Reply Brief — Atchison, Topeka & Santa Fe Railway Co. v. National Ass'n of Recycling Industries, Inc.

IN THE

Supreme Court of the United States

Oororner Tera, lo7s8

Aronson, Toppka & Santa Fp Rarway Co,, et al,

Petitione PS,

;'

NATIONAL ASSOCIATION OF Recyenina LNpusStTRES, INC

et al,,

Respondents,

On Petition for Writ of Certiorari to the United States

Court of Appeals for the District of Columbia Circul!

REPLY OF PETITIONERS

Harry N, Bancock Micuann, Bovupix

2700 Terminal Tower Timoreuy A, Harr

P.O, Box 6419 S88 Sixteenth Street, N.W,

Cleveland, Ohio 44101 Washington, D.C, 20006

Riomarp W, Krenn

8 North Jefferson Street Janes L. Hown, U1

Roanoke, Va, 24042 P.O, Box LS08

Wazuy C. Lauran Washington, D.C, 20018

. a“ "

P.O, Box 536

600 Grant Street

Pittsburgh, Pa, 15280

Joun A, Datmy

1188 Six Penn Center Plaza

Philadelphia, Pa, 19104

Janes L. Tapupy

Jacvious EE. Sykes

099 SNS Riverside Plaga

Chieago, TH}, 60606

Iitorneus for the Railroads

January L979

Parse oF Bynon S, Apawea Painting, Inc, Waanineron, D.C

ss

IN THE

Supreme Court of the United States

OcToBER TERM, 1978

No. 78-872

ATcHIson, TopeKA & SANTA Fr Ratmtway Co., et al.,

Petitioners,

Vv.

NATIONAL ASSOCIATION OF Recycuiina INpustries, INC.,

et al.,

Respondents.

On Petition for Writ of Certiorari to the United States

Court of Appeals for the District of Columbia Circuit

REPLY OF PETITIONERS

This reply is submitted by petitioners—the principal

Western, Eastern, and Southern railroads (‘‘the rail-

roads’), in response to the memorandum in opposition

to certiorari filed by the federal respondents (‘‘Gov.

Mem.’’) and briefs in opposition filed by National As-

sociation of Recycling Industries, Inc. et al. (“‘NARI

Br.’’), and Institute of Scrap Iron and Steel, Ine.

(“ISIS Br.’’)." Memoranda in support of certiorari

‘Opposition briefs were also filed by two companies: North-

western Steel and Wire Company and Fort Howard Paper Com-

pany. These briefs, however, essentially repeat arguments contained

in the principal oppositions.

ee

9

—

have been filed by the American Paper Institute, Inc.,

and Armco Steel Corporation, et al.’ None of the argu-

ments made in opposition disprove the railroads’ basic

contention: that the lower court has improperly in-

vaded the substantive and procedural province of the

Commission and has disregarded directly controlling

decisions of this Court, including SCRAP IT and

Transcontinental.’

1. The federal respondents, without endorsing the

lower court’s decision,‘ assert that plenary review is

not warranted. This conclusion rests on the assumption

that the lower court merely ‘‘applied established prin-

ciples of judicial review” to the agency’s decision.

Gov. Mem. 2. That assumption is manifestly incorrect.

It is the lower court’s very disregard of those princi-

ples that warrants review.

The lower court itself conceded that the substantive

standards of discrimination and reasonableness ap-

plied by the Commission had not been altered by Con-

gress. Pet. 12; Gov. Mem. 4. Consequently, the lower

court was reduced, in reversing the Commission, to a

spate of disagreements about the agency’s analysis and

*The American Paper Institute represents over 90 percent of

the United States’ pulp, paper and paperboard industry. Armco

Steel was joined in its memorandum by Inland Steel Company,

Republic Steel Corporation and Youngstown Sheet and Tube Com-

pany.

‘Aberdeen & R.R.R. v. SCRAP, 422 U.S. 289 (1975); FPC v.

Transcontinental Gas Pipe Line Corp., 423 U.S. 326 (1976).

* Below, the Commission vigorously sought to sustain its own

decision. The United States criticized the agency decision but did

so primarily on the ground-—rejected by the lower court—that

Congress had altered the discrimination standard. See Pet. 8-9

and n,13.

3

its evaluation of individual pieces of evidence. Pet. 10,

12-14; see Gov. Mem. 2.° Quite apart from the factual

and analytical errors that the lower court committed

in this process (Pet. 14-16), this type of appellate

scrutiny is not consistent with ‘‘established principles

of judicial review,’’ for this Court has repeatedly

emphasized that the evaluation and weighing of evi-

dence is for the expert agency and not for the review-

ing court. See Pet. 12-14. Maintenance of that prin-

ciple clearly merits certiorari.

The Court applied this very principle delimiting ju-

dicial review in SCRAP II where, in similar circum-

stances, it reversed the lower court’s decision in that

ease and found that the Commission’s evaluation of

recyclable rates was entirely adequate under the prin-

ciples governing judicial review. There, as here, Chief

Judge Wright “simply disagreed’’ with the Commis-

sion’s decision on the merits. 422 U.S. at 322. It would

be squarely inconsistent with SCRAP II to allow the

lower court now to reverse the ICC’s subsequent deci-

sion which is, if anything, even more thorough, elab-

orate and emphatic in its conclusion that recyclable

rates do not discourage the movement of recyclables.

On the other issue presented by the railroads’ certi-

orari petition—the illegality of the six-month time

limit fixed for further proceedings—the Government

memorandum states that the Commission ‘‘does not be-

lieve that such time limits are appropriate’’ and it cites

‘These disagreements are nothing other than an invasion of the

agency's factfinding and evaluation process; and their substance

is not altered by rhetorical references to the ‘‘mandate of Section

204.’’ Gov. Mem. 2. The statute mandates nothing except use of

traditional standards and those standards are exactly what the

Commission applied.

4

this Court’s Transcontinental opinion, holding that

such a limitation is clearly improper. Gov. Mem. 4.

As the petition explained, the artificial and unlawful

time constraint on remand threatens the railroads, not

the Commission, because it is the railroads who bear the

burden of proof. Accordingly, since the limitation is

clearly unlawful under Transcontinental, summary re-

versal of this directive is plainly warranted even if

the Court does not grant plenary review on the remand

itself.’

2. NARI has submitted a lengthy opposition devoted

largely to NARI’s own factual and legal attacks on

the lawfulness of the rate structure. These arguments

were not adopted by either the Commission or the

lower court and are irrelevant to the questions before

this Court—whether the lower court overstepped the

established bounds of judicial review in vacating the

agency decision and imposed unlawful constraints on

the Commission’s disposition of the remanded pro-

ceedings.

NARI’s principal defense of the lower court’s deci-

sion is based on the repeated suggestion that Congress,

in Section 204, mandated revision of railroad rates on

recyclables absent an extraordinary showing and that

the lower court was merely enforcing that mandate.

NARI Br. 20, 29, 39. This contention is simply incor-

rect: Congress did not alter existing substantive stand-

* Only recently, this Court summarily vacated a procedural con-

straint imposed by the lower court on remand, where this Court

deemed the constraint unlawful but did not believe that the lower

court’s decision on the merits warranted review. Long Island R.R.

8 — & R. R.R., 47 US, L. W. 3263 (No. 77-1515, Oct. 16,

).

4)

ards, preordain the resolution of disputed issues like

competition, or rule that recyclers should be subsidized

or specially favored by the struggling rail industry.’

It required only that the railroads prove that their

rate structure was lawful under existing standards.

Even the lower court did not accept NARI’s construc-

tion of the statute, and NARI’s contentions do not sup-

port the decision.*

NARI also seeks to present its own ‘‘factual’’ argu-

ments allegedly to show that rail rates on recyclables

have been increased to a burdensome level or impose

discriminatory constraints on recycling. F.g., NARI

Br. 7, 13, 15-16. Yet the Commission’s unimpeached

environmental impact statement in this case demon-

strates—by economic measurements, past experience,

and industry analysis—that the railroad rate structure

has no significant impact on the level of recycling. See

Pet. App. 1g. If, as the Government respondents sug-

gest, ‘‘Congress’ major concern was the removal of

[any] rate structures that impeded or discouraged de-

velopment of industrial recycling’? (Gov. Mem. 3),

that concern was amply met by the Commission’s eval-

uation.

NARI also argues that the six-month time limit on

the proceedings was ‘‘pursuant to”’ statute. NARI Br.

43. This is clearly incorrect. In fact the lower court,

which considered the statute at length, did not itself

*The recycling industry did urge such bills upon Congress, but

Congress refused to enact them. See Pet. 5.

* NARI’s arguments do not constitute an alternative ground for

sustaining the decision below; those arguments wouid, if accepted,

lead to an entirely different remand than that ordered by the

lower court.

6

think to impose any time limit in its initial decision;

the six-month deadline was adopted solely because

NARI later suggested it. Congress, of course, gave

the Commission one year to complete its investigation.

Only Congress has the authority to alter that period or

impose new limitations. The Commission did not delay,

but moved expeditiously to complete its investigation

in one year. The lower court had neither justification

nor authority to impose a shortened deadline of its

own. FPC v. Transcontinental Gas Pipe Line Corp.,

supra, 423 U.S. at 333.

3. ISIS claims that remand was justified because

the Commission allegedly shifted the burden of proof

from the railroads to the shippers in violation of Sec-

tion 204. ISIS Br. 7. In fact, the Commission repeat-

edly and expressly held that the burden was on the

railroads, and when in a few instances it believed that

the railroads failed to satisfy the burden, the Commis-

sion resolved individual issues against them. Pet. 9

n.14. The passages from the ICC decision cited by

ISIS do not show that the Commission ever shifted that

burden.’ The ICC considered the shippers’ failure to

come forth with any evidence only where the railroads

had already presented evidence to support their burden

of proof and the Commission was looking to the ship-

pers to produce evidence in opposition. This is both

® For example, ISIS notes that the ICC stated that the railroads

‘*failed to show comparisons.’’ ISIS Br. 7 n. 13. The railroads had

in fact submitted the evidence for such comparisons, and the Com-

mission itself made the comparisons in its decision. Similarly, there

is no foree to ISIS’ claim based on the Commission’s rejection of

some of the railroads’ repetitive movements; the Commission spe-

cifically found that the several thousand remaining ones were ade-

quate evidence.

7

logical and accepted practice and does not represent

a shift in the ultimate burden of proof. Speiser v.

Randall, 357 U.S. 513, 524 (1958).

ISIS also suggests that the lower court’s remand was

proper because the ICC erroneously gave greater

weight to railroad profitability than to environmental

considerations. ISIS Br. 8. In fact, the lower court’s

discussion of this point reveals an error by the lower

court, not by the Commission. Contrary to the lower

court’s intimation (Pet. App. 28b-29b & n.62), the

Commission never suggested that it would sustain un-

lawful rates based on railroad revenue need or give

controlling weight to this factor. The Commission said

only that revenue need ‘‘will be considered’’ (Pet. App.

50d) as one of a number of relevant factors. E.g., Pet.

App. 8d, 319d. Under traditional ratemaking stand-

ards, which Congress adopted in Section 204 (see Pet.

9), this was clearly permissible and appropriate.”

ISIS next argues that, although the Commission

properly stated the standards for determining lawful-

ness, the Commission did not properly apply them. In

particular, ISIS says that the lower court found that

the Commission erred in considering only the actual

competitive injury and not the potential competitive

impact of freight rates on recycling. As the railroads

pointed out in their petition, the Commission clearly

did consider potential impact and the lower court’s

contrary belief was based on its own misunderstanding.

Pet. 15-16. Much of the Commission’s analysis was de-

voted to the question of transportation elasticity—the

potential impact of different freight rates on recycling.

° See Section 15a(4) of the Interstate Commerce Act, now codi-

fied in 49 U.S.C. § 10704(a) (2).

8

The Commission found, as it had in numerous previous

investigations of this question, that any such impact of

freight rates on recycling is insignificant.

Finally, ISIS incorrectly argues that the lower

court’s decision is ‘‘interlocutory’’ and not ripe for

review. ISIS Br. 3, 12. The lower court has, by its deci-

sion, overturned a completed agency decision which,

under correct standards of review, should have been

affirmed, and SCRAP II is ample precedent for imme-

diate review in this Court. Moreover, this may well be

the only opportunity the railroads will ever have to

obtain review of the agency’s own decision under

proper standards." In all events, the railroads have

now shown that recyclable rates are lawful, Congress’

mandate has been satisfied, and the lower court should

not be allowed to require more proceedings merely

because it does not agree with the Commission’s deter-

mination of transportation issues.

“Ag the petition demonstrated, there is a continuing danger

that the Commission under the pressure of the lower court’s opinion

will abandon its position and order unjustified rate revisions. Pet.

24-25. Obviously the limited opportunity to attack such an agency

order in court is not a substitute for affirmance of this order.

9

CONCLUSION

For the reasons stated above and in the railroads’

petition, plenary review should be granted. Alterna-

tively, if the Court does not grant plenary review, the

lower court’s order imposing a time limitation on re-

mand should be vacated summarily on the authority

of Transcontinental.

Respectfully submitted,

Harry N. Bascock MicHAEL B

2700 Terminal Tower Pans yoo

P.O. Box 6419 888 Sixteenth Street, N.W.

Cleveland, Ohio 44101 Washington, D.C. 20006

Ricwarp W. Krenue James L, Tapue

8 North Jefferson Street James L. Howe, IIT

Roanoke, Va. 24042 P.O. Box 1808

Was 0 tem Washington, D.C. 20013

P.O. Box 536 James FE, Sykes

600 Grant Street 222 S. Riverside Plaza

Pittsburgh, Pa. 15230 Chicago, Ill. 60606

Joun A. Datry

1138 Six Penn Center Plaza

Philadelphia, Pa. 19104

Attorneys for the Railroads

January 1979