Chicago, M., St. P. & Statutes and regulations—Continued Page
PR. Co, Ht US. GO. 36 nA EET A CE 11
United States v. MacDonald, 435 U.S. EN ENS ESE eats a 32
SU nnnsscnsesncensnssssennne 18 ETO passim
United States v. Nixon, 418 U.S. 683........ 27 RS ie el 11
United States v. SCRAP, 412 U.S. 669......3, 5, 23 Section 15(7) (1970 ed.) 20.002. 4, 30
Vaca v. Sipes, 386 U.S. 171 ...................... 27 Section EN isk easubiansrncnies 8,4, 12,17
Zenith Radio Corp. v. United States, 4387 Section 15(8) (a) ....--...--ccececeeeceeeceee passim
is. Sr! See 25 Section 15(8) (b) .ec..eeceecceeeceeeeeeeee ee 3-4, 12
Section 15(8) (C) ............-ssc-cceeceeeeeeeee 4
Statutes and regulations: seeenom 2608) (dd) nc. ccncccneeces 4
Administrative Procedure Act, 5 U.S.C. nei fen wossosseeseeesnaeeateaneenteases 13, .
701 et seq.: BOM BOKO) AL) -n-nnenensceonensereennensecnnen
SUSC 2 ee 2 Pub. L. No. 95-478, 92 Stat. 1887 _........... 3
5 USC. Wile} cu. 9 : od |) ce 4,11, 24
BEUSC 90 eee 2,9 oe Be, ee 29, 30
5 USC. 908 oc 2,14, 15, 32 ES OE] |) 30
B U.S.C. 706 (2) (A) eneeernneerne 33 citi asinss:
Interstate Commerce Act, as amended by : a : ;
the Railroad Revitalization and Regu- x. oh de ae ma Law Treatise
latory Reform Act of 1976, Pub. L. No. Ba Seat nhnceneeiietsemmnsienosienene 28
94-210, 90 Stat. 31, 49 U.S.C. (1976 —
and 1970 ed.) 1 et seq.:
ek. | ee 4
90 Stak. 2E0 jcc 26
| Ene 26
Sectiom 26G) nncnncncscmeeeee 5, 6, 25
Section 1€18) <.cicicsnnene 26
i Tei 5, 6, 25
Section SCR) iiccncnseeee 5, 6, 25
Sectiom SOR) eccncnncscccecnieeeeeeneeee 5, 25
Section SEB) . nncccninsccsisnnesneeenen 3
OCC GB ccccics-ssnenena be 11
Iu the Supreme Court of the United States
OCTOBER TERM, 1978
No. 78-575
SOUTHERN RAILWAY COMPANY, PETITIONER
Vv.
SEABOARD ALLIED MILLING CORP., ET AL.
No. 78-597
INTERSTATE COMMERCE COMMISSION, PETITIONER
Vv.
SEABOARD ALLIED MILLING CORP., ET AL.
No. 78-604
SEABOARD COAST LINE RAILROAD
COMPANY, ET AL., PETITIONERS
Vv.
SEABOARD ALLIED MILLING CORP., ET AL.
ON WRIT OF CERTIORARI TO THE UNITED STATES
COURT OF APPEALS FOR THE EIGHTH CIRCUIT
BRIEF FOR THE UNITED STATES
OPINIONS BELOW
The opinion of the court of appeals (A. 303-316) is
reported at 570 F.2d 1349. The opinion of the Inter-
(1)
2
state Commerce Commission (A. 280-290) is not
reported.
JURISDICTION
The judgment of the court of appeals (A. 303-316)
was entered on February 16, 1978. A petition for
rehearing was denied on May 12, 1978 (A. 317-318).
The petitions for a writ of certiorari were filed on
October 6, 1978 (No. 78-575) and October 10, 1978
(Nos. 78-597 and 78-604), within the time as ex-
tended, and invoked this Court’s jurisdiction under
28 U.S.C. 1254(1) and 2350(a). This Court granted
the petitions on January 8, 1979, and consolidated the
cases (A. 319-321).
QUESTION PRESENTED
Whether the court of appeals had jurisdiction to
review a decision of the Interstate Commerce Com-
mission refusing to investigate a proposed rate in-
crease.
STATUTES INVOLVED
Sections 13(1) and 15(8) of the Interstate Com- ‘
merce Act, 49 U.S.C. (1976 ed.) 18(1) and 15(8),
and Sections 10, 10(a) and 10(c) of the Adminis-
trative Procedure Act, now 5 U.S.C. 701, 702, and
704, are set forth in pertinent part in Appendix A,
infra, 1a-5a.
3
STATEMENT
1. Under the Interstate Commerce Act, carriers
have the initiative in railroad ratemaking, subject to
advance notice requirements and to the Commission’s
powers to suspend and investigate proposed rate
changes. See United States v. SCRAP, 412 U.S. 669,
672 (1978) (SCRAP I). A carrier desiring to in-
crease its rates must file a tariff reflecting the changes
under Section 6(3), 49 U.S.C. (1976 ed.) 6(3),* at
least 30 days before the changes are to go into effect.
In the absence of any action by the Commission, the
rates become effective.
When a tariff is filed, Section 15(8) of the Act, 49
U.S.C. (1976 ed.) 15(8), provides in subsection (a)
that “the Commission may, upon the complaint of an
interested party or upon its own initiative, order a
hearing concerning the lawfulness” of the rates pro-
posed in the tariff. That section also requires the
Commission to render a final decision in any such
hearing within seven (or on certain conditions ten)
months. Section 15(8)(f) provides that in any such
hearing “the burden of proof is on the common car-
rier by railroad to show that the proposed changed
rate * * * is just and reasonable * * *.” Section
1On October 17, 1978, President Carter signed into law
the Revision of Title 49, United States Code, “Transporta-
tion,” Pub. L. No. 95-473, 92 Stat. 1837, which recodifies the
Interstate Commerce Act. For purposes of clarity, we refer to
the statutes by their former designations. Appendix B, infra,
sets forth a table of the recodified sections of the sections of
the Act referred to in this brief.
4
15(8)(b) of the Act authorizes the Commission to
suspend the effectiveness of a proposed rate change
for the seven or ten-month period in which an investi-
gation is held under Section 15(8) (a).’
If a new tariff goes into effect because the Commis-
sion has decided not to suspend it and not to conduct
an investigation into its lawfulness under Section
15(8) (a), any person, such as a shipper, may com-
plain to the Commission under Section 13(1), 49
U.S.C. (1976 ed.) 13(1), that the rates are unlawful;
in that event “it shall be the duty of the Commission
to investigate the matters complained of * * *.” In
such an investigation, the complainant has the burden
of demonstrating that the rates are unlawful. Atchi-
son, Topeka & Santa Fe Ry. v. Wichita Board of
Trade, 412 U.S. 800, 812-814 (1973).
If the Commission conducts an investigation under
either Section 15(8) (a) or Section 13(1) and renders
a final decision that the rates are lawful or unlawful,
that decision is subject to judicial review. 28 U.S.C.
2342(5). This Court has held, however, that a deci-
sion by the Commission not to suspend a rate is not
subject to judicial review, ‘because Congress intended
2Prior to 1976 the provision of the Act authorizing the
Commission temporarily to suspend the proposed rates of rail
carriers (49 U.S.C. (1970 ed.) 15(7)) placed no limitations
on that authority. The Railroad Revitalization and Regulatory
Reform Act of 1976 (the “4-R Act’’), Pub. L. No. 94-210, 90
Stat. 31, enacted a new suspension provision pertaining exclu-
sively to rail carriers (the present 49 U.S.C. (1976 ed.) 15
(8)), and that provision places significant limitations on the
Commission’s authority to suspend. See 49 U.S.C. (1976 ed.)
15 (8) (b), (c) and (d).
5
that only the Commission have authority to suspend
the effectiveness of rates pending a final decision on
their lawfulness. SCRAP I, supra, 412 U.S. at 691;
Arrow Transportation Co. v. Southern Ry., 372 U.S.
658 (1963).
2. In August 1977 the principal southern railroads
filed a tariff proposing a 20% seasonal increase in
rates for the shipment of certain grains between
Illinois and Indiana and points in the southeastern
United States. The tariff was to be effective from
September 15 to December 15, 1977. Some 35 parties,
including shippers, associations, state departments of
agriculture and the United States Department of
Agriculture asked the Commission to suspend and
investigate the rate. Protestants alleged that the pro-
posed tariffs were unreasonable and discriminatory,
in violation of Sections 1(5), 2, 3(1) and 4(1) of the
Act, 49 U.S.C. (1976 ed.) 1(5), 2, 3(1) and 4(1)
(A. 304-305).
The Commission denied the petitions for suspension
and investigation of the rates (A. 286-290). The
Commission stated that the evidence did not warrant
suspension of the tariff, but it “admonished”’ the rail-
roads to “take prompt action to remove violations of
the long-and-short haul provision of Section 4(1) of
the Act, if any” (A. 288).° The Commission declined
% Section 4(1) essentially prohibits a railroad from collect-
ing a greater total charge for shipments over shorter dis-
stances than over longer distances when both involve the same
route and direction. The prohibition is absolute, with relief
available only by express findings, after investigation, that a
“special case” exists. See Intermountain Rate Cases, 234 U.S.
476, 485-486 (1914).
6
to exercise its authority to investigate the rates under
Section 15(8) (a), holding that the proposal “appears
to be in general conformity” with the goals of the 4-R
Act and that the protestants had not “sustained their
burden on the section 1(5) assertions” (A. 288). It
stated that the allegations of violations of Section 2
and Section 3(1) appeared to stem from “the possibly
overbroad scope of the proposal” but held that there
was insufficient evidence to warrant suspension (A.
289). The Commission referred to a “clear Congres-
sional purpose to permit experimental ratemaking”
and observed that “[t]he complaint sections of the
Act protect, to a certain extent, the interests of those
who may be adversely affected” (A. 289).
3. The court of appeals vacated the Commission’s
order and remanded the case for further proceedings
(A. 303-316). The court concluded that, under the
“peculiar circumstances of this case,’”’ the Commission
erred by failing to open a formal investigation (A.
315-316). The court rejected the Commission’s con-
tention that Arrow Transportation Co. v. Southern
Ry., supra, precluded review, because the court con-
cluded that “[t]he factors which prompted the
‘Supreme Court in Arrow Transportation Co. v. South-
ern Railway Co., supra, to hold suspension orders not
reviewable are not applicable to decisions of the Com-
mission to refuse to make or to terminate an investi-
gation of the lawfulness of a proposed tariff” (A.
310). With respect to such decisions, the court held,
the regulatory scheme did not preclude review “under
all circumstances” (A. 314). The court concluded
7
that where allegations of substantial statutory viola-
tions have “sufficient substance” (A. 315), immediate
review of a decision not to investigate is appropriate
because such a decision “is equivalent to a finding of
lawfulness of the tariffs” and because review would
promote administrative efficiency by “eliminat[ing]
the necessity of consideration of numerous potential
§ 13(1) complaints by the Commission and the court”
(@ 314).
INTRODUCTION AND SUMMARY OF ARGUMENT
We do not agree with the position of either peti-
tioners or the court of appeals. Our view is that the
decision of the Commission not to conduct an investi-
gation under Section 15(8)(a) is subject to judicial
review to determine whether it was arbitrary, caprici-
ous, or an abuse of discretion. But that decision is
not, as the court of appeals held, reviewable immedi-
ately after the Commission declines to open an investi-
gation; it is reviewable only after the Commission has
entered a final order on the lawfulness of the rate
following an investigation and adjudication that any
aggrieved person can require the Commission to con-
duct under Section 13(1) of the Act.
Our submission is based on the fact that a decision
not to conduct an investigation under Section 15(8)
(a) is functionally equivalent to a decision to allocate
the burden of proof in an investigation to shippers or
other persons aggrieved by rate increases. Nothing
in the Act or its purposes suggests a congressional
intent entirely to insulate such a burden-allocation
8
determination from judicial review. But the regula-
tory purposes of the Act and general principles of
finality establish that it is necessary to protect the
carefully structured ratemaking procedures of the
Act from the delay that would result from immediate
judicial review of an essentially interlocutory burden-
allocation decision. Review of that determination—
which is only one of many potentially important is-
sues—should await the completion of the investiga-
tion that any aggrieved person can require the
Commission to conduct under Section 13(1). If the
Commission errs in allocating the burden, and if that
error has decisional consequence, judicial review of
an order entered at the end of a Section 13(1) pro-
ceeding would adequately protect any party aggrieved
by the error without disrupting the Commission’s
administrative functions.
In practical effect, our position may not differ sig-
nificantly from the position:of the Commission and
the other petitioners. We agree with the Commission
that it has wide discretion in determining whether to
initiate an investigation under Section 15(8) (a).
Moreover, because the Commission’s failure to initiate
a Section 15(8) (a) investigation would be arbitrary,
capricious or an abuse of discretion only when the
complainants had built a powerful case that the rate
was unlawful, it seems unlikely that the complainants
would in such cases fail to satisfy any burden placed
on them by the Commission, properly or not, in a
Section 13(1) proceeding. Nevertheless, we believe
that the principle we assert is important and, as deci-
9
sions of this Court indicate, there may well be cases
in which the Commission’s decision to allocate the
burden of proof would be error that changes the out-
come of the case.
ARGUMENT
A. The Commission’s Decision Not To Open An Investi-
gation Under Section 15(8)(a) Is Immune From Ju-
dicial Review Only If A Statute Expressly Precludes
Review Or If The Statutery Structure Indicates That
Review Is Inappropriate
The Administrative Procedure Act establishes a
strong presumption in favor of judicial review of
agency action. 5 U.S.C. 702 provides: ‘A person
suffering legal wrong because of agency action, or ad-
versely affected or aggrieved by agency action within
the meaning of a relevant statute, is entitled to
judicial review thereof.” The Act provides an ex-
ception to that principle only to the extent that ‘“(1)
statutes preclude judicial review; or (2) agency ac-
tion is committed to agency discretion by law.” 5
U.S.C. 701(a). As this Court had concluded, judicial
review is available unless a statute expressly pre-
cludes review or “unless there is persuasive reason to
believe” that Congress intended to preclude review.
Abbott Laboratories v. Gardner, 387 U.S. 136, 140
(1967); see also Morris v. Gressette, 432 U.S. 491,
501 (1977) (collecting cases).
~ 10
B. A Decision Not To Conduct An Investigation Under
Section 15(8)(a) May Be Judicially Reviewed, But
Only After A Final Commission Decision On The
Lawfulness Of The Rates
1. A Decision Not to Investigate Under Section 15(8)
(a) Is Essentially A Decision Allocating Burdens
of Proof, And Judicial Review of Such Decisions
is Consistent with the Statutory Plan
No statute expressly prohibits judicial review of a
decision not to initiate an investigation under Section
15(8) (a). Moreover, nothing in the structure of the
Interstate Commerce Act suggests that. judicial re-
view would interfere with the achievement of the
legislature’s objectives. On the contrary, judicial re-
view of such decisions, at the appropriate time, is
consistent with the purposes and structure of the Act.
That is so because, under the particular and some-
what unusual structure of the Interstate Commerce
Act, the Commission’s decision not to investigate rate
changes under Section 15(8) (a) does not amount to
a decision not to adjudicate the lawfulness of the
rates at all; instead it amounts to a decision to place
the burden of proof on shippers in an investigation
and adjudication that protesting shippers can compel
the Commission to conduct under Section 13(1).
As we have pointed out (pages 3-5, supra), if the
- Commission initiates an investigation under Section
15(8) (a), the statute places the burden of proof on
carriers to demonstrate that the proposed rates are
lawful. If the Commission declines to initiate such a
proceeding and the rates go into effect, shippers and
other aggrieved persons have a statutory remedy:
11
‘they can file a complaint under Section 13(1) and
require the Commission to investigate and adjudicate
the lawfulness of the rates. Section 13(1) gives no
discretion to the Commission to decline to conduct an
investigation; it provides that if a complaint is filed,
and if the carrier does not “satisfy the complaint”
within a reasonable time, or if “there shall appear to
be any reasonable ground for investigating said com-
plaint, it shall be the duty of the Commission to in-
vestigate the matters complained of in such manner.
and by such means as it shall deem proper.’ If, after
an investigation under Section 13(1), the Commission
determines that the rates charged were unlawful, the
shippers may obtain damages resulting from the un-
lawful rates. 49 U.S.C. (1976 ed.) 8, 9. If the Com-
mission determines that the rates are lawful, the
shipper may obtain judicial review. 28 U.S.C.
2342(5). In a Section 13(1) proceeding, however,
the shipper has the burden of showing that the rate is
unlawful: “the shipper must produce substantial evi-
dence that the rate is unreasonable.” Atchison,
Topeka & Santa Fe Ry. v. Wichita Board of Trade,
412 U.S. 800, 814 (1973) (plurality opinion); see
also id. at 812-813.
In light of these provisions, the principal effect on
interested parties of a decision by the Commission not
‘If the Commission conducts such an investigation, Sec-
tion 14(1) of the Act, 49 U.S.C. 14(1), requires it to render a
decision on the merits and to state its reasons in writing. See
City of Chicago v. United States, 396 U.S. 162, 166 (1969).
12
to initiate an investigation under Section 15(8) (a)
is to place the burden of proof on shippers. Such a
decision does not, contrary to the court of appeals’
view (A. 314), constitute a determination that the
rates are lawful, and it does not preclude the shipper
from demonstrating or the Commission from deciding
in a Section 13(1) proceeding that the rates are un-
lawful. It is no more a final decision on the merits
than, for example, a district judge’s denial of a re-
quest for summary judgment. Trial lies ahead. ©
Such a decision also does not delay the shippers’
remedies, for they can file a Section 13(1) complaint
and require the Commission to initiate an investi-
gation as soon as the rates go into effect. In this case
they could have compelled a Section 13(1) investi-
gation the day after the Commission declined to insti-
tute an investigation under Section 15(8) (a). Final-
ly, the decision not to open a Section 15(8) investi-
gation does not preclude or diminish shippers’ rights
to judicial review. Whether the Commission deter-
mines that rates are lawful after an investigation
initiated under Section 15(8)(a) or after one com-
pelled by shippers under Section 13(1), shippers may
obtain judicial review of that determination.’
°In contrast to a decision not to investigate under Sec-
tion 15(8) (a), a decision not to suspend a proposed rate in-
crease under Section 15(8) (b) has a different and more sig-
nificant effect on carriers and shippers. If the Commission
suspends a proposed rate increase and later finds it to have
been lawful, the carriers will have lost the increased revenues
they would have received from all shippers if the rate had not
been suspended. If the Commission does not suspend a rate
13
Although the burden of proof sometimes is of con-
siderable significance to the Commission’s ultimate
determination of the lawfulness of rates (see, e.9.,
Atchison, Topeka & Santa Fe Ry. v. Wichita Board
of Trade, supra, 412 U.S, at 813-814 (plurality opin-
ion) and pages 32-37, infra), there is no reason to
suppose that Congress intended to make the Commis-
sion’s allocation of burdens wholly immune from
judicial review. Although an investigation under
Section 15(8) (a) would require expenditures of the
Commission’s time and resources, a decision not to
open such an investigation does not ensure any sav-
ings, since aggrieved persons can require the Commis-
sion to make those expenditures on demand under
Section 13(1). And it is commonplace for courts,
reviewing final agency adjudications, to review the
correctness of the agency’s allocation of burdens in
a proceeding. See Environmental Defense Fund, Inc.
increase and later finds it to be unlawful, individual shippers
may seek and obtain the “full amount of damages sustained
in consequence” of such unlawful rate (49 U.S.C. 8), which
need not be the same as the simple difference between the
lawful rates and the rates charged. Davis v. Portland Seed
Co., 264 U.S. 408 (1924); ASG Industries, Inc. v. United
States, 548 F.2d 147 (6th Cir. 1977).
If the Commission does not suspend the rates but initiates
an investigation under Section 15(8) (a), Section 15(8) (e)
does create a potential, though limited, refund liability for
carriers if the rates are ultimately found unlawful. In that
respect, the Commission’s decision not to initiate an investiga-
tion under Section 15(8) (a) has a consequence in addition to
allocating burdens of proof; but as we discuss at pages 20-22,
infra, that consequence is not relevant to the availability or
timing of judicial review.
14
v. EPA, 548 F.2d 998, 1018-1015 (D.C. Cir. 1976)
cert. denied, 431 U.S. 925 (1977) (collecting cases).
2. Review of the Commission’s Decision Not To In-
vestigate Under Section 15(8)(a) Should Await a
Final Decision By The Commission On The Lawful-
ness of the Rates
Although the scheme of the Interstate Commerce
Act does not suggest a congressional intent to insulate
the Commission’s decision not to investigate under
Section 15(8)(a) entirely from judicial review, we
believe that the court of appeals was incorrect in
holding that decision is immediately reviewable.
The Administrative Procedure Act, 5 U.S.C. 704,
provides in pertinent part that:
Agency action made reviewable by statute and
final agency action for which there is no other
adequate remedy in a court are subject to ju-
dicial review. A preliminary, procedural, or
intermediate agency action or ruling not directly
reviewable is subject to review on the review of
the final agency action.
This requirement that agency rulings are subject to
review only after “final agency action” (unless other-
wise authorized by statute) reflects the principle that
“it is generally more efficient for the administrative
process to go forward withoutyinterruption than it is
to permit the parties to seek aid from the courts at
various intermediate stages.” McKart v. United
States, 395 U.S. 185, 194 (1969). This requirement
also is an aspect of the general principle that parties
must exhaust their administrative remedies before
15
they may seek the assistance of the courts. See Toilet
Goods Association v. Gardner, 387 U.S. 158 (1967) ;
Boire v. Greyhound Corp., 376 U.S. 473, 476-479
(1964). As this Court said in Myers v. Bethlehem
Shipbuilding Corp., 308 U.S. 41, 50-51 (1938), it is
a “long settled rule of judicial administration that no
one is entitled to judicial relief for a supposed or
threatened injury until the prescribed administrative
remedy has been exhausted.” .
The finality requirement of Section 704 and the
exhaustion doctrine, indicate that review of the Com-
mission’s decision not to open an investigation under
Section 15(8) (a) should await the Commission’s final
determination of the lawfulness of rates after a pro-
ceeding that any aggrieved person can require the
Commission to conduct under Section 18(1). As we
have argued in the preceding section, a decision not to
open an investigation does little more than allocate
the burden to shippers to demonstrate unlawfulness.
An agency’s decision to allocate burdens in a proceed-
ing is plainly “[a] preliminary, procedural, or inter-
mediate” ruling that may be reviewed only after the
completion of the proceeding and a final decision on
the merits.
Nothing in the Interstate Commerce Act suggests
a need for immediate judicial review of a decision not
to proceed under Section 15(8)(a). Any aggrieved
party who seeks judicial review of such a decision
could as easily file a complaint under Section 13(1).
In many cases, an administrative proceeding under
Section 13 would be completed before a court finally
16
decided whether the Commission abused its discretion
in failing to proteed under Section 15(8). And be-
cause aggrieved shippers may meet their burden of
demonstrating the unlawfulness of the rates in a
Section 13 proceeding, and thus obtain a complete
remedy, immediate judicial review of the Section
15(8) (a) decision in such cases would be unnecessary
and wasteful.
It may seem strange to conclude that a court should
wait until after the Commission has conducted’ an
investigation into the lawfulness of rates under Sec-
tion 13(1) before deciding whether the Commission
should have conducted an investigation under Section
15(8) (a). But many important issues are not re-
solved by courts until administrative proceedings are
over. The point of judicial review is not to force the*
Commission to conduct an investigation (Section
13(1) already does that), but rather to ensure that
the burdens in the investigation are placed in accord-
ance with the statutory design. That question, like
many other potentially dispositive issues, can best be
reviewed after the proceeding is over.’ And if the
Commission’s error should require an investigation to
be redone, that is a small price to pay for avoiding
premature judicial review, and its attendant delay, in
many other cases. Trials and administrative proceed-
ings frequently are redone; this is undesirable, but
the alternative—immediate review of every important
* Only then will a reviewing court know whether the poten-
tially dispositive issue in fact was dispositive.
17
procedural or substantive issue in the case—is still
less desirable.
The following example may illustrate our position.
Suppose a group of carriers files a tariff increasing
rates for the shipment of alfalfa from $50 per ton to
$100. Despite shipper protests, the Commission de-
clines to conduct an investigation under Section
15(8)(a) for the stated but erroneous reason that
a new statute requires it to allow unlimited rate in-
creases on alfalfa, but that if it had some say in
the matter the increase would surely warrant an
investigation. The rates then go into effect; the ship-
pers file a Section 13(1) complaint, and thus initiate
a proceeding in which they and the carriers present
argument and evidence supporting their positions.
Fuller argument is possible in this proceeding than
could be had in the brief time before the Commission
made its decision under Section 15(8).’ At the end of
the proceeding the Commission enters a final decision
in which it repudiates its erroneous statement about
the new law but upholds the lawfulness of the in-
7 Under Section 15(8) (a) the Commission usually has 30
days within which to decide whether to investigate the pro-
posed rate, and it must reach its decision on the basis of what-
ever brief submissions the carriers or protestants may provide.
That fact suggests that the Commission should be accorded a
substantial margin of discretion in making such decisions
(see pages 32-34, infra) and also indicates the wisdom of
deferring judicial review until the Commission’s final deci-
sion on the lawfulness of the rates. Fuller consideration
under a Section 13(1) proceeding may well lead the Commis-
sion to correct any erroneous view it may have had that per-
suaded it not to investigate under Section 15(8).
18
creased rates on the ground that the shippers had not
met their burden of demonstrating that the rates were
above the permissible zone of reasonableness. The
shippers then can obtain judicial review. If the court
first concludes that the burden of proof had an effect
on the outcome of the Section 13(1) investigation,*
it should then decide whether the Commission abused
its discretion in declining to initiate a Section 15(8)
(a) investigation. If the court finds such abuse—
and it presumably would in this example—it then
should remand to the Commission with directions to
institute a new proceeding in which the carriers have
®In many cases the inquiry would end with a finding that
the burden was irrelevant. In the case before the Court, for
example, the burden of proof has no effect on the analysis of
the asserted long-and-short-haul violation. Such violations
cannot be justified by the reasonableness of the rates charged.
Moreover, even in many cases involving “‘reasonableness” of
rates, if the evidence of unlawfulness in a given case is so
powerful that it was arbitrary for the Commission, after con-
sidering these factors, not to investigate, then the same evi-
dence should be sufficient to carry the day for the complainant
in a Section 13(1) case without regard to the placement of
the burden of proof.
Furthermore, the fact that in some cases it might appear to
a court that the proposed rates are clearly unlawful would
provide no basis for immediate judicial review of the Com-
mission’s decisions not to investigate them. Under the Ad-
ministrative Procedure Act and general principles of finality
applied in other contexts, non-final decisions are not review-
able no matter how apparently erroneous, since the agency
or trial court might well correct its initia! error in its final
decision and since in any case the aggrieved party has an
adequate remedy on review of the final decision. See United
States v. MacDonald, 435 U.S. 850, 857-858 n.6 (1978).
19
an opvortunity to meet their burden.’ Suppose that
after such a proceeding the Commission finds that the
carriers failed to meet their burden and that the rate
increases were therefore unlawful. In those circum-
stances, a determination by the Commission that the
rates are unlawful, which would entitle shippers to
damages under Section 8, does no more than imple-
ment the statutory scheme by placing the burdens
where the statute intended. This would give shippers
a remedy but avoid premature and potentially un-
necessary judicial decisionmaking.
In sum, we believe that a court reviewing a final
Commission decision under Section 13(1), with the
full record before it, would have jurisdiction to
determine whether the initial placement of the bur-
den on the shippers was arbitrary, capricious, or
contrary to the Commission’s statutory mandate, and,
if so, whether that error made a difference to the
outcome. If the court makes both determinations, it
should remand for further proceedings in which the
burdens would be properly placed. This procedure
would protect the interests of shippers, carrv cut the
statutory design, and minimize the disruption, delay
and waste of judicial time that might be caused by
piecemeal litigation of the Commission’s decisions.
® See, e.g., FPC v. Transcontinental Gas Pipe Line Corp., 423
U.S. 326 (1976) ; South Prairie Construction Co. v. Local 627,
Operating Engineers, 425 U.S. 800 (1976).
20
3. The Accounting and Refund Provisions Of Section
15(8)(e) Are Not Relevant To The Availability or
Timing of Judicial Review
The Commission’s decision not to open an invcsti-
gation under Section 15(8)(a) and to await any
complaints under Section 13(1) has one consequence,
in addition to the shifting of the burden of proof,
that may be urged as a consideration relevant to
the question of review. If the Commission initiates
an investigation under Section 15(8)(a) without
suspending the propysed rate changes, Section 15
(8)(e) provides that the Commission must require
the carriers to keep an account of the amounts re-
ceived because of the increases (and from whom they
were received) during the period of the investigation,
but in no event more than seven months.” Section
15(8)(e) further provides that if the Commission’s
final order after such an investigation finds the rate
increases to have been unlawful, it must require the
carriers to refund to shippers that portion of the
accounted—for increases that were found unlawful.
If, on the other hand, the Commission does not initi-
ate an investigation under Section 15(8) (a), and the
shippers compel it to investigate and determine the
lawfulness of the rates under Section 13(1), the
carriers will not have kept an account, and the ship-
pers will not be entitled to refunds under Section 8.
” Ten months if the Commission extends its investigation
to ten months, as Section 15(8) (a) permits if the Commis-
sion files a written report to Congress explaining why it can-
not reach a decision within seven months.
21
They would be entitled only to their damages, which
may be less than refunds if the shippers have passed
their increased costs through to their customers.
While this may make it significant to carriers and
shippers whether the Commission proceeds under
Section 15(8)(a) or under Section 18(1), the dif-
ferences do not provide a basis for supposing that
Congress intended either to immunize the Commis-
sion’s decision not to proceed under Section 15(8) (a)
entirely from judicial review or to override the usual
rule against premature judicial decisions. Even if
aggrieved persons could seek immediate review of a
decision not to investigate under Section 15(8) (a),
filing a petition in a court of appeals would have no
effect on the carrier’s obligation to keep accounts.
The obligation could not be created until a court had
reviewed the Commission’s decision on the merits;
during the interim no records would be kept. The
obligation would expire in any event seven months
after the rates went into effect, and a final judicial
decision that the Commission abused its discretion in
failing to initiate an investigation could not undo the
past. A final judicial decision that the Commission
abused its discretion might ultimately justify an
order that the carriers pay refunds for that seven-
month period on the basis of the best evidence avail-
able, but that result is only what the Act contem-
plates. And if, as we contend, the Commission’s deci-
sion should be reviewed in the context of a final
order determining the lawfulness of the rates, which
is reviewable in any event, review would not affect
22
or interfere with the Commission’s exercise of its
functions under the Act.
The example used earlier (pages 17-19, supra)
may again illustrate our contention. Suppose that
the court, in reviewing a final order under Sec-
tion 13(1) that increased rates are lawful, deter-
mines that the Commission erred in placing the
burden on shippers, finds that that error was of deci-
sional consequence, and orders the Commission to
reopen its proceedings. If, in that new proceeding,
the carriers fail to meet their burden, the Commis-
sion may direct that the carriers refund the excess
rates for the period in which they should have been
accounted for and refunded; this achieves the result
the statutory scheme intended. The procedure, in-
cluding judicial review, does not affect or interfere
with the Commission’s proper functions under the
Act. And little could be gained by immediate judi-
cial review of the decision not to open a Section 15
(8) (a) investigation.
4. The Decisions Relied On By Petitioners Do Not
Support Their Argument That The Commission’s
Decision Not To Investigate Under Section .15(8)
(a) Is Unreviewable
a. Petitioners rely on a number of decisions of
this Court that do not, in our view, support their
contention that the Commission’s decision not to
initiate an investigation under Section 15(8) (a) is
immune from judicial review.
Arrow Transportation Co. v. Southern Ry., 372
U.S. 658 (1963), held that a court had no power to
23
enjoin the implementation of rates before the Com-
mission makes a determination about their lawful-
ness. That case does not suggest, however, that a
decision not to investigate under Section 15(8) (a)
is immune from review. In Arrow the Court con-
cluded that Congress intended to give the Commis-
sion the exclusive authority to suspend rates pending
a final decision on their lawfulness because any power
in the courts to suspend rates would result in non-
uniform rates, contrary to the statutory purpose, and
because the exercise of such a power would require
courts to make independent determinations of the
reasonableness of rates, contrary to the congressional
purpose to vest those determinations primarily in
the Commission. 372 U.S. at 662-672. See also Trans
Alaska Pipeline Rate Cases, 486 U.S. 631, 638 n.17
(1978) ; United States v. SCRAP, 412 U.S. 669, 691
(1973) (SCRAP I). Judicial review of a decision
“In Arrow the Court held that a district court could not
suspend rates after they had gone into effect at the expiration
of a Commission-imposed suspension period but before a final
determination by the Commission on their lawfulness. In
SCRAP I this Court expanded that principle somewhat by
holding that a court could not enjoin rate changes during the
statutory period when the Commission has declined to suspend
them. 412 U.S. at 691. In the Trans Alaska Pipeline Rate
Cases, supra, however, this Court held that a court could re-
view a decision to suspend rates; a court may ensure that the
Commission does not exceeded its statutory authority.
After a final decision by the Commission that a proposed
rate increase is lawful, courts may have the authority to
enjoin an increase when necessary to effect their power to
review the Commission’s decision. The Court has not resolved
24
not to open an investigation under Section 15(8) (a)
would not have the effect of suspending rates and
would not require courts prematurely to assess the
reasonableness of rates. The review would come after
the fact.” It would interrupt nothing. It would raise
no risk of non-uniform rates. It would not extend a
statutory limit on the permissible length of suspen-
sion. Such review would simply involve the well
recognized power “to determine whether the course
followed by the Commission is consistent with its
mandate from Congress.” Atchison, Topeka & Santa
Fe Ry. v. Wichita Board of Trade, supra, 412 U.S.
at 806 (plurality opinion).
The Commission also relies on City of Chicago v.
United States, 396 U.S. 162 (1969). In that case
the Commission commenced an investigation under
49 U.S.C. (1976 ed.) 13a into proposals by carriers
to discontinue certain passenger services but termi-
nated the investigation without prohibiting the dis-
continuance. This Court held that the order ter-
minating the investigation was reviewable because
it was, in effect, a final determination on the merits
that question. Compare the plurality opinion in Atchison,
Topeka & Santa Fe Ry. v. Wichita Board of Trade, supra, 412
U.S. at 819-824, with id. at 826-828 (Douglas J., dissenting
in part).
ay
” As Atchison, Topeka & Santa Fe Ry. v. Wichita Board of
Trade, supra, 412 U.S. at 818 (plurality opinion), explained,
the power of a court to review, set aside and suspend a Com-
mission order, which is clearly given by statute (28 U.S.C.
2342(5)), is not the same thing as “an injunction forbidding
the railroads to implement a proposed change in rates * * *,”
25
of the discontinuance, and the Court could tind “no
talismanic sign indicating that Congress desired to
deny review to opponents of interstate discontinu-
ances” (396 U.S. at 164). To the extent that refus-
ing to open a Section 15(8) (a) investigation might
be viewed as a decision on the merits, then, City
of Chicago actually supports review.“ But the Com-
mission relies on dicta in the opinion, stating
“Tw]hether the Commission should make an investi-
gation of a §18a(1) discontinuance is of course
within its discretion, a matter which is not review-
able.” 396 U.S. at 165.
As dicta, that statement does not, as the Com-
mission claims (78-597 Pet. 12), “control[] this
case.” See, e.g., Zenith Radio Corp. v. United
States, 4837 U.S. 443, 461-462 (1978). More im-
portant, however, the structure and purpose of
Section 18a is quite different from the rate review
mechanisms of Sections 18(1) and 15(8). Various
sections of the Act provide that it is unlawful for
carriers to charge certain rates or engage in certain
practices (see 49 U.S.C. (1976 ed.) 1(5), 2, 3(1),
4(1)), and Section 13(1) gives any aggrieved party
the right to complain to the Commission and to com-
pel the Commission to investigate and adjudicate
the alleged unlawfulness, whether or not the Com-
18 We have argued above (see pages 11-12, swpra) that the
Commission’s decision not to open a Section 15 (8) (a) investi-
gation does not decide any issue, let alone any entire case, on
the merits. City of Chicago thus does not support the position
ef respondents.
26
mission has done so under Section 15(8). Neither
Section 13a nor any other provision makes it unlaw-
ful for carriers to discontinue service without the
Commission’s approval. Discontinuance is prohibited
only if the Commission, in its discretion, undertakes
an investigation, concludes that continued operation
is required by the public interest, and orders the
carrier to continue service.“ If the Commission does
not undertake an investigation, no aggrieved person
can compel the Commission to do so under Section
13(1), because discontinuance would not be unlaw-
ful.” Cf. Morris v. Gressette, supra. In short, Sec-
tion 13a provided the Commission with discretion
that it does not have with respect to the investigation
of allegedly unlawful rates and practices.
The fact that Section 13(1) permits parties to
compel the Commission to investigate and adjudicate
allegedly unlawful rates and practices, and gives the
Commission no discretion to decline to do so, also
The discontinuation and abandonment provisions were
substantially changed in 1976. See Pub. L. No. 94-210, 90 Stat.
127, 49 U.S.C. (1976 ed.) 1a; see generally Chicago & North
Western Transportation Co. v. United States, 582 F.2d 1048
(7th Cir. 1978), cert. denied, No. 78-411 (Dec. 4, 1978).
1° Tt would have been different if a carrier had abandoned a
“line of railroad” without the Commissions approval, since
Section 1(18) of the Act, 49 U.S.C. (1976 ed.) 1(18), prohib-
ited carriers from abandoning “all or any portion of a line of
railroad, or the operation thereof” unless they first obtained
permission from the Commission. Discontinuance of a par-
ticular service on a line was not an abandonment of a line
within the meaning of Section 1(18). Alabama Public Service
Commission V. Southern Ry., 341 U.S. 341, 346 n.7 (1951).
; 27
distinguishes this case from the other cases relied
on by petitioners. See Vaca v. Sipes, 386 U.S. 171,
182 (1967) (refusal of the NLRB’s General Counsel
to issue an unfair labor practice complaint is not
reviewable) ; FTC v. Klesner, 280 U.S. 19, 25 (1929)
(refusal of FTC to issue a complaint is not review-
able). These cases stand for the long-recognized rule
that courts cannot review decisions to prosecute or
not prosecute particular offenses and offenders. See
United States. v. Nixon, 418 U.S. 688, 698 (1974);
FTC v. Universal-Rundle Corp., 387 U.S. 244 (1967) ;
Confiscation Cases, 74 U.S. (7 Wall.) 454 (1868).
But investigations under the Interstate Commerce
Act are as much part of a program for redress
of private harms as they are part of a system
of public prosecutions. Moreover, unlike the Inter-
state Commerce Act, the statutes of the NLRB,
the FTC, and other prosecutorial agencies give ag-
grieved persons no right to compel the agency to
investigate and adjudicate allegedly unlawful prac-
tices. Indeed in FTC v. Klesner, the Court made this
very point (280 U.S. at 26; footnote omitted) :
The provisions in the Federal Trade Commis-
sion Act concerning unfair competition are often
compared with those of the Interstate Commerce
Act dealing with unjust discrimination. But in
their bearing upon private rights, they are wholly
dissimilar. The latter Act imposes upon the car-
rier many duties; and it creates in the individ-
ual corresponding rights. For the violation of
the private right it affords a private administra-
tive remedy. It empowers any interested person
28
deeming himself aggrieved to file, as of right, a
complaint before the Interstate Commerce Com-
mission; and it requires the carrier to make
answer. Moreover, the complainant there, as in
civil judicial proceedings, bears the expense of
prosecuting his claim. The Federal Trade Com-
mission Act contains no such features.
When an agency’s discretionary authority to inves-
tigate and file complaints may be analogous to the
discretion of a public prosecutor there are often
compelling reasons, grounded in the statutory pur-
pose, for inferring that review is precluded even in
the absence of statutes expressly precluding review
of such discretionary decisions. Deciding whether
particular matters warrant the expenditure of time
and resources is often a difficult judgment involving
considerations that “are beyond the judicial capacity
to supervise.” K.C. Davis, Administrative Law
Treatise § 28.16 (1970 Supp.).” Moreover, judicial
review of such decisions often would have seriously
disruptive effects on the statutory enforcement
scheme.” Those considerations are not present where,
% See also, e.g., Imbler v. Pachtman, 424 U.S. 409, 424
(1976).
In other cases in which this Court had held that an
administrator’s decision, or inaction, is not subject to review,
the Court has found special reasons in the statutory scheme
and purpose for inferring a preclusion of review. Thus, in
Morris Vv. Gressette, supra, the Court held that the Attorney
General’s failure to object to a new state reapportionment
plan under Section 5 of the Voting Rights Act of 1965, 42
U.S.C. 1978c, was not judicially reviewable. The Court
inferred a preclusion of review because review would be con-
29
as here, the agency has no discretion to decline to
investigate and adjudicate a private complaint, and
where the principal effect of the agency’s refusal to
conduct the investigation on its own initiative is to
shift the burden of proof in a later investigation and
adjudication that it must undertake.
Instead, the statutory scheme of the Interstate
Commerce Act is more analogous to the statute con-
sidered in Dunlop v. Bachowski, 421 U.S. 560 (1975).
In that case the Court held that the decision of the
Secretary of Labor not to bring an action to set aside
a union election under 29 U.S.C. 482 is subject to
some kind of judicial review. (The Court did not
decide what the scope of review might be or what
remedies, if any, a court could employ.) That stat-
ute, like Section 18(1), gives aggrieved private per-
sons a right to file a complaint with the Secretary
and requires the Secretary to investigate the com-
plaint. It also requires the Secretary to bring an
action to set aside the election if he finds the com-
trary to the very purpose of the statutory scheme, which was
to provide states with an expeditious means of implementing
and enforcing state legislation that would be otherwise pro-
hibited by the “severe” and “unusual” provisions of Section 5.
No analogous purpose of the Interstate Commerce Act would
be undermined by limited judicial review, at the appropriate
time, of the Commission’s refusal to initiate an investigation
under Section 15(8) (a). Review of the Attorney General’s
failure to object under Section 5 of the Voting Rights Act
would be more analogous to review of the Commission’s re-
fusal to suspend rates, since the ultimate effect of review in
each case would be to prevent the affected party (the state
or the carrier) to implement practices that ultimately might
be found to be lawful.
30
plaint supported by probable cause. Although the
Court did not reach the question whether a court
could order the Secretary to file a complaint (421
U.S. at 575), it stated (421 U.S. at 567 n.7): “We
agree with the Court of Appeals, for the reasons
stated in its opinion. 502 F.2d 79, 86-88 (CA3 1974),
that there is no merit in the Secretary’s contention
that his decision is an unreviewable exercise of prose-
cutorial discretion.” The reasons stated by the court
of appeals in Bachowski are similar to those we have
discussed above: the grounds for declining to review
prosecutorial decisions are not present when the
statutory scheme demonstrates substantial concern
with the adjudication and vindication of private
rights. Indeed, we submit that the Commission’s
decision not to investigate under Section 15(8) is
more clearly reviewable than the Secretary’s decision
not to file a complaint under 29 U.S.C. 482, because,
when a complaint is filed under Section 13(1), the
Commission has no choice but to act on it; it must
both investigate and adjudicate the merits of the com-
plaint. 29 U.S.C. 482(b), in contrast, gives the Sec-
retary of Labor discretion in deciding whether to
act on a complaint by filing an action to set aside
the election.
b. Petitioners also rely on Asphalt Roofing Manu-
facturers Association v. ICC, 567 F.2d 994 (D.C.
Cir. 1977), which held that orders of the Commis-
sion declining to investigate proposed rate increases
in a general revenue proceeding are not reviewable.
The court reasoned that 49 U.S.C. (1970 ed.) 15(7),
31
which was then applicable to all common carriers,
committed the power to investigate and the power to
suspend to the Commission in the same terms, and
that they should therefore be equally immune from
review. 567 F.2d at 1000-1008.
For the reasons previously stated, we believe that
Asphalt Roofing was wrongly decided. Investigation
and suspension are very different indeed (see pages
10-18, 22-24, supra). General revenue increases, how-
ever, pose an issue that is not presented by tariffs
(such as the one in this case) that simply increase
rates on specific commodities.
If the Commission declines to investigate a tariff
pertaining to specific commodities, shippers have a
remedy in Section 18(1), which generally has been
viewed as the appropriate procedure for deciding
whether particular rates for particular commodities
and particular routes are lawful. See Aberdeen &
Rockfish R.R. v. SCRAP, 422 U.S. 289, 311-316
(1975) (SCRAP II). An investigation of a pro-
posed general revenue increase, however, does not
address the lawfulness of the increase as it pertains
to particular commodities or routes; it focuses in-
stead on the total revenue needs of carriers. Accord-
ingly, shippers may not seek judicial review of deci-
sions upholding general revenue increases on the
ground that the increase is unlawful as it pertains to
particular commodities or routes; shippers must pre-
sent such claims under Section 13(1). SCRAP II,
supra.
32
Although some courts have held the contrary, the
United States and the Commission have contended
thai orders approving general revenue increases may
be reviewed with respect to the issue they have finally
decided—i.e., whether the carriers’ general revenue
needs warrant the general increase. This Court has
reserved decision on that question. See SCRAP I],
supra, 422 U.S. at 317 n.18 (citing cases). Cases in
which the Commission declines to investigate proposed
general revenue increases would present the question
whether shippers can use a Section 13 investigation
to present the general revenue issue for adjudication;
if not, the Commission’s failure to investigate should
be immediately reviewable. See 5 U.S.C. 704. In our
view nothing in Section 13 precludes a complainant
from challenging not only the lawfulness of the in-
creased rates as they pertain to particular commodi-
ties and routes but also the general revenue justifi-
cation for the increase. The decision not to investi-
gate would thus be reviewable only after a final
decision on those matters. This case, however, does
not involve a general revenue increase and does not
present these questions. “
C. The Commission’s Discretion Under Section 15(8)(a)
Is Broad But Not Unlimited, And Judicial Review Is
Necessary To Protect Statutory Policies
The practical effect of our position may not differ
significantly from the position of the Commission and
the other petitioners. If review is available, as we
33
contend, courts would examine the Commission’s de-
cision to determine whether it was “arbitrary, caprici-
ous, an abuse of discretion, or otherwise not in ac-
cordance with law” (5 U.S.C. 706(2)(A)). We
agree with the Commission that the scope of its
discretion under Section 15(8) (a) is broad. Carriers
file hundreds of tariffs with the Commission each
year, and in deciding which of those to investigate
under Section 15(8)(a) the Commission must have
discretion to consider many factors, including the
probable unlawfulness of the proposed rate, the rate’s
likely effect on the public, the Commission’s limited
resources, and its regulatory priorities. Its judgment
on those matters is entitled to considerable deference
and should be upheld if it is “rational and based on
consideration of the relevant factors.” FCC v. Na-
tional Citizens Committee For Broadcasting, 436 U.S.
775, 803 (1978). The Commission need not investi-
gate under Section 15(8)(a) just because a com-
plainant can make a showing of probable unlawful-
ness.
Acknowledging that the Commission’s discretion is
broad, however, is quite different from asserting that
it is unbounded, as petitioners contend. And the fact
that judicial review may be necessary to protect statu-
tory rights in only a few cases is not a reason for
concluding that review is not available at all.
Moreover, while it would not be possible to identify
the universe of reasons that might support the Com-
34
mission’s discretion in particular cases, cases cer-
tainly can be imagined in which the Commission’s
decision not to proceed under Section 15(8) (a) would
be an abuse of discretion or contrary to its statutory
mandate. For example, we think that a court could
set aside a decision not to proceed under Section
15(8) (a) if the decision rested entirely on incorrect
legal grounds, such as lack of jurisdiction; or on the
ground that the protesting shippers were members of
the wrong political party; or on the ground that a
proposal to triple rates for basic commodities would
not have a sufficient effect on the public to warrant an
expenditure of the Commission’s resources.”
18 Each case would depend on the particular facts, and fac-
tors relied on by the Commission that might be rational in
one context might be irrational in another. We express
no view on whether a court reviewing a final decision on the
lawfulness of the rates in this case could properly conclude
that the Commission abused its discretion in not initiating an
investigation under Section 15(8) (a). For the reasons we
have stated, any conclusion on that issue would be premature.
Indeed, as we argue at note 8, supra, it may never be neces-
sary for a court to decide that issue in this case.
* It is far more likely that the Commission would be found
to have abused its discretion for having made legal or juris-
dictional errors than for its assessment of facts, and it seems
most unlikely that the Commission would base any decision on
blatantly discriminatory grounds. But judicial review for
abuse of discretion is not limited to a review of the agency’s
legal conclusions. A prosecutor’s decision not to investigate
or prosecute, on the other hand—to which petitioners anal-
ogize the Commission’s discretion—may not be judicially
reviewed whether it is based on errors of law, fact, or out-
right corruption. Correction of such abuses is left to the
political process and (in the case of corruption or civil rights
offenses) to criminal prosecution of the prosecutors. Cf.
Imbler v. Pachtman, supra.
35
Cases also can be imagined in which the burden
shifting effect of such decisions may be of decisive
consequence. Atchison, Topeka & Santa Fe Ry. v.
Wichita Board of Trade, supra, although involving a
somewhat different factual situation, is a pertinent
illustration. In that case carriers filed a tariff pro-
posing to charge shippers separately for a service that
was formerly provided as part of the general line haul
rate to all shippers desiring the service. The carriers
did not propose to reduce the line haul rate cor-
respondingly, although prior decisions had established
a policy against permitting carriers to institute new
service charges unless they also demonstrated that the
line haul rate remaining in effect also would be just
and reasonable. The Commission investigated the
tariff and found it to be just and reasonable, although
the carriers had not demonstrated that the line haul
rate that would remain in effect would be just and
reasonable.
This Court reversed the Commission on the ground
that it had not adequately explained its departure
from its prior policy. Significantly, for purposes of
this case, the Court concluded that a principal con-
sequence of the Commission’s departure from its
prior policy would be to shift to shippers the burden
to prove the unlawfulness of the line haul rates.*’
The plurality opinion stated (412 U.S. at 814):
* The Court remanded the case to the Commission for a
further justification of its departure from prior policy but
reversed the district court’s injunction against the carrier’s
implementation of the new charges. Mr. Justice Douglas con-
36
[T]he change involved in making the shippers
claim that particular rates are unreasonable
[i.e., carry the burden of going forward] is not
all that is at stake. For in proceedings for rep-
arations, there is also a change in the burden
of proof: the shipper must produce substantial
evidence that the rate is unreasonable. This
would appear to affect the likelihood that the
shipper will prevail. There is a zone in which
rates are reasonable, United States v. Chicago,
M., St. P. & P. R. Co., 294 U.S. 499, 506 (1935),
and it would seem to be harder to establish that
the proposed rates fell outside that zone than
that they fell within it. Or so Congress believed,
for it specified the allocation of the burden of
proof in suspension proceedings as part of the
cost to the carriers; in return for confining the
power to suspend rates to the Commission, and
so of eliminating the threat of long-drawn-out
injunctive proceedings in the courts, Congress
made the carriers carry a burden of proof that
would otherwise not have been theirs.
In short, the Court expressly recognized the practical
significance of decisions by the Commission that effec-
tively shift burdens of proof, and it at least implicitly
curred with the plurality opinion’s view that the Commission
had not adequately explained its departure from prior policy
but dissented with respect to the reversal of the injunction.
412 U.S. at 826-828. The dissenting Justices believed that the
Commission had adequately justified its decision but did not
disagree with the plurality’s view that the principal effect of
the decision was to shift the burden to shippers. 412 U.S. at
828-836.
oe —
37
recognized that such decisions are subject to judicial
review.”
CONCLUSION
The judgment of the court of appeals should be
reversed.
Respectfully submitted.
WADE H. McCREEB, Jr.
Solicitor General
FRANK H. EASTERBROOK
Deputy Solicitor General
RICHARD A. ALLEN
Assistant to the Solicitor General
MARCH 1979
* Although the Court in that case was reviewing a final
decision that a proposed tariff for ancillary services was
lawful, the Commission’s method of proceeding also can be
regarded as a decision not to investigate an aspect of the
proposed change (the continuation of the previous line haul
rates) that the Commission previously had viewed as in-
separable from charges for ancillary services. Analytically,
therefore, the case is very similar to cases where the Com-
mission declines to investigate a tariff under Section 15 (8) (a).
la
APPENDIX A
49 U.S.C. (1976 ed.) 13(1) provides:
Any person, firm, corporation, company, or
association, or any mercantile, agricultural, or
manufacturing society or other organization, or
any body politic or municipal organization, or
any common carrier complaining of anything
done or omitted to be done by any common car-
rier subject to the provisions of this chapter in
contravention of the provisions thereof, may ap-
ply to said Commission by petition, which shall
briefly state the facts; whereupon a statement of
the complaint thus made shall be forwarded by
the Commission to such common carrier, who
shall be called upon to satisfy the complaint, or
to answer the same in writing, within a reason-
able time, to be specified by the Commission. If
such common carrier within the time specified
shall make reparation for the injury alleged to
have been done, the common carrier shall be re-
lieved of liability to the complainant only for the
particular violation of law thus complained of.
If such carrier or carriers shall not satisfy the
complaint within the time specified, or there shall
appear to be any reasonable ground for investi-
gating said complaint, it shall be the duty of the
Commission to investigate the matters complained
of in such manner and by such means as it shall
deem proper.
49 U.S.C. (1976 ed.) 15(8) provides in pertinent
part:
(a) Whenever a schedule is fied with the
Commission by a common carrier by railroad
2a
stating a new individual or joint rate, fare, or
charge, or a new individual or joint classification,
regulation, or practice affecting a rate, fare, or
charge, the Commission may, upon the complaint
of an interested party or upon its own initiative,
order a hearing concerning the lawfulness of
such rate, fare, charge, classification, regulation,
or practice. The hearing may be conducted with-
out answer or other formal pleading, but reason-
able notice shall be provided to interested parties.
Such hearing shall be completed and a final de-
cision rendered by the Commission not later than
7 months after such rate, fare, charge, classifi-
cation, regulation, or practice was scheduled to
become effective, unless, prior to the expiration
of such 7-month period, the Commission reports
in writing to the Congress that it is unable to
render a decision within such period, together
with a full explanation of the reason for the de-
lay. If such a report is made to the Congress,
the final decision shall be made not later than 10
months after the date of the filing of such sched-
ule. If the final decision of the Commission is
not made within the applicable time period, the
rate, fare, charge, classification, regulation, or
practice shall go into effect immediately at the
expiration of such time period, or shall remain in
effect if it has already become effective. Such
rate, fare, charge, classification, regulation, or
practice may be set aside thereafter by the Com-
mission if, upon complaint of an interested party,
the Commission finds it to be unlawful.
(b) Pending a hearing pursuant to subdivi-
sion (a), the schedule may be suspended, pur-
suant to subdivision (d), for 7 months beyond
a ee ER ee en
Pee mae ot. AE A i eee
ee ns Re
tintitce rts «ai 1 eS Or
3a
the time when it would otherwise go into effect,
or for 10 months if the Commission makes a re-
port to the Congress pursuant to subdivision
(a), except under the following conditions:
* * * * *
(d) The Commission may not suspend a rate
under this paragraph unless it appears from spe-
cific facts shown by the verified complaint of any
person that—
(i) without suspension the proposed rate
change will cause substantial injury to the
complainant or the party represented by
such complainant; and
(ii) it is likely that such complainant
will prevail on the merits.
The burden of proof shall be upon the complain-
ant to establish the matters set forth in clauses
(i) and (ii) of this subdivision. Nothing in ais
paragraph shall be construed as establishing a
presumption that any rate increase or decrease
in excess of the limits set forth in clauses (iii)
or (iv) of subdivision (c) is unlawful or should
be suspended.
(e) If a hearing is initiated under this para-
graph with respect to a proposed increased rate,
fare, or charge, and if the schedule is not sus-
pended pending such hearing and the decision
thereon, the Commission shall require the rail-
roads involved to keep an account of all amounts
received because of such increase from the date
such rate, fare, or charge became effective until
the Commission issues an order or until 7 months
after such date, whichever first occurs, or, if the
hearings are extended pursuant to subdivision
4a
(a), until an order issues or until 10 months
elapse, whichever first occurs. The account shall
specify by whom and on whose behalf the amounts
are paid. In its final order, the Commission shall
require the common carrier by railroad to refund
to the person on whose behalf the amounts were
paid that portion of such increased rate, fare, or
charge found to be not justified, plus interest at
a rate which is equal to the average yield (on the
date such schedule is filed) of marketable securi-
ties of the United States which have a duration
of 90 days. With respect to any proposed de-
creased rate, fare, or charge which is suspended,
if the decrease or any part thereof is ultimately
found to be lawful, the common carrier by rail-
road may refund any part of the portion of such
decreased rate, fare, or charge found justified if
such carrier makes such a refund available on an
equal basis to all shippers who participated in
such rate, fare, or charge according to the rela-
tive amounts of traffic shipped at such rate, fare,
or charge.
(f) In any hearing under this section, the
burden of proof is on the common carrier by rail-
road to show that the proposed changed rate,
fare, charge, classification, rule, regulation, or
practice is just and reasonable. The Commission
shall specifically consider, in any such hearing,
proof that such proposed changed rate, fare,
charge, classification, rule, regulation, or practice
will have a significantly adverse affect (in vio-
lation of section 2 or 3 of this title) on the com-
petitive posture of shippers or consignees af-
fected thereby. The Commission shall give such
hearing and decision preference over all other
ents a os RT DE
5a
matters relating to railroads pending before the
Commission and shall make its decision at the
earliest practicable time.
5 U.S.C. 701(a) provides:
(a) This chapter applies, according to the pro-
visions thereof, except to the extent that—
(1) statutes preclude judicial review; or
(2) agency action is committed to agency
discretion by law.
5 U.S.C. 702 provides in pertinent part:
A person suffering legal wrong because of
agency action, or adversely affected or aggrieved
by agency action within the meaning of a rele-
vant statute, is entitled to judicial review there-
of. * * * *
5 U.S.C. 704 provides:
Agency action made reviewable by statute and
final agency action for which there is no other
adequate remedy in a court are subject to judicial
review. A preliminary, procedural, or intermedi-
ate agency action or ruling not directly review-
able is subject to review on the review of the
final agency action. Except as otherwise ex-
pressly required by statute, agency action other-
wise final is final for the purposes of this section
whether or not there has been presented or de-
termined an application for a declaratory order,
for any form of reconsiderations, or, unless the
agency otherwise requires by rule and provides
that the action meanwhile is inoperative, for an
appeal to superior agency authority.
6a
APPENDIX B
Pertinent Sections of the Corresponding Sections of the
Interstate Commerce Act Interstate Commerce Act
as set forth in 49 U.S.C. as recodified by
(1976 ed.) and as referred Pub. L. No. 95-473,
to in this brief 92 Stat. 1337 (1978)
49 U.S.C. (1976 ed.) 49 U.S.C. (Supp. 1976)
Be intrlaiocs padebnicleneeshabulnacatas 10701 (a)
OE wisictsckosiiaiolessicuninsaesasetcaulen 10901
ER CES eC NL a ET 10741 (a)
| SEMPER CEs. Oe PPRRC Te 10741 (b)
Rf pene COE eet ee PS A 10726
OL IOE ESOC 10762 (c) (3)
REESE LEER a a SDA 11705 (b) (2)
_ FEL aoa NEE 11705 (c) (1)
i | | SD Ee ONE ares Re REID Sar 11701 (b)
ce cedhictisticnicesiacedsgiah okies 10908
I Hise: actsciacadacontecitiets tetaniinaaeaas 10310
| RDA et SONS 10707
bi U. S. GOVERNMENT PRINTING OFFICE; 1979 287687 347
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