Petition — Wichita Board of Trade v. United States
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ALEXANDER L STEVA
IN THE
Supreme Court of the United States
October Term. !983
S
|
THE WICHITA BOARD OF TRADE, ET AL.,
Petitioners,
v.
THE UNITED STATES OF AMERICA AND
THE INTERSTATE COMMERCE COMMISSION, ET. AL.,
Respondents.
ON WRIT OF CERTIORARI TO THE
UNITED STATES COURT OF APPEALS FOR
THE TENTH CIRCUIT
PETITION FOR WRIT OF CERTIORARI
CHARLES J. McCARTHY
Counsel of Record
DANIEL J. SWEENEY
1750 Pennsylvania Avenue, NW
Washington, D.C. 20006
(202) 393-5710
McCARTHY, SWEENEY & HARKAWAY, P.C.
Of Counsel
September, 1983
SS I |S a
DiCesare and Associates Printing @ Washington, D.C. @ (202) 331-8101
QUESTIONS PRESENTED
1. Where this Court directed a district court to resolve the
disposition of a fund, consisting of payments by shippers of
unlawful grain inspection charges collected by railroads
during the period covered by a stay order issued by this
Court, and the district court remanded the issue of
reasonableness of those charges to the Interstate Commerce
Commission, did that court lose the power to comply with
this Court’s directive by failing to state in its remand that it
reserved jurisdiction over the ultimate disposition of the
fund?
2. Where, pursuant to a stay order issued by this Court, a
fund, consisting of payments by shippers for unlawful grain
insvection charges, was accumulated under the jurisdiction
of a district court, did the district court act properiy in
ordering the fund returned to those who bore the unlawful
charges?
3. (a) When this Court has referred to a district court for
decision an issue that was not briefed or argued before this
Court, it is the district court’s duty to decide that issue by
appiying established legal and equitable principles or to try,
by parsing the opinion of the Court, to decide how this
Court would have decided the issue if it had decided it?
(b) Where the district court has decided the issue applying
established legal and equitable principles, may a court of
appeals ignore the merits of the district court’s decision and
reverse, based on its interpretation of this court’s opinion?
4. Where: (1) the charges collected by the railroads while
an appeal was pending in this court are in a fund under the
supervision of a district court; (2) the Interstate Commerce
Commission subsequently found that the charges collected
by the railroads were unlawful; and (3) the statute confers on
shippers an unqualified right to recover the damages
sustained by unlawful action of the railroads, must the
district court nevertheless relegate the shippers who paid the
unlawful charges to complaint proceedings before the
Commission?
5. After a three-judge court has completed its review of a
Commission decision, is the disposition of a fund
accumulated as an incident to such review a matter that can
be determined by a single judge?
Cre P|
iil
LIST OF PARTIES
This Petition is being filed on behalf of the following: The
Wichita Board of Trade, the Board of Trade of Kansas City,
Mo., Board of Trade of the City of Chicago, Omaha Grain
Exchange, Enid Board of Trade, the Hutchison Board of
i rade, Sioux City Grain Exhange, Merchants’ Exchange of
St. Louis, the Denver Grain Exchange Association, Los
Angeles Grain Exchange, Fort Worth Grain Exchange,
Peoria Board of Trade,Utah-ldaho Grain Exchange, State
Corporation Commission of the State of Kansas, Missouri
Department of Agriculture, Kansas Grain & Feed Dealers
Association, National Grain Trade Council, National Grain
and Feed Association, Missouri Farmers Association, Inc.,
Cash Grain Association of the Chicago Board of Trade,
Pacific Northwest Grain Dealers Association, Inc., National
Association of Wheat Growers, Kansas City Grain
Commission Men’s Association, California Grainand Feed
Association, Far-Mar-Co., Inc. FS Services, Inc.,
Producers Grain Corporation, Bunge Corporation, C-G-F-
Grain Company, Inc. Garvey Elevators, Inc. Garvey Grain,
Inc., Lincoln Grain, Inc., Midwestern Grain Company -
Division of Garnac Grain Co, Inc., Masters Grain
Company, Hollander & Feuerhaken, Mohr-Holstein
Commission Co., and Stotler & Company. !
The following list identifies parties to the proceeding in
the Court of appeals for the Tenth Circuit:
The Wichita Board of Trade
The Board of Trade of Kansas City, MO
Board of Trade of the City of Chicago
Omaha Grain Exchange
Enid Board of Trade
'Lauhoff Grain Company is a subsidiary of the Bunge Corporation,
which is a subsidiary of Los Andes N V. C-G-F Grain Company, Inc. isa
subsidiary of Mid-West Industries. Lincoln Grain, Inc. is subsidiary of
Lincoln Industries, Inc.
The Hutchison Board of Trade
Sioux City Grain Exchange
Merchants’ Exchange of St. Louis
The Denver Grain Exchange Association
Los Angeles Grain Exchange
Fort Worth Grain Exchange
Peoria Board of Trade
Utah-Idaho Grain Exchange
State Corporation Commission of the State of Kansas
Missouri Department of Agriculture
Kansas Grain & Feed Dealers Association
National Grain Trade Council
Nationa! Grain and Feed Association
Missouri Farmers Association, Inc.
Cash Grain Association of the Chicago Board of Trade
Pacific Northwest Grain Dealers Association, Inc.
National Association of Wheat Growers
Kansas City Grain Commission Men's Association
California Grain and Feed Association
Far-Mar-Co., Inc.
FS Services, Inc.
Producers Grain Corporation
Bunge Corporation
CGF Grain Company, Inc.
Garvey Elevators, Inc.
Garvey Grain, Inc.
Lincoln Grain, Inc.
Midwestern Grain Company - Division of Garnac Grain
Co., Inc.
Masters Grain Company
Hollander & Feuerhaken
Mohr-Holstein Commission Co.
Stotler & Company
United States of America
Interstate Commerce Commission
The Atchison, Topeka and Santa Fe Railway Company
The Baltimore and Ohio Railroad Company
The Baltimore and Ohio Chicago Terminal Railroad
Company
Burlington Northern Inc.
The Chesapeake and Ohio Railway Company
Chicago and Eastern Illinois Railroad Company
Chicago and North Western Railway Company
Chicago, Rock Island, and Pacific Railroad Company
Colorado and Southern Railway Company
The Denver and Rio Grande Western Railroad Company
Elgin, Joliet and Eastern Railway Company
Erie Lackawanna Railway Company
Fort Dodge, Des Moines & Southern Railway Company
Fort Worth and Denver Railway Company
Grand Trunk Western Railroad Company
Gulf, Mobile and Ohio Railroad Company
Illinois Central Railroad Company
Illinois Central Gulf Railroad Company
Illinois Terminal Railroad Company
Kansas City Southern Railway Company
Louisville and Nashville Railroad Company
Missouri-Kansas- Texas Railroad Company
Missouri Pacific Railroad Company
Monon Railroad Company
_Norfolk and Western Railway Company
Penn Central Transportation Company
St. Louis-San Francisco Railway Company
St. Louis Southwestern Railway Company
Soo Line Railroad Company
Southern Pacific Transportation Company
Texas and Pacific Railway Company
Toledo, Peoria & Western Railroad Company
Union Pacific Railroad Company
Western Pacific Railroad Company
TABLE OF CONTENTS
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ED ck. dp peewnancadcéeccanecdebs thepeseuaniren x
ENED Ca cdpebcbeccecccvccccovevessetsevcenbaceeeees |
torch veces kbeedrCbdend oeccscndeencuceveusestdeewe 2
DOMSRREY POGUIIIONS TRVOIVEE 0.0.00 cccccccccsrecsaccdsccceceness 2
tite ee iwetee howe Whee e¥ehéopanseedeqkenehgen 3
POR HO COMIN WUE gc cc vcccccccncccces coecccecscocesucse 8
|. THE HOLDING BY THE COURT OF APPEALS THAT
THE DISTRICT COURT HAD LOST JURISDICTION
OVER THIS CASE FRUSTRATES THE MANDATE
OP THIS COURT nn ccscsscvcccccssccccccsccccccccsses 9
tl. THE DECISION OF THE COURT OF APPEALS
CONFLICTS WITH THE DECISION OF THIS COURT
IN MORGAN U0 wccccrcccccvccccccccccccsceccccceces 1
ill, THE CONSTRUCTION BY THE COURT OF
APPEALS OF THIS COURTS MANDATE CON-
FLICTS WITH ESTABLISHED PRINCIPLES
GOVERNING THE CONSTRUCTION OF
MEANDATES occccccccccccccccccccccceccccescsecesics 13
IV. THE HOLDING BY THE COURT OF APPEALS
THAT REPARATIONS ARE WITHIN THE PRIMARY
JURISDICTION OF THE COMMISSION CONFLICTS
WITH A.J. PHILLIPS CO. v. GRAND TRUNK
WESTERN RAILROAD .wuccccccccscccccccccccccccecs 15
V. THE HOLDING BY THECOURT OF APPEALS THAT
A SINGLE JUDGE HAD NO JURISDICTION TO
ISSUE AN ORDER DISPOSING OF THE FUND
CONFLICTS WITH THE DECISION OF THIS
COURT IN PUBLIC SERVICE COMMISSION vy.
BRASHEAR FREIGHT LINES 0.0.00 ccc ceeeeeennnes 17
CONCLUSION ...ccccccccccccccccccvvccvccsccseccecccceces 18
viii
Appendix (i) Wichita Board of Trade vy. United States,
706 F. 2d 1067 (10th Cir. 1983)
Appendix (ii) (a) Wichita Board of Trade v. United States,
No. 4730 (D. Kan. May 6, 1982)
(Order directing railroads to file a
written accounting and tender the
amounts collected into the court,
reserving decision on the amount of
interest which might be due on such
funds.)
(ii) (b) Wichita Board of Trade v. United States,
352 F. Supp. 365 (D. Kan. 1972)
(ii) (c) Atchison, Topekaand Santa Fe Railway
v. Wichita Board of Trade, 412 U.S.
800 (1973)
(ii) (d) Atchison, Topeka and Santa Fe Railway
v. Wichita Board of Trade, 409 U.S.
801 (1972)
(ii) (¢) Inspection in Transit, Grain and Grain
Products, 339 1.C.C. 364 (1971)
(ii) (f) Inspection in Transit, Grain and Grain
Products, 349 1.C.C. 89 (1975)
(ii) (g) /nspection in Transit, Grain and Grain
Products, 359 1.C.C. 624 (1979)
(ii) (h) Atchison, Topeka and Santa Fe Railway
v. Wichita Board of Trade, 433 U.S.
902 (1977)
(ii) (i) Wichita Board of Trade v. United States,
No. 4730 (D. Kan. July 31, 1973)
(Order of the court remanding to the
Commission.)
ix
(ii) (j) Wichita Board of Trade v. United States,
No. 4730 (D. Kan. Feb. 23, 1977)
(Opinion of the court granting Peiti-
ioners’ motion for refund.)
(ii) (k) Wichita Board of Trade v. United States,
No. 4730 (D. Kan. Aug. 22, 1977)
(Order remanding to the Commission.)
Appendix (iii) Wichita Board of Trade v. United States,
No. 82-1808 (10th Cir. June 16, 1983)
(Petition for rehearing denied.)
Appendix (iv) (a) No. 8548 /nspection in Transit, Grain
and Grain Products, (served Nov. 20,
1975) (Order denying protestant’s mo-
tion for refund.)
(iv) (b) Secretary of Agriculture v. 1.C.C., 551 F.
2d 1329 (D.C. Cir. 1977)
Appendix (iv)(c) INTERSTATE COMMERCE ACT
Former Section | (5)
Former Section 8
49 U.S.C. §11705(b) (2)
Former Section 9
49 U.S.C. §11705(c) (1)
Former Section 13(1)
Former Section 15(7)
Former Section 16(1)
7
TABLE OF AUTHORITIES
Cases Page
Atchison, Topeka & Sante Fe Railway v.
Wichita Board of Trade,409 U.S. 801 (1972) ....... 2
Atchison, Topeka & Santa Fe Railway v.
Wichita Board of Trade, 412 U.S. 800 (1973) ..2, 4, 13
Atchison, Topeka and Santa Fe Railway v.
Wichita Board of Trade, 433 U.S. 902 (1977)....2, 10
Bates v. United States, 323 U.S. 15 (1944) .......... 15
Burlington Northern, Inc. v. United States,
U.S. , 103 S.Ct. 514 (1982);
reh’g denied, 103 S.Ct. 1238 (1983) ........... 16, 17
Byrd v. Blue Ridge Rural Electric Cooperative,
Re EES oo’ bina beled SWaw twee eee bene a 15
In re Sanford Fork & Tool Co. 160
ET UMEE ob kv cedddewes sc ccbdawns vupweene 13
Inspection in Transit, Grain and Grain
Products, 339 1.C.C. 364 (1971) wc. ccc cece eeeees y
Inspection in Transit, Grain and Grain
Products, 349 1.C.C. 89 (1975) .....cesccccccees 2,4
Inspection in Transit, Grain and Grain Products,
eT Rn TUTE 6 6 6 oe sib adecveens 2, 6, 7, 10, 11
Insulating Materials, Between Points in Official
Territory, 364 1.C.C. 599 (1981)... ccc cece e eens 15
Manufacturers’ Finance Co. v. Mc Key, 294 U.S.
PN 6 0G4d ia Wed 00 si0.bs dock cehbapekeinkena 15
Morgan v. United States, 298 U.S. 468 (1936) ..... 5, 14
Morgan v. United States, 304 U.S. | (1938) ....... 5, 12
Morgan v. United States, 24 F. Supp. 214
Core WOO: IFIED acne cwcies'scs) ideemeeener ensue 12
Perkins v. Standard Oil of Calif., 399 U.S.
TE AEOUED oi0 sa cbvesecewseneeee » san abate ala enh 13
xi
A.J. Phillips Co. v. Grand Trunk Western
Reiroad, 236.U.S. 662 (1G1D) oo. os vicvvcvs rer 15, 16
Public Service Commission v. Brashear Freight
Lines, 312 U.S. 621; reh'g denied, 313
Ti SOE cdiedcpeed-ued Ccdhesbikewds ube 17, 18
Quern v. Jordan, 440 U.S. 332 (1979) oc. ccc cceceues 13
Rosado v. Wyman, 397 U.S. 397 (1970) .......eeeees 10
Secretary of Agriculture v. 1.C.C., 551
Pee Paee tees GO, LOTT in cscvice beees ane 2, 5,6
Southwestern Sugar and Molasses Co. v. River
Terminals Corp., 360 U.S. 411 (1959) .... eee eee 10
Special Equipment Co. v. Coe, 324 U.S.
IN tnd G binkie bake eblens heme Aba neh adanece 15
United States v. 1.C.C., 337 U.S. 426 (1949) .......45. 16
United States v. Malphurs, 316 U.S. 1 (1942) ....... 15
United States v. Morgan, 307 U.S. 183
POA Tas oab tne kee ued vambceas nee ee a 08,44 Om
United States v. Morgan, 313 U.S. 409 (1941) ........ 5
U.S. Department of Energy v. Baltimore and
Ohio Railroad, 364 1.C.C. 951 (1981)... eee cece ees 16
Wichita Board of Trade v. United States,
eee eee. 6a eee BOR. ISTE cc cdessccasseas 1,4
Wichita Board of Trade v. United States,
706 F. 2d 1067 (10th Cir. 1983)..........045. Passim
Unreported Cases:
Inspection in Transit, Grain and Grain Products,
ICC Docket No. 8548 (served Nov. 12, 1975)....... 2
Wichita Board of Trade v. United States, No.
4730 (D. Kan. May 6, 1982) .......ccceeeeeeees 7,8
Wichita Board of Trade v. Uniied States, 4730
RS NS Sg Fe eer 6,9
xii
STATUTORY PROVISIONS
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49 U.S.C. §10101 ef seg,
Pub. L. No. 96-473, 92 Stat. 1337 (1978) ........ 2
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PE UAETER BEER a5. 0<nk0cdcsminocacie 3, 15
No.
IN THE
Supreme Court of the United States
October Term, 1983
THE WICHITA BOARD OF TRADE, ET AL.,
Petitioners,
Vv
THE UNITED STATES OF AMERICA,
THE INTERSTATE COMMERCE COMMISSION, ET AL.,
Respondents.
ON WRIT OF CERTIORARI TO THE
UNITED STATES COURT OF APPEALS FOR
THE TENTH CIRCUIT
PETITION FOR WRIT OF CERTIORARI
Petitioners, the Wichita Board of Trade, et al.,
respectfully pray that a writ of certiorari issue to review the
Judgment and Opinion of the United States Court of
appeals for the Tenth Circuit in this case.
OPINIONS BELOW
The decision of the court of appeals is reported at 706 F.
2d. 1067 (10th Cir. 1983) and is included as Appendix (i).
The decision of the United States District Court for the
District of Kansas, which the court of appeals reversed, is
unreported and is included as Appendix (ti) (a). The earlier
decision of the district court is reported at 352 F. Supp. 365
(D. Kan. 1972) and is included as Appendix (ii) (b). The
earlier decision of this Court is reported as Atchison,
Topeka & Santa Fe Railway v. Wichita Board of Trade,
412 U.S. 800 (1973) and is included as Appendix (ii) (c). The
stay order of this Court, pursuant to which the district court
awarded the refunds here in issue, is reported as Atchison,
Topeka & Santa Fe Rairoad v. Wichita Board of Trade, 409
U.S. 801 (1972) and is included as Appendix (ii) (d). The
decisions of the Interstate Commerce Commission are
reported as /nspection in Transit, Grain and Grain
Products, 339 1.C.C. 364 (1971); Inspection in Transit,
Grain and Grain Products, 349 1.C.C. 89 (1975); and
Inspection in Transit, Grain and Grain Products, 3591.C.C.
624 (1979), and are included as Appendices (ii) (e), (f) and
(g), respectively. The order of this Court of June 26, 1977 is
reported as Atchison, Topeka and Santa Fe Railway v.
Wichita Board of Trade, 433 U.S. 902 (1977) and is included
as Appendix (ii) (h).?
JURISDICTION
The Opinion and Judgment of the court of appeals was
entered on April 28, 1983. A timely Petition for Rehearing
was denied by order entered June 16, 1983, which appears as
Appendix (iii) hereto. This Court has jurisdiction to review
the decision of the court below under 28 U.S.C. §1254(1).
STATUTORY PROVISIONS INVOLVED
This case was decided under the provisions of the
Interstate Commerce Act, 49 U.S.C. §1 ef seq., in effect
prior to its recodification as 49 U.S.C. §10101 et seq( Pub. L.
No. 95-473, 92 Stat. 1337). The relevant portions of the
following statutory provisions are set out as Appendix (iv)
(c):
2Also included (in Appendix (iv)) are the Nov. 12, 1975 decisions of the
Commission in /nspection in Transit, Grain and Grain Products, \.C.C.
Docket No. 8548, which denied a motion of the Secretary of Agriculture
for refunds under Section 15(7) of the Interstate Commerce Act (App.
(iv) (a)), and the decision of the Court of Appeals for the District of
Columbia Circuit reviewing that decision which is reported as Secretary
of Agriculture v. 1.C.C., 551 F.2d 1329 (D.C. Cir. 1977) (App. (iv) (b)).
Former Section | (5)
Former Section 8
49 U.S.C. §11705 (b) (2)
Former Section 9
49 U.S.C. §11705 (c) (1)
Former Section 13 (1)
Former Section 15 (7)
Former Section 16 (1)
STATEMENT
Petitioners initially sought review before the three-judge
district court of the April 16, 1971 decision of the Interstate
Commerce Commission (Commission) in /nspection in
Transit, Grain and Grain Products, 339 1.C.C. 364 (1971)
(App. (ii) (e)), which found just and reasonable a separate
charge proposed by the railroads for in-transit grain
inspection, without any offsetting reduction in the line-haul
r2.e.3 The district court acquired jurisdiction under thethen
effective provisions of 28 U.S.C. §§1336 and 2325.
A long line of Commission precedents had established the -
principle that a railroad seeking to impose a separate charge
for a service already included in the line-haul rate must
establish that the linc -haul rate is reasonable for the reduced
service. The three-judge district court found that the
railroads had not carried the burden of establishing the
reasonableness of the existing line-haul rate for the reduced
service the railroads proposed to offer, and that the
Commission's decision upholding the charges had not given
an adequate explanation for departing from the principle
established in earlier Commission precedents. The court
remanded the matter to the Commission for further
proceedings and ordered the collection of the proposed
‘The railroads do not perform the grain inspection. They simply make
the cars available for sampling by governmeut-licensed grain inspectors.
a
charges suspended. Wichita Board of Trade v. United
States, 352 F. Supp. 365 (D. Kan. 1972) (App. (ii)(b) at A-29)
This Court granted a stay pending the railroads’ appeal to
this Couri (App. (ii) (d)). The stay required the railroads to
keep accurate account of all amounts collected during the
existence of the stay and to refund such amounts to the
persons on whose behalf they were paid if the decision of the
district court were affirmed. The stay order further
provided:
In the event this Court’s action should be other
than an affirmance of the results reached by the
district court, this Court may make such further
order concerning the disposition of the aforesaid
amounts as the Court may deem appropriate.
(App. (ii) (d) at A-62.)
This Court affirmed the district court’s decision on the
merits, but reversed the district court insofar as it had
enjoined collection of the charges and directed that court “to
enter an order, consistent with this opinion, regarding the
disposition of” “he amounts collected by the railroads while
the case was before this Court. Afch--on, Topeka & Santa
Fe Railway v. Wichita Board of Trade ( App. (ii) (c)at A-31, n.1.)
The district court then remanded the matter to the
Commission for further proceedings to reconsider the
administrative finding that the charges were reasonable
(App. (ii) (c)).
On January 21, 1975, the Commission found that
repudiation of the long-established rule that “the line-haul
rates, as increased through a diminution of service
thereunder, [must] be justified by appropriate evidence
establishing that the aggregate charge for the through
service is reasonable” would not be in the public interest;
and it concluded that the railroads had not carried their
burden of proof on the issue of reasonableness. /nspection
in Transit, Grain and Grain Products (App. (ii) (f)at A-121).
Accordingly, the Commission found that the charges “are
not shown to be just and reasonable and otherwise lawful.”
Id. at A-123.
Because of this Court's holding in United States v.
Morgan, 307 U.S. 183, 198 (1939) (Morgan /1/1),4 that the
disposition of amounts collected while a stay order is in
effect is determined by whether the charges are ultimately
found by the agency to have been lawful or unlawful,
Petitioners awaited the decision of the Commission before
filing a motion in the district court for refund of the amounts
collected during the period covered by this Court’s stay, July
7, 1972, through June 18, 1973.
~The Secretary of Agriculture elected to pursue a different
remedy. He filed a motion with the Commission under
‘ Section 15(7) of the Act seeking refunds for the entire three
year-period that the charges were in effect. That motion was
dismissed suinmarily and the Secretary appealed to the
Court of Appeals for the District of Columbia Circuit.
That court remanded the proceeding to the Commission
for an explanatin of why it had denied relief. It directed
the Commission specifically to advise whether, if shippers
filed individual complaints seeking reparations, each
shipper would be required to demonstrate that the charges
were unreasonable rather than relying on the Commission's
earlier “not shown to be just and reasonable” finding.
Secretary of Agriculture v. 1.C.C. (App. (iv) (b) at A-177).
4Morgan was before this Court four times. Morgan / 8 reported as
Morgan v. United States, 298 U.S. 468 (1936); Morgan // is reported as
Morgan vy. United States, 304 U.S. | (1938); Morgan 1V 8 reported as
United States v. Morgan, 313 U.S. 409 (1941.) Only Morgan // and
Morgan //1 are discussed herein.
Meanwhile, the district court granted Petitioners’
motion for refunds for the stay period by its decision and
order of February 23, 1977 (App. (ii) (j)). That order also
placed the refund procedures under the judicial supervision
of the district judge. The railroads appealed that order to
this Court. In response to representations by the
Department of Justice and the Commission of a
relationship between this case and the Secretary of
Agriculture case, the Court remanded this case to the
district court with directions to remand it to the
Commission for further consideration in connection with its
reconsideration of the Secretary of Agriculture case (App.
(ii) (h)). In compliance with such direction, the district
court remanded the matter to the Commission by its order
of August 22, 1977 (App. (ii) (k)).°
The Secretary’s motion for refunds, on its face, appeared
to cover the entire period during which the rates were in
effect. But the Commission recognized that it had no
jurisdiction over the rates collected while this Court’s stay
was in effect. It stated:
The Supreme Court's stay covered the period from
July 7, 1972 to June 18, 1973. The period covered
‘In the district court, Commission counsel had opposed the original
refund motion of the Petitioners on the sole ground that the
Commission had not passed on the reasonableness of the rates but had
found only that the rates were not shown to be just and reasonable.
Because of the directive from the Court of Appeals for the District of
Columbia Circuit, the Commission was required on this remand to face
squarely the question of whether shippers could rely on the
Commission's “not shown to be just and reasonable” holding as a final
resolution of the reasonableness issue. It held that they could. The
Comssion rejected the railroad’s argument that the in-transit ins pection
charges were just and reasonable, stating that “[t]hat issue may not be
relitigated” Inspection in Transit, Grain and Grain Products (App. (ii)
(g) at A-136). The Commission thus held squarely that the charges were
unlawful.
by the Secretary's petition includes the time from
the date the railroads initially placed the rates into
effect, May 4, 1971, to the date of the stay’s
issuance, plus the period from the end of the stay
to March 28, 1975, when the charges were
ultimately canceled by the railroads.
(App. (ii) (g) at A-139, n. 22.)
Having described the Secretary of Agriculture’s petition as
one “which covers the period when the stay order was not in
effect” (App. (ii) (g) at A-140), the Commission denied the
petition. As to the period covered by the stay order, it
ordered “that the District Court for the District of Kansas
be advised not to refund those monies under its
jurisdiction.” (App. (ii) (g) at A-152.) (Emphasis added.)
After the Commission's advisory decision was issued,
Petitioners renewed their motion in the district court for an
order requiring the railroads to refund amounts collected
during the pendency of the stay order “to the persons in
whose behalf such amounts were paid.” On May 6, 1982,
Judge Theis granted the motion.°®
Judge Theis also directed the railroads to file a written
accounting and tender the amounts collected into court,
reserving decision on the amount of interest which might be
due on such funds. Wichita Board of Trade v. United States,
No. 4730 (D. Kan. May 6, 1982). (App. (ii) (a)at A-20.) The
court further ordered that Petitioners file a statement
*Judge Theis explained at length his reasons for decliningto adopt the
advice of the Commission, which he deemed “quite unpersuasive, as well
as grossly inequitable” (App. (ii) (a) at A-17). He noted that “(t)he
shippers of the grain during the period of the stay hadin fact been forced
to pay for the inspections twice, once in the inspection fee, and again in
the line haul rate” (id. at A-14). and rejected the Commission's recom-
mendation that the shippers be relegated to filing individual complaints
for recovery, pointing out that the claims were individually too smal! to
support litigation and that the statute of limitations had run. (A-15).
detailing on whose behalf the payments were made,
expressing the intention to have the moneys identified “for
ultimate refund or reimbursement to the actual payers of
such in-transit charges at the farmer and/or country
elevator levels” (App. (ii) (a) at A-21).
The railroads and the government appealed this order to
the court of appeals. The court of appeals ignored the
merits of the district court decision, reversing on the
following grounds:
1. The district court did not have subject matter
jurisdiction because its October 3, 1973 remand to the
Commission did not expressly state that jurisdiction was
reserved.
2. Whether the unlawful charges should be retained by
the railroads or returned to the shipper was a matter within
the exclusive primary jurisdiction of the Commission.
3. Although this Court’s decision of June 18, 1973, had
expressly instructed the district court to enter an order
disposing of the funds accumulated pursuant to the stay
order, that decision should be construed as a holding that
the question of reparations was to be determined by the
Commission and not by the court.
4. A single judge lacked jurisdiction to issue a refund
order.
REASONS FOR GRANTING THE WRIT
The decision of the court of appeals includes a number
of serious errors which compel this Court’s review: the
decision of the court of appeals not only has made it
impossible for the district court to comply with this Court’s
directive that it order disposition of the funds collected
while this Court’s stay order was in effect; but is also in
direct conflict with holdings of this Court on no less than
three fundamental issues of major importance.
THE HOLDING BY THE COURT OF APPEALS
THAT THE DISTRICT COURT HAD LOST
JURISDICTION OVER THE CASE FRUSTRATES
THE MANDATE OF THIS COURT
In compliance with this Court’s decision affirming the
setting aside by the district court of the Commission’s
initial decision, the district court, by order of July 31, 1973,
remanded the proceeding to the Commission for
determination of the lawfulness of the charges (App. (ii) (i).)
That order did not expressly state that jurisdiction was
reserved. But such a statement was unnecessary because the
district court was subject to an order from this Court
requiring it to dispose of the funds accumulated while the
stay was in effect. It could not surrender jurisdiction until it
had done so.
Under the directive and mandate from this Court, the
district court’s jurisdiction continued until it ordered
disposition of the funds subject to its jurisdiction. Under the
principle of Morgan //]/, discussed infra at | 1-13, the district
court could not order disposition of the fund until after the
Commission, in the exercise of its primary jurisdiction, had
determined whether the charges were lawful.’ The district
’That the district court did not intend to surrender jurisdiction is
made clear in its opinion of February 23, 1977, in which it stated:
In accordance with Supreme Court mandate, by order filed
August 13, 1973, this Court remanded the matter to the ICC for
further proceedings consistent with the opinion of the Supreme
Court. No order was then entered by the Court regarding the
distribution of the amounts received by the railroads by reason of
their collection of the in-transit grain inspection charges during
the existence of the stay, for the obvious reason further
administrative action by way of reconsideration of the justness
and reasonableness of the proposed rates was directed by both this
Court and the Supreme Court. (App. (ii) (j) at A-158.)
10
court was not asked to review the Commission’s decision
after remand. To the contrary, Petitioners relied on the
Commission’s uncontested determination that the charges
were unlawful and that was the basis for the district court's
ruling on the refund motion.*
This Court's subsequent order of June 27, 1977 (App. (ii)
(h)) directing the District Court to obtain the Commission's
views as to refunds did not strip the district court of the
jurisdiction entrusted to it by this Court’s directive of June,
1973 to decide who was entitled to the fund under its
jurisdiction. If this Court had believed that the district
court lost jurisdiction over the fund collected during the
stay by failing to state that it was reserving jurisdiction in its
1973 remand order, this Court presumably would have
reversed the district court with instructions to dismiss for
want of jurisdiction, thereby saving six years of litigation of
a “moot” case. Furthermore, had this Court intended to
terminate the district court only to obtain the views of
disposing of the funds, it could have said so. The Court’s
order required the district court only to obtain the views of
the Commission before taking dispositive action. This is not
an unusual procedure. See Southwestern Sugar & Molasses
Co. v. River Terminals Corp., 360 U.S. 411 (1959); Rosado
v. Wyman, 397 U.S. 397 (1970).
The Commission recognized the district court’s con-
tinuing jurisdiction, as it neither granted nor denied
refunds for the period of the stay order. In its decision of
February 9, 1979 (App. (ii) (g)). the Commission expressly
recognized that it did not have jurisdiction to order the
disposition of the fund because the charges collected during
*Had this Commission's subsequent decision been reviewed either in
the Kansas court or in another court. the Kansas count would still have
been obligated to order disposition of the funds under its control as soon
as there was a final Commission decision, not subject to further judicial
review, determining whether the charges were lawful or unlawful.
11
the stay period were under the jurisdiction of the district
court. The Commission stated with the utmost clarity that
it was only advising the court as to how it believed the
court’s equitable jurisdiction should be exercised (App. (ii)
(g) at A-152).
Petitioners did not seek review of that order, because it
did not purport to direct a disposition of the funds
accumulated during the stay period. That remained for the
district court to decide, giving appropriate consideration
to the Commission’s advisory opinion. Accordingly,
Petitioners asked the district court to exercise its equitable
jurisdiction after considering the views of the Commission;
and the district court properly did so.
In short, the district court was simply complying with
the directive from this Court to enter an order disposing of
the fund under its jurisdiction. In holding that the district
court lacked jurisdiction to decide an issue that this Court
had ordered it to decide, the court of appeals prevented the
district court from obeying the mandate of this Court. In
so doing, the court of appeals acted beyond its authority.
THE DECISION OF THE COURT OF
APPEALS CONFLICTS WITH THE
DECISION OF THIS COURT IN MORGAN Ill
Morgan I// arose under the Packers and Stockyards Act.
The Secretary of Agriculture had declared the schedule of
maximum rates for the service at the Kansas City stockyards
to the unlawful and had prescribed a lower schedule of rates.
Stockyard companies supplying the services filed suit in the
district court, which temporarily restrained the Secretary's
order on condition that the companies desposit with the
clerk of the court the difference between the existing rates
and the rates prescribed by the Secretary. It ultimately
sustained the Secretary's order.
12
In Morgan I//, this Court held the Secretary's order
invalid and remanded the case to the district court. 304
U.S. at 22. On remand, the district court held that, since
this Court had found that the Secretary's order was
unlawful (and therefore the district court had erred in
requiring that the funds be paid into court), the funds must
go to the stockyard companies. Morgan v. United States. 24
F. Supp. 214 (W.D. Mo. 1938). In Morgan //]/, this Court
reversed, pointing out that it is a “guiding principle” that:
[1]n reviewing the action of the Secretary and in
similarly reviewing the action of the Interstate
Commerce Commission in conformity with the
provisions of the Urgent Deficiencies Act, the
District Court sits as a court of equity, see Ford
Motor Co. v. National Labor Relations Board,
305 U.S. 364, 373; Inland Steel Co. v. United
States, 306 U.S. 153; and in exerting its
extraordinary powers to stay execution of a rate
order, and in directing payment into court of so
much of the rate as has been found administratively
to be excessive, if assumes the duty of making
disposition of the fund in conformity to equitable
principles.
307 U.S. at 191. (Emphasis supplied.)
Applying equitable principles, this Court held that the
disposition of a fund accumulated as an incident to review of
an order of an administrative agency is not governed by
whether the decision of the court that led to the
accumulation of the funds was right or wrong but by
whether the rates were lawful or unlawful; and that,
therefore, the court must await the determination by the
agency of that issue and then order disposition of the fund
accordingly.
In the instant case, the Commission held on the first
remand that the charges were not shown to be just and
reasonable (App. (ii) (f) at A-123), and, on the second remand.
13
that the unreasonableness of the charges had been settled
and could not be relitigated (App. (ii)(g) at A-136). It follows
that the fund should go to those who paid the unlawful
charges. The holding of the court of appeals that the rail-
roads are entitled to retain the fund is thus squarely in
conflict with this Court’s decision in Morgan /11.9
THE CONSTRUCTION BY THE COURT OF APPEALS
OF THIS COURT'S MANDATE CONFLICTS
WITH ESTABLISHED PRINCIPLES GOVERNING
THE CONSTRUCTION OF MANDATES.
It is settled law that, on remand, a district court “may
consider and decide any matters left open by the mandate of
this Court.” /n re Sanford Fork & Tool Co., 160 U.S. 247,
256 (1895). Accord, Perkins v. Standard Oil of Calif., 399
U.S. 222, 223 (1970); Quern v. Jordan, 440 U.S. 332, 347 n.
18 (1979). The opinion of this Court in Atchison, Topeka &
Santa Fe Railway v. Wichita Board of Trade (App. (ii) (c))
settled only two issues: that the district court was correct in
setting aside the Commission’s order of September 21, 1971,
*The court of appeals sought to distinguish Morgan /// on two
grounds: that Morgan /// arose under a different statutory scheme, and
that the funds had not been paid into the registry of the court. That
Morgan II] arose under a different statute (athough the Packers and
Stockyards Act is modeled after the Interstate Commerce Act) is
irrelevant. Morgan I// lays down a broad principle governing the
relationship between courts and administrative agencies. And the fact
that in Morgan the funds had been physically paid into court, whereas
here the funds were ordered to be accumulated by the railroads and held
for ultimate disposition, is not determinative of who should be awarded
these funds. It is enough that the funds are under the control of the
court. The same principle applied in Morgan /// was applied in Inland
Steel Co. v. United States. 306 U.S. 153 (1939), where, as here, the
railroads were not required to pay the moneys into court but rather to
keep account.
14
and that the district court was in error in enjoining
collection of the inspection charges. The disposition of the
funds under control of the district court was left open by
the remand and the district court was expressly directed to
decide that issue. (App. (ii) (c) at A-31, n.1.) The court of
appeals gave scant attention to whether the district court’s
decision was correct. Instead, it construed the phrase
“consistent with this opinion” in this Court’s opinion as a
direction not to dispose of the fund under legal and
equitable principles but to guess how this Court would have
decided the issue if it had decided it. '?
From its reading out of ~ontext of a single paragraph of
this court’s opinion, the court of appeals found an “intent”
that “reparations are for decision by the ICC, not the
Kansas Court” (App. (i) at A-8), and that this Court, without
saying so, had “left reparations to the ICC in the exercise of
it primary jurisdiction ...” /d, at A-9. In the face of this
Court’s instruction to the district court to make an approp-
riate disposition of the fund, the court of appeals concluded:
“Also, we find no intent of the Supreme Coun that the
Kansas court retain jurisdiction over any matters which
might arise under the Court’s 1972 stay order”. (App. (i) at
A-11) Thus, the direction of this Court to the district court to
decide the disposition of the fund collected under this
Court’s stay was nullified by the court of appeals.
It is the established practice of this Court not to decide
isue without the benefit of their initial consideration by the
In Morgan I//, the remand was “for further proceedings in
conformity with this opinion.” 298 U.S. at 482. On remand, the district
court, instead of determining what disposition was required by
equitable principles, tried to guess how this Court would have decided
the issue based on its reading of Morgan //. This Court reversed the
district court because it had made the same error made by the court of
appeals here.
15
lower court, especially where, as here, the issues have not
been briefed or argued to it.'' The purpose of a remand is
frustrated if the lower court decides the issue by trying to
parse the decision out of which the remand grew, instead of
giving the issue the full consideration required.
IV.
THE HOLDING BY THE COURT APPEALS THAT
REPARATIONS ARE WITHIN THE PRIMARY
JURISDICTION
OF THE COMMISSION CONFLICTS WITH
A.J. PHILLIPS CO. V. GRAND TRUNK WESTERN
RAILROAD
Section 8 of the Interstate Commerce Act!? creates an
absolute right to recover damages sustained by reason of the
imposition of an unlawful charge by a railroad;'? and
''See, e.g.. Manufacturers’ Finance Co. v. McKev, 294 U.S. 442, 453-
454 (1935); United States v. Malphurs, 316 U.S. 1, 3 (1942); Bates v.
United States, 323 U.S. 15, 17 (1944); Special Equipment Co. v. Coe,
324 U.S. 370, 380 (1945); Byrd v. Blue Ridge Rural Electric
Cooperative, 356 U.S. 525, 540 (1958).
'2References are to the Interstate Commerce Act as in effect at the
time this controvery arose. Sections 8 and 9 of the Ac* ure now 49 U.S.C.
§11705(b) (2) and §11705(c) (1), respectively.
If Petitioners had sought reparations in a proceeding before the
Commission, the award of reparations would have been mandatory
because the Commission has found that the charges were unreasonable
and has held that finding could not be relitigated in a reparations
proceeding. In /nsulating Materials, Between Points in Official
Territory, 364 1.C.C. 599, 601 (1981), the Commission held:
In the case of a rate increase found unlawful on reasonableness
grounds, the measure of refunds (i.e., damage) is clear. Given
market dominance, the shipper has no choice but to pay a rate
later found too high and no further evidence of harm is necessary.
See Mayo Shell Corp. v. Chicago, R. 1. & P. R. Co., 293 1.C.C.
16
Section 9 permits the shipper to enforce that right either ina
proceeding before the Commission or by action ina District
Court. Since the Commission would have had no discretion
to deny reparations, it follows that the award of reparations
following a Commission finding of unlawfulness is not a
matter within the primary jurisdiction of the Commission.
In A. J. Phillips Co. v. Grand Trunk Western Railroad,
236 U.S. 662 (1915), this Court held that, once the
Commission had found that a rate was unlawful, that
finding inured to the benefit of every person who had been
obligated to pay the unjust rate; and that a shipper who had
not been a party to the Commission proceeding could
maintain an action at law for damages. '4
The court of appeals relies on Burlington Northern, Inc.
v. United States, U.S. 103S.Ct. 514, 521
(1982); reh’g denied 103 S.Ct. 1238 (1983), as authority to
the contrary. This Court there said that:
243, 246-47 (1954). Therefore, for obvious reasons, what
discretion we have to limit refunds is not exercised in this
circumstance and refunds are, in effect, automatic.
To the same effect in U.S. Department of Energy v. Baltimore and
Ohio Railroad, 364 1.C.C. 951, 975 (1981): “Under 49 U.S.C. 11705(b)
(2). a railroad is ‘liable for damages sustained’ when it violates the
statute. It is the Commission's duty to award the full amount of damages
sustained in consequence of any violation. ..” (Footnote ommitted).
'4*Moreover, if a reparations action is instituted in a federal district
court, it is appropriate for the court to reserve jurisdiction pending a
Commission decision on the issue of lawfulness. See United States v.
LC.C., 337 U.S. 426, 446-466 (1949) (Frankfurter, J.. Jackson, J., and
Burton, J., dissenting). and cases there cited. If a shipper can recover
unlawful charges paid by it in action at law, it follows, a fortiori, that
a court of equity which has the moneys under its jurisdiction can grant
the same relief.
17
where there is a dispute about the appropriate
rate, the equities favor allowing the carrier's rate
to control pending decision by the Commission,
since under the Act, the shipper may receive
reparation for overpayment while the carrier can
never be made whole after underpayment.
(Emphasis supplied.)
Burlington Northern does not address the question of
primary jurisdiction to award damages after a rate has been
found to be unlawful. The quoted language holds only that
the carrier may continue to collect the rate while its
lawfulness is being determined by the Commission, which is
consistent with this Court's holding in its first decision in
this case. It does not address the question whether a court
may award damages once the Commission has passed on the
lawfulness of the rate.'®
V.
THE HOLDING BY THE COURT OF APPEALS
THAT A SINGLE JUDGE HAD NO JURISDICTION
TO ISSUE AN ORDER DISPOSING OF THE
FUND CONFLICTS WITH THE DECISION
OF THIS COURT IN PUBLIC SERVICE
COMMISSION V. BRASHEAR FREIGHT LINES
Although it did not reverse on this basis, because it
recognized that the “defect” could be cured on remand by a
three-judge district court, the court of appeals also held
that a single judge lacked jurisdiction to order disposition of
the fund pursuant to this Court’s directive. The three-judge
district court, having disposed of the issues for which the
three-judge court was constituted, properly directed the
single judge to order disposition of the fund. In Public
'SCuriously, the court of appeals in the instant case cited the policy
preamble to the Staggers Rail Act of /980 as support for its conclusion
that this Court's opinion in /¥73 must be read as holding that only the
ICC may award refunds. (App. (i) at A-I1.)
18
Service Commission v. Brashear Freight Lines, 312 U.S. 621
(1941); reh'g denied, 313 U.S. 598 (1941), this Court noted
that “the motion for damages raised questions not within
the statutory purpose for which the two additional judges
had been called” (312 U.S. at 625) and held that assessment
of damages was properly for a single district judge. See also
United States v. 1.C.C., 337 U.S. 426, 440-43 (1949), holding
that one judge rather than three should entertain challenges
to Commission reparation orders because of “the
importance of limiting the three-judge court procedure
within its expressly stated confines.” 337 U.S. at 443.
CONCLUSION
For the reasons stated, certiorari should be granted and
the case should be reversed summarily or set for briefing and
oral argument.
Respectully submitted,
CHARLES J. McCARTHY
Counsel of Record
DANIEL J. SWEENEY
1750 Pennsylvania Ave., NW
Washington, D.C. 20006
(202) 393-5710
McCARTHY, SWEENEY & HARKAWAY, P.C.
Of Counsel
September 14, 1983
iad ah eat
a) 7 owe
APPENDICES
APPENDIX (i)
A-1
The WICHITA BOARD OF TRADE, et
al., Plaintiffs-Appellees,
v.
The UNITED STATES of America and
the Interstate Commerce Commission,
Defendants-Intervenors,
and
Atchison, Topeka and Santa Fe Railway
Company, et al., Intervening
Defendants-Appellants.
No. 82-1808.
United States Court of Appeals,
Tenth Circuit.
April 28, 1983.
A-2
Charles J. McCarthy, Washington, D.C. (Daniel J.
Sweeney of McCarthy, Sweeney & Harkaway, P.C.,
Washington, D.C., Glaves, Weil & Evans, Wichita, Kan.,
with him on brief), for plaintiffs-appellees.
Henri Rush, Associate Gen. Counsel, Washington, D.C.
(John Broadley, Gen. Counsel, and Craig M. Keats, Atty.,
1.C.C., Washington, D.C., with him on briefs), for 1.C.C.
Christopher A. Mills, Chicago, III. (Charles W. Harris of
Curtman, Harris, Stallings Grace & Snow, Wichita, Kan.,
with him on briefs), for intervening defendants-appellants.
Before SETH, LOGAN and BREITENSTEIN, Circuit
Judges.
BREITENSTEIN, Circuit Judge.
This controversy over railroad freight rates on grain has
followed a tortuous and unusual path through a maze of
administrative and judicial proceedings. Any simple
statement of the facts, issues, and procedures is impossible.
The appeal by the railroads attacks a judgment of the United
States District Court for the District of Kansas which held
that the rates imposed were unlawful and ordered the
railroads to file an accounting of the moneys collected
during a stay period and pay the amounts wrongfully
collected into the registry of the court. The United States
and the Interstate Commerce Commission have been
permitted to intervene in the appeal. We reverse on
jurisdictional grounds.
In 1970 the railroads proposed a charge, separate and
above the applicable line-haul rate, for the inspection of
grain in-transit. The proposal covered the western territory.
At the time a similar charge was in effect for the eastern
territory. In-transit inspection refers to the stopping of cars
loaded with grain, placing them on railroad track facilities,
A-3
determination of the grade of the grain, and subsequent
movement of the car to its destination. The process is
described in more detail in Atchison T. & S.F.R. Co. v.
Wichita Board of Trade, 412 U.S. 800, 803, 93 S. Ct. 2367,
2372. 37 L. Ed. 2d 350, and particularly n. 2. This decision
will be hereafter referred to as AT & SF v. Wichita. See also
Inspection in Transit of Grain and Grain Products, 339
1.C.C. 364, 365.
A chronology of the administrative and judicial actions
will be helpful.
(1)-- April 16, 1971. Interstate Commerce Commission
(ICC) Div. 2 order holding the in-transit charges were just,
reasonable, and lawful. 339 LC.C. 364.
(2)- September 21, 1971. In banc ICC order affirming
Div. 2 order in all pertinent respects. 340 1.C.C. 69.
(3)—-May 26, 1972. Order and judgement of a three-judge
district court for the District of Kansas setting aside the rate,
remanding the matter to ICC, and suspending the charges
until otherwise ordered by the court. 352 F. Supp. 365.
(4). July 7, 1972. Order of Supreme Court staying
judgment of the Kansas court until final determination of
the railroads’ appeal and requiring the railroads to keep
account of charges received. 409 U.S. 801, 93S. Ct. 24, 34L.
Ed.2d. 14.
(5)—June 18, 1973. Supreme Court decision on merits
affirming lower court’s remand to ICC and reversing that
court’s injunction suspending the proposed charges. 412
U.S. 800, 826, 93 S.Ct. 2367, 2484, 37 L.Ed.2d 350.
(6)--August 3, 1973. Order of Kansas court remanding
cause to ICC but saying nothing about retention of
jurisdiction. R. 271.
A-4
(7)- January 21, 1975. 1CC order on remand holding that
the charges were not shown to be just and reasonable. 349
1.C.C. 89, 97. ICC ordered prospective cancellation of the
charges. With respect to refund of collected charges it said,
Id. at 93, “should relief in addition to that which is provided
in this report and order be desired by protestants, action
under section 13(1) of the act must be commenced.” Section
13(1) has been recodified as 49 U.S.C. § 11701.
(8)—-September 5, 1975. The Secretary of Agriculture, in
his statutory capacity as representative of farm interests,
moved ICC for a general refund order under 49 U.S.C.
§15(7). Section 15(7) has been recodified as 49 U.S.C.
§10708(b).
(9)—-November 12, 1975. 1CC summarily denied motion
of Secretary. Docket No. 8548.
(10)--February II, 1977. On Secretary’s appeal of ICC
order denying general refunds, the District of Columbia
court of appeals reversed the ICC denial of the Secretary's
refund motion and remanded the cause to the ICC.
Secretary of Agriculture v. 1.C.C., D.C. Cir., S51 F. 2d 1329,
1331.
(11)—-February 23, 1977. Kansas district court ordered
railroads to account and pay for charges collected. R. 66-67.
(12)—-June 26, 1977. Supreme Court vacated Kansas
court account and pay order and remanded with directions
to remand cause to ICC for further consideration in
connection with its reconsideration under the order of the
District of Columbia Circuit. 433 U.S. 902, 97 S.Ct. 2964,
53 L.Ed.2d 1087.
(13)—-August 22, 1977. Kansas court order remanding
cause to ICC with no provision for retention of jurisdiction.
R. 70.
A-5
(14)--February 9, 1979. ICC order on remands. 359
1.C.C. 624. Charges held under Supreme Court “keep
account” order should not be returned under a blanket
refund order. Id. at 636-637. Kansas court advised to deny
petition for refund of monies under its jurisdiction. Id. at
636. Shippers told to seek refunds in individual complaint
proceedings under 49 U.S.C. § 11701. Id. at 637-638.
(15)--August 16, 1979. District of Columbia Circuit's
dismissal of action brought by Secretary of Agriculture.
Docket No. 76-1026.
(16)--May 6, 1982. Order of Kansas court reentering its
account and pay order, R.227-234. and denying
reconsideration on June 22, 1982. R. 262.
(17)—June 29, 1982. Railroads’ appeal from account and
pay order docketed in the Tenth Circuit.
The plaintiffs-appellees are the Wichita Board of Trade
and 37 other shipper organizations and shippers. The
intervening defendants-appellants are the Atchison,
Topeka and Santa Fe Railway Company and 33 other
railroads. The United States and ICC are intervenors. The
record does not show the amount of money at stake. The
district court order covers the stay period beginning July 7,
1972, 409 U.S. 801, 93 S.Ct. 24, 34 L.Ed.2d 14, and ending
June 18, 1973, 412 U.S. 800, 826, 93 S.Ct. 2367, 23384, 37
L.Ed.2d 350. The record does not show what accounting, if
any, was made and does not show that the railroads have
paid any money into the court registry. ICC comments on
total collections of the in-transit charges are found at 349
1.C.C. 95. In its 1979 decision, ICC said that “[t]he equitable
aspects of refunding past rates are ... inextricably entwined
with the Board’s normal regulatory responsibility, as such
A-6
refunds may substantially affect the future rates,
performance and health of the industry.” 359 L.C.C. at 634,
n. 52.
The appellees moved to dismiss this appeal on the ground
that jurisdiction did not lie in the court of appeals under
either 28 U.S.C. § 1291 or § 1292(a). Another panel of this
court denied the motion to dismiss by order entered
January 14, 1983.
A preliminary question relates to the power of one judge
of the three-judge panel to act alone in the entry of the May
6, 1982, account and pay order of the district court. When
the case was filed in 1971, the Judicial Code, 28 U.S.C. §
2325, provided that actions to overturn ICC decisions
should be brought in a federal district court and heard by a
panel of three judges. Review of its judgment was by direct
appeal to the United States Supreme Court. In 1975
Congress repealed § 2325 and provided for review of ICC
orders by the courts of appeals. 88 Stat. 1917-1918. See 28
U.S.C. § 2341 et seq. The repealing act privided, 88 Stat.
1918, that is shall not affect pending actions which “shall
proceed to final disposition under the law existing on the
day they were commenced.”
The three-judge panel on February 23, 1977, sustained the
motion for refund and ordered R. 67, that all further
proceedings be transferred to the resident judge for such
further action as he finds necessary. Proceedings before
three-judge district courts are governed by 28 U.S.C. § 2284.
It provides that a single judge may conduct all proceedings
except trial but he may not “enter judgment on the merits.”
Any action by a single judge “may be reviewed by the full
court at any time before final judgment.” The resident judge
entered the remand order of August 22, 1977, the May 6,
A-7
1982 account and pay order, and the June 22, 1982, order
denying reconsideration. All of these were final judgments
onthe merits and were not approved by the panel. One judge
had no power to enter them alone. No review by the panel
was requested. We decline to reverse because of this
assertion of power by one judge because on remand it would
be possible that the panel will uphold the orders. We
conclude that it is necessary to consider the jurisdiction of
the panel over the cause.
Consideration of the jurisdiction of the Kansas court
presents intertwined problems of procedure and substance.
The district court suspended the proposed in-transit charges
and said that they “shall be ineffective until and unless
otherwise ordered by this Court.” 352 F. Supp. at 369. On
the application of the railroads, the Supreme Court stayed
the district court order on condition that the railroads keep
accurate accounts of charges collected and in the event the
Court affirms the suspension of the rates the railroads shall
pay the amounts collected to those entitled to them. 409
U.S. 801, 93 S.Ct. 24, 34 L.Ed. 2d 14.
When the case came before the Supreme Court on the
merits it noted the stay order and said: “We hereby direct the
District Court to enter an order, consistent with this
opinion, regarding the disposition of those amounts.”
[ Emphasis supplied.] 412 U.S. at 802, n. 1,93 S.Ct. at 2372,
n. |. In disposing of the case, the Court said, 412 U.S. at 826,
93 S.Ct. at 2384:
“Here the Commission ordered the railroads to
maintain records of the amounts collected as a result of
the new charge. It may be that this adequately protects
the shippers from irreparable damage, in the light of
the availability of actions for reparations. The
A-8
Commission may determine on remand that some
further steps must be taken to protect the shippers. But
in any event, it is clear that the District Court should
not have entered the injunction it did. The action of the
District Court is affirmed as to the remand to the
Commission and ts reversed as to the injunction
suspending the proposed charges.”"[Emphasis supplied. }
The Court did nor affirm the suspension of the charges.
We believe that the quoted language expresses the intent
that reparations are for decision by the ICC, not the Kansas
court. The district court must have so interpreted the
Supreme Court order because it remanded the cause toICC
without retention of jurisdiction. R. 271.
After ICC acted, 349 1.C.C. 89, no proceeding was
brought for review of that action in the Kansas court.
instead Wichita Board of Trade moved, in its original
action, for refunds. The Kansas court granted the motion in
its 1977 account and pay order. R. 56-67. The railroads
appealed that order. The Supreme Court summarily
reversed with directions to remand the case to ICC for
further consideration in connection with the D.C. Circuit
case. 433 U.S. 902, 97 S.Ct. 2964, 53 L.Ed. 2d 1087. The
Kansas court again remanded the case to ICC without
retention of jurisdiction. R. 70. By its remand without
retention of jurisdiction, the Kansas court terminated its
power and jurisdiction over all matters connected with
review of ICC action. See Greater Boston Television
Corporation v. F.C.C., D.C. Cir., 463 F.2d 268, 287, cert.
denied, 406 U.S. 943, 92 S.Ct. 2042, 32 L.Ed. 2d 339, and
Chemical Leaman Tank Lines, Inc. v. U.S., D.Del., 446 F.
Supp. 721. Appellees say that these decisions are not
pertinent because they reflect only the policy of the courts
A-9
involved. We believe that the better practice is fora court to
expressly retain jurisdiction if such is its intent.
The effect of the Supreme Court's actions was to have the
question of reparations considered and determined by the
ICC, subject to appropriate judicial review. The 1982
decision of the Court in Burlington Northern, Inc. v United
States, U.S. . 103 S.Ct. 514, 74 L.Ed.2d 311,
reviewed its decisions on the respective authority of the ICC
and the courts with regard to railroad freight rates. After
citing AT & SF v. Wichita, 412 U.S. 800, 93 S.Ct. 2367,37
L.Ed.2d 350, and other cases, the Court said, Id., 103 S.Ct.
at 521, that those cases stand for three propositions: (1)
primary jurisdiction to determine reasonable rates lies with
ICC; (2) judicial authority to reject ICC rate orders “extends
to the orders alone, and not to the rates themselves,” and
(3):
“where there is a dispute about the appropriate rate. the
equities favor allowing the carrier's rate to control
pending decision by the Commission, since under the
Act, the shipper may receive reparation for overpay-
ment while the carrier can never be made whole after
underpayment.”
The directions given by the Supreme Court in 412 U.S. at
802, n. |, and 826, 93S.Ct. at 2372, n. |, and 2384, and in 433
U.S. 902, 97 S.Ct. 2964, 53 L.Ed. 2d 1087, mean to us that
the Court left reparations to the ICC in the exercise of its
primary jurisdiction granted by §§ 13(1) and 15(7) of the
Interstate Commerce Act, amended, and codified, and now
appearing at 49 U.S.C. §§ 10707 and 11701.
Appellees support the jurisdiction of the Kansas court to
enter the account and pay order by reliance on United
States v. Morgan, 307 U.S. 183, 59S.Ct. 795, 83 L.Ed. 1211.
A-10
Morgan arose under a different statutory scheme, the
Packers and Stockyards Act, and the funds at stake had
been impounded. Id. at 187, 59 S.Ct. at 798. Nothing in the
record shows that any funds have been paid into the court
registry. The applicability of Morgan is inconsistent with
the Supreme Court's second remand in this case. 433 U.S.
902, 97 S.Ct. 2964, 53 L.Ed.2d 1087.
Reliance on Indiana & Michigan Electric Company v.
Federal Power Commission, D.C. Cir., 502 F.2d 336, cert.
denied, 420 U.S. 946, 95 S.Ct. 1326, 43 L.Ed.2d 424, is also
misplaced. That case arose under the Federal Power Act.
The court exercised its equitable powers because of the
unique procedural! aspects of the case. See 502 F.2d at 347-
348.
To support the jurisdiction of the Kansas court to enter
the account and pay order, the Appellees cite 28 U.S.C.
§§ 1336 and 1398. Section 1336 confers district court
jurisdiction over ICC orders for the payment of money. In
the case at bar ICC made no such order. Section 1398 refers
to district court jurisdiction of an ICC order made pursuant
to a referral. No referral was made here. The cause was
remanded to ICC.
A further argument of Appellees is that the Kansas court
had jurisdiction to implement and enforce its own order.
Reference has to be to the 1977 account and pay order of the
Kansas court. The Supreme Court vacated that order, 433
U.S. 902, 97 S.Ct. 2964, 53 L.Ed.2d 1087. Nothing was left
of it to be either implemented or enforced.
We find nothing in the long history of this controversy to
indicate that the Kansas court had any jurisdiction of the
cause after its remand to the ICC pursuant to the order of
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the Supreme Court, 412 U.S. at 826, 93 S.Ct. at 2384. Also,
we find no intent of the Supreme Court that the Kansas
court retain jurisdiction over any matters which might arise
under the Court's 1972stay order, 409 U.S. 801, 93S.Ct. 24,
34 L.Ed.2d 14. As we read Burlington Northern,
reparations are under the primary jurisdiction of ICC with
judicial review when appropriate. 103 S.Ct. at 521. This
harmonizes with the congressional intent in the Staggers
Rail Act of 1980, 94 Stat. 1895 et seq. The purpose of the
Act “is to provide for the restoration, maintenance, and
improvement of the physical facilities and financial stability
of the rail system of the United States.” Id. at 1897. ICC is
the administrative agency responsible for achievement of
the Act's intent.
The Kansas court did not have subject matter jurisdiction
to make and enter its orders of May 6 and June 22, 1982.
Accordingly, those orders are set aside and held for naught.
APPENDIX (ii) (a)
A-12
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF KANSAS
THE WICHITA BOARD OF TRADE
et. al..
Plaintiffs,
Civil Action
No. W-4730
VS.
THE UNITED STATES OF AMERICA
and INTERSTATE COMMERCE
COMMISSION, et al..
)
)
)
)
)
)
)
)
)
)
)
)
)
Defendants. )
)
A-13
MEMORANDUM OPINION AND
ORDER OF THE COURT
Once again this Court must resurrect this case from a
judicial resting place in limbo and address the question of
disposition of the monies received by the railroads during
the period of the stay order and “keep account” order of the
United States Supreme Court, Atchison, Topeka & Santa
Fe Rv. Co. v. Wichita Board of Trade, 409 U.S. 801, 93
S.Ct. 24, 34 L.Ed.2d 14 (1972). In 1971, the Interstate
Commerce Commission approved the imposition of a
charge for in-transit grain inspections. Prior to that
approval the cost of such inspections had been considered a
part of the line haul rate. Sitting as a three-judge court, this
court set aside the Commission's order, declared the
changes ineffective, and enjoined enforcement of the
questioned I.C.C. order, as reported in Wichita Board of
Trade v. United States, 352 F. Supp. 365 (D. Kan. 1972).
The Supreme Court, in an interim order, stayed the
injunction and allowed collection of the fees on condition
the railroads “keep accurate accounts in detail of all
amounts hereafter received during the existence of the stay
by reason of in-transit grain inspection charges, specifying
by whom and in whose behalf such amounts are paid.” 409
U.S. at 801. The purpose of these accounts was to provide
repayment, with interest, “to persons in whose behalf such
amounts were paid, without necessity for such persons to
make applications for refunds” if this Court’s order was
affirmed. The Court's injunction was not upheld, and the
railroads were allowed to continue collecting the contested
rate. This Court’s view of the merits, however, was
affirmed, i.e., that the initial ICC order was illegal, and the
matter was ordered remanded to the ICC to again
A-14
determine whether the contested fee was reasonable. This
Court was instructed by the Supreme Court “to enter an
order, consistent with this opinion, regarding the
disposition of” the accounts computed as a result of the
interim order. Atchison, Topeka & Santa Fe Ry. Co. v.
Wichita Board of Trade, 412 U.S. 800, 802 n.1, 93 S.Ct.
2367, 37 L.Ed.2d 350 (1973). On remand to the ICC, the
reasonableness of the fee was not proved and the fee was
eliminated. The shippers of the grain during the period of
the stay had in fact been forced to pay for the inspections
twice, once in the inspection fee, and again in the line haul
rate.
In 1977, this Court, again sitting as a three-judge court,
issued an order, as it was mandated to do, disposing of the
funds. The funds were ordered returned to those who had
paid double for the services of the railroad. For the
apparent purpose of achieving consistency in judicial
disposition, that order was summarily vacated by the
Supreme Court, Alchison, Topeka & Santa Fe Ry. Co. v.
Wichita Board of Trade, 433 U.S. 903, 97 S.Ct. 2964, 53
L.Ed.2d 1086 (1977), tobe reconsidered by the ICC in light
of Secretary of Agriculture v. Interstate Commerce
Commission, 551 F. 2d 1329 (D.C. Cir. 1977). That case
involved disposition of fund collected by the railroads after
the 1972 decision by the Supreme Court, but before the rate
was set aside on remand to the ICC.* The D.C. Circuit
remanded an ICC refusal to order a general refund of those
fees. On remand this case and the Secretary's were
consolidated before the ICC, which again declined to order
a general refund of the fees collected after the 1972 decision,
and recommended this Court do likewise with the funds
collected during the stay. /nspection In Transit, Grain and
*See Appendix attached.
A-15
Grain Products, 359 1.C.C. 624 (1979). Instead, the 1.C.C.
has decided each claimant must file a separate claim, and
prove it is entitled to a refund. The futility or “Catch 22” of
such a procedure is: the Commission has determined the
statute of limitations will have run for all payments made
during the period of the stay. 359 I.C.C. at 637. Therefore,
anyone who paid fees during the stay, and then relied upon
the mandate to this Court to dispose of the funds on
equitable principles, and so did not file a claim with the
1.C.C., would be left without any remedy. It is further
apparent most of the claims would have been so small as to
preciude the individual legal expense of recovery.
The I.C.C.’s position is to the effect the railroads should
not have to refund the double charges because it came as
such a surprise to the carriers to learn they might have to.
The LC.C. again engages in a long discourse on the
difference between unreasonable rates and not reasonable
rates, but finally admits the rate was invalid. It then goes to
great lengths to explain how the railroads were never on
notice that there was any possibility they would have to
make refunds. “The district court's reversal of our order was
not notice to the carriers that we might withdraw that
approval.... This situation ts quite distinct from
circumstances in which the Commission has given the
carriers notice that the rates they are about to collect exceed
or may be found to exceed a reasonable maximum level.”
359 1.C.C at 630-32. However, the Commission refutes its
own distinctions. “Of course, a ‘keep account’ provision in
an order instituting investigation is also notice that refunds
may follow. Once a ‘keep account’ order is entered, the
carrier is collecting monies earmarked for return should it
fail to convince the Commission that the increased rates are
A-16
just and reasonable.” 359 1.C.C. at 633. The stay order of
the Supreme Court, 409 U.S. 801, was and is very
unambiguous notice to the railroads that they were to “keep
accurate accounts in detail of all amounts” collected
“during the existence of the stay” so there could be a “refund
(with interest) of such amounts to persons in whose behalf
such amounts were paid, without the necessity for such
persons to make applications for refunds.” 409 U.S. at 801.
The Court has no need to form or express any opinion on
the reasonableness of the Commission's conclusions
concerning the post stay charges, but it is clear much of its
rationale does not apply to the funds collected during the
stay. The fact the railroads cannot be surprised by having to
pay, renders inapplicable a number of the Commission's
arguments concerning rate making, hardships to the
railroads, and speculated damage to rail transportation
systems.
If the railroads in fact complied with the order of the
Supreme Court, it also disposes of the argument of the
railroads that only middlemen will end up getting the
refund. The stay clearly states the carriers were to include
data on the identity of the party on whose behalf the fees
were paid. Additionally, as a double check, the plaintiff
grain trade must have access likewise to such information.
Two of those railroads whose finances were seen as in
need of protection by the Commission have taken the
bankruptcy route, and any opportunity for those who paid
them twice for their service has now been lost by the passage
of so much time resolving this dispute. There is no longer
any need for the Commission to be concerned for the fate of
those roads.
A-17
The Commission's opinion as a whole ts quite
unpersuasive, as well as grossly inequitable, as any
statement of fairness. Underlying the whole opinion and
interlaced within its various parts, is the premise that
because no accurate account is possible of the individual
farmers paying the illegal fee, no blanket refund should be
made to the plaintiff. It can be strongly urged that the tenor
of the opinion and the balance of the scales of justice in the
Commission's view would otherwise have been with the
individual shippers if identifiable. This Court quite agrees
that unless reasonable accuracy can be developed as to
individual farmer refunds, then plaintiff Boards of Trade
are no more entitled to the fund or any part thereof as a
windfall profit than are the railroads. Presently,
information before this Court, and it is believed more
specific information to be sought by this Court, will
establish that a substantial part of the available funds will
reach the hands of the individual farmer-shippers.
In Morgan v. United States, 307 U.S. 183, 59 S.Ct. 795,
83 L.Ed. 1211 (1939), scheduled rates were in dispute. The
Secretary of Agriculture had fixed maximum rates to be
charged by marketing agencies at the Kansas City
Stockyards. The agencies sued to have the order set aside,
and to have their higher rate in effect. The dispute portion
of the charges was being paid in to the court. The district
court found the Secretary's rates were reasonable, but the
United States Supreme Court reversed, on procedural
grounds. While the matter was still pending on the merits
before the Secretary on remand, the district court ordered
disposition of the disputed funds to the marketing agencies.
It was the position of the district court that since the
Secretary could not retroactively effect rates, and since its
A-18
previous order was invalid, the marketing agencies were
entitled to the funds whether the charges were too high or
not. The issue on appeal was whether, if the Secretary
determined his schedule was reasonable, “the district court
will have, and should exercise, the power to order the
distribution of the impounded fund in conformity to his
determination by directing that so much, if any, of the
amounts paid into court as exceeds the rates ultimately
determined ... to be just and reasonable be returned to those
who have paid them.” 307 U.S. at 188.
The Court held it was error to pay over the funds to the
marketing agencies. °
“The district court, in staying the Secretary's order
and at the same time arresting the excess payments to
appellees under the scheduled rates, assumed the duty
of making the proper disposition of the funds.... Its
action presupposed that the ownership of the excess
payments was in doubtand could be finally determined
only by an adjudication of the merits of the
reasonableness of the filed rates. In taking the
payments into custody it acted as a court of equity,
charged both with the responsibility of protecting the
fund and of disposing of it according to law, and free in
the discharge of that duty to use broad discretion in
the exercise of its powers in such a manner as to avoid
an unjust or unlawful result.” /d. at 193-94.
The situation in the present case is similar to that in
Morgan. The funds are in the hands of the railroads, not the
court, but this does not change the fact of the court's power
to effect their disposal. See, /n/and Steel Co. v. United
States, 306 U.S. 153, 59S.Ct. 415, 83 L.Ed. 557 (1939). The
A-19
railroads have collected rates which were not reasonable,
and the issue is whether the amounts paid in excess of
reasonable rates should be left with those who did not earn
them, or whether the court should exercise its powers, to
avoid an unjust result. In Morgan, the court stated:
“Having prohibited and declared unlawful any
unjust or unreasonable rate, a court of equity should be
astute to avoid the use of its process to effectuate the
collection of unlawful rates.” 307 U.S. at 194
The Commission claims its procedures are adequate for
giving refunds, by filing individual claims. Such an
approach was rejected by the Supreme Court in Baltimore
& Ohio RR. Co. v. United States, 279 U.S. 781, 49 S.Ct.
492, 73 L.Ed. 954 (1929). An I.C.C. order was set aside, and
plaintiff railroads sought restitution of amounts paid to
other railroads while the order was in effect, and after their
suit had been erroneously dismissed in the earlier action. The
Court held it was error for the district court to deny the
application for restitution. The burden of the charges had
been shifted, and when the invalid order was set aside those
collecting the charges were obliged to make restitution. “If
each claim is treated as a separate cause of action
enforceable only at law, the number of suits andthe burden
of maintaining them would be so enormous that the
relegation of the east side roads to that remedy would be a
virtual denial of justice.” 279 U.S. at 786. Justice will be
denied in this case as well if the farmers and shippers are
forced to litigate claim by claim before iie Commission.
This is especially so since the Commission has deaded to cut
off the claims with their selection of a cut-off date, discussed
supra.
A-20
Principles of equity govern this Court's disposition of the
funds. The charges were initially approved by the I.C.C.
When required to take a hard look at the charges the
Commission found them to be legally unsupportable. Now
it would have the railroads keep the money anyhow.
American Petrofina Co. of Texas v. Williams Brothers Pipe
Line Co., 56 F.R.D 488 (D.Kan. 1972) is not on point with
the present situation. The challenged rates in that case had
never been considered by the Commission, and the question
of validity of a rate is peculiarly within the Commission's
competence. Here, the rate has already been considered and
finally rejected by the Commission, as this Court and the
Supreme Court had previously done. Since our
Constitution was adopted, the federal courts have acted as
courts of equity, and are fully, perhaps even peculiarly,
qualified to do so.
The Supreme Court, as pointed out, several times has
said unequivocally that a “keep account” order must be
kept so there could be a “refund... without the necessity for
such persons to make applications for refunds.” We
therefore rely on the specific words of the Supreme Court,
the impregnable equitable basis for return of the fund to its
owners, and reject the advice of the 1.C.C. in this matter.
Thus, again, we exercise our own considered judgment of
the equities, as expressed herein and in our previous order
of February 23, 1977.
IT IS THEREFORE ORDERED that each defendant
railroad, within sixty (60) days of this date, shall file with
the Clerk of this Court, at Wichita, Kansas, a written
accounting of the in-transit charges collected during the
stay period, and tender therewith into the registry of the
Court the amount of money collected by each said railroad
A-21
from such charges. The Court reserves decision at this time
on the amount of interest which may be due on such funds.
IT IS FURTHER ORDERED that each plaintiff shall
within ninety (90) days of this date, file a written statement
of the amounts paid by it as in-transit charges during such
stay period, detailing whether such payment was one
directly orginating with it or on whose behalf the payment
was made, it being the intention of the Court to have
identified for ultimate refund or reimbursement to the
actual payers of such in-transit charges at the farmer and/ or
country elevator levels.
At Wichita, Kansas, this 6th day of May, 1982.
/s/ Frank G. Theis
United States District Judge
APPENDIX
The Supreme Court's stay covered the period from
July 7, 1972 to June 18, 1973. The period covered by
Agriculture's petition includes the time from the date
the railroads initially placed the rates in effect, May 4,
1971, to the date of the stay’s issuance, plus the period
from the end of the stay to March 28, 1975 when the
charges were ultimately canceled by the railroads.
APPENDIX (ii)(b)
A-22
The WICHITA BOARD OF TRADE
et al., Plaintiffs,
Vv.
The UNITED STATES of America and
Interstate Commerce Commission,
Defendants.
Civ. A. No. W-4730.
United States District Court,
D. Kansas.
May 26, 1972.
BARRETT, Circuit Judge, and THEIS and
O'CONNOR, District Judges.
OPINION OF THE COURT
PER CURIAM.
This is an action to cujoin, annul, set aside, and
suspend orders of the Interstate Commerce
Commission entered by the Commission, Division 2,
on April 16, 1971, and by the Commission en banc on
September 21, 1971, in proceedings entitled
Investigation and Suspension Docket No. 8548,
Inspection in Transit, Grain Products, reported at 339
1.C.C. 364 and 340 1.C.C. 69 respectively. A three-
judge court was convened to hear the case. The suit is
brought pursuant to the provisions of Sections 1336,
1398, 2284 and 2321-2325 of Title 28 U.S.C.
A-23
By the reports and orders here assailed, the Commission
has found just and reasonable the establishment of tariff
provisions applicable throughout the West at the rate of
$13.36 per car for the first in-transit inspection services
historically provided by the rail carriers under the line-haul
rates. The commission did not require a reduction in the
line-haul rates in relation to the reduced service.
Ihe in-transit inspection service with which we are here
concerned has reference to the practice of stopping railroad
cars loaded with grain and grain products and placing them
on railroad track facilities for the purpose of permitting
inspection of the contents of the car, awaiting disposition
orders from shippers after inspection, and the subsequent
movement of the railroad car. The sample or samples tested
determine the official grade of the contents of the car for the
purpose of establishing its value at market.
This transit service has been historically provided by the
rail carriers in the West as part of the line-haul rates. Until
1968, federal law required official federal inspection and
sampling. That function was performed by federal officials.
That requirement was eliminated by Congress in 1968. 82
Stat. 761. 7 U.S.C. § 71 et sey. The primary purpose of
Congress was to effect an increased utilization of rail cars.
In its brief the Commission noted that car shortages ona
nation-wide basis was a grave problem and that “the
Commission's action here represents a determination to
employ all rational and lawful means to attempt to alleviate
the difficulty.”
After extensive hearings the Commission found that: (1)
the proposed charges do not apply in any instance where
applicable line-haul rates plus the charge would exceed the
maximum reasonable rates set forth in Grain and Grain
ie ee
A-24
Products, 205 L.C.C. 301 (1934), 215 1.C.C. 83 (1936), (2)
inspection of grain is no longer a mandatory requirement of
federal law, (3) there is a need for inspection at some point
in the grain marketing process, but inspection in-transit is
not essential, and (4) grain inspection in-transit is an
“accessorial™ service for which a charge separate from the
basic line-haul charges may be properly assessed. The
Commission then found that the proposed charges were just
and reasonable in that the railroads established by
substantial evidence that the costs associated with in-transit
inspection correspond to the level of the proposed charges
and that delays resulting from in-transit inspection amount
to more than three days per car. There is substantial
evidence in support thereof.
The Commission recognized that the Western railroads
were not presently assessing a charge in their line-haul rates
for the first stop for inspection. The protestants here
contend that under these circumstances the railroads could
not segregate the inspection service and assign to it a
separate charge without presenting substantial evidence
that the new aggregate rate, composed of the line-haul plus
inspection-transit rates, represent a just and reasonable rate
for all of the services.
In its discussion and conclusions, the Commission found
that: “A requirement that the reasonableness of the
proposed charges cannot be determined without ‘reference
to the line-haul rates, the services furnished thereunder, and
the cost thereof effectively precludes respondents from ever
establishing a separate charge for the accessorial first stop
for inspection regardless of the need for such a charge. This
inability was not present in the cited proceeding (Transit
Charges, Southern Territory, 332 LC.C. 664 [1968])—
A-25
However, there is a more significant distinguishing feature
that persuades us that the prior decision is not controlling
here. That difference is that the line-haul rate applicable to
any movement of grain within the West when coupled with
the proposed charge is less than the maximum reasonable
level determined by this Commission.” In its brief the
Commission refers to the “extreme difficulty” involved in
putting together thousands of such rates for the purpose of
determining the reasonableness of a charge for a separate
accessorial service. The Commission ultimately justified its
rationale predicated upon the maximum level of rates
which it established some 35 years ago in its Docket No.
17000 proceedings, Grain and Grain Products, supra.
While purporting to “distinguish” the instant decision
from its prior decisions, the Commission discovered that
which had been known for years: the maximum reasonable
rates established in its Docket No. 17000 cases. This
discovery suddenly became a “significant distinguishing
feature” in its decision here.
There may be facts and circumstances justifying a
Commission reversal to its well established rule that
whenever a proposal is made for the establishment of an
additional charge for a service that has been provided at the
line-haul rates, the reasonableness of the proposed charge
may not be divorced from the line-haul rates, the services
thereunder, and the cost thereof. Transit Charges, Southern
Territory, 332 1.C.C. 664 (1968); Grand Forks Chamber of
Commerce, et al. v. Great Northern Railway Company, et
al., 321 1.C.C. 356 (1963); Investigation and Suspension
Docket No. 5146, Terminal Charges at Pacific Coast Ports,
255 1.C.C. 673 (1943); Unloading Lumber to New York
Harbor, 256 1.C.C. 463 (1943); Reconsignment Case No. 3,
A-26
53 1.0.C. 455 (1919). The difficulty generated by the
Commission's ruling here is that instead of repudiating its
long established rule that it will not allow a separate charge
for an accessorial service previously performed as part of
the line-haul rates without substantial evidence that such an
additional charge is justified measured against the overall
services rendered and the overall reasonableness of the
increased line-haul rate resulting therefrom — which may be
legally justified it has attempted to “distinguish” this case
from its prior rulings. In our judgment the Commission has
failed in this respect. In effect, the Commission “excuses”
the respondent railroads in the case before us from meeting
the substantial proof requirement in satisfaction of its long
established rule predicated upon the rail carriers “inability”
to meet that obligation here. In other words, the rule is
viable and applicable where the Commission determines
that the railroads are “able” to carry the burden of proof but
it is not applicable in those instances where the Commission
determines that the rail carriers are unable to do so. Sucha
departure is impermissible. Secretary of Agriculture v.
United States, 347 U.S. 645, 74 S.Ct. 826, 98 L.Ed. 1015
(1954), is dispositive of this issue. There, as here, the
Commission approved special charges, in addition to the
existing line-haul rates, for unloading accessorial services.
The protestants appealed contending that the service (a) is
an essential part of the line-haul charge in that it relates to
delivery, (b) that the line-haul rate encompassed the service
and (c) that the service covered by the line-haul rate cannot
be separately compensated unless the carriers show that the
line-haul rate is inadequate to cover it. The Supreme Court
held that each of these claims must be met by the
Commission. The Court held that the Commisssion had not
A-27
done so and that it had failed to explain its departure from
prior norms and its legal basis for doing so. See also
William N. Feinstein & Company v. United States, 209
F.Supp. 613 (S.D.N.Y.1962); National Small Shipments
Traffic Conference, Inc. v. United States, 321 F.Supp. 500
(S.D.N.Y.1970). The same reasoning applies here. The
Commission in the case at bar did not “explain its
departure” from its prior norm by its contention that this
case can be “distinguished” on the apparent proposition
that here the railroads were unable to marshal and present
substantial evidence to meet the requirements of the norm.
The Commission has unwittingly, we believe, adopted an
evidentiary rule which is discriminatory per se: In those
cases where the Commission determines that the carrier is
able to meet the burden of proof that the separate charge ts
justificable in relation to its overall line-haul rates, it must
do so; on the other hand, in those cases where the rail carrier
is, in the judgment of the Commission, unable to carry the
burden of proof, the separate charge will be approved if it
does not exceed the “maximum reasonable rates”
established in Grain and Grain products, supra.
We recognize that activities and conditions in dynamic
fields may dictate that because of later developments prior
administrative construction and interpretation of a statute
should no longer be binding if it does not achieve general
legislative objectives. National Broadcasting Company v.
United States, 319 U.S. 190, 63 S.Ct. 997, 87 L.Ed. 1344
(1943). But a specific and long-standing administrative
interpretation of a statute should not be overruled except
for weighty reasons. Commissioner v. Estate of
Sternberger, 348 U.S. 187, 75 S.Ct. 229, 99 L.Ed. 246
(1955). An administrative interpretive rule of long standing
A-28
has the same force and effect as a statute and rules of
evidence apply to both in the same manner.
The Commission here noted that “even though the
combined line-haul rate and the proposed charge does not
exceed the prescribed maximum level, it is still incumbent
on the Commission to determine if the separate charge is
reasonable when related to the specific service for which it is
to be assessed.” 339 L.C.C. at 388. This, then, was a
departure from its prior interpretive decisions.
We hold that the Commission has not adequately
explained, for purposes of our review, its departure from
prior norms. It has not sufficiently spelled out the legal basis
of its decision. The Commission has not repudiated or
overruled its prior decisions requiring that a carrier or
carriers proposing separate and additional charges for
accessorial services previously included within the line-haul
rates may only do so if there is substantial evidence that the
existing line-haul rates do not adequately cover the entire
services, We are not convinced that the instant proceeding
can be “distinguished” as the Commission has indicated. It
does appear, however, that it has been distinguished by the
commission predicated upon the Commission's own
determination of the burden of proof which it will require
and impose in variable quantities, at its discretion, on a
case-to-case basis.
We do not believe that the findings of the Commission
are adequate in relation to our obligations and tasks on
review. We recognize, just as the Supreme Court recognized
in Secretary of Agriculture v. United States, supra, that “the
Commission was not precluded from following a procedure
fairly adapted to the unique circumstances of this case.” 347
U.S. at 652, 74. S.Ct. at 831.
A-29
The matter is remanded to the Commission for further
proceedings consistent with this opinion. The proposed
charges are suspended and shall be ineffective until and
unless otherwise ordered by this Court.
APPENDIX (ii)(c)
A-30
ATCHISON, TOPEKA & SANTA FE RAILWAYS CO.
et al. v. WICHITA BOARD OF TRADE et al.
APPEAL FROM THE
UNITED STATES DISTRICT COURT FOR
THE DISTRICT OF KANSAS
No. 72-214. Argued February 28, 1973 Decided June 18,
1973*
Mr. Justice Marshall announced the judgment of the
Court, and an opinion in which The Chief Justice, Mr.
Justice Stewart, and Mr. Justice Blackmun join.
We noted probable jurisdiction in these cases to resolve
two important questions relating to the proper role of
courts in reviewing approval by the Interstate Commerce
Commission of proposed rate increases by railroads. 409
U.S. 1005 (1972). First, under what circumstances may a
reviewing court find that the Commission has failed
adequately to explain its apparent departure from settled
Commission precedent? Because the problem of
determining what policies an agency is following, as a
prelude to determining whether the agency is acting in
accordance with Congress’ will, is a recurring one, this issue
raises general problems of judicial review of agency action.
The second question in these cases is a more limited one: in
order to enjoin a proposed rate increase after a final order
by the Interstate Commerce Commission, what sort of error
must a District Court find in the proceedings of the
Commission? We hold that in these cases the Commission
did not explain its apparent departure from precedent ina
manner sufficient to permit judicial review of its policies,
but that, nevertheless, that kind of error does not justify the
District Court in entering an injunction against imposition
of the rates pending review of the Commission's action on
remand. We therefore vacate the judgment of the District
*Together with No. 72-433, Interstate Commerce
Commission v. Wichita Board of Trade et al., also on
appeal from the same court.
A-31
Court and remand for the entry of a proper order.'
|
In these cases, the railroads proposed to establish a
separate charge for inspection of grain while in transit. In
order to inspect the grain, the railroad cars loaded with it
are stopped and placed on track facilities. A sample of the
grain is taken, and the official grade is determined. Once the
grade is known and the commercial value of the grain
established, the shipper orders the car to proceed to the
appropriate market. In-transit inspections have substantial
advantages to shippers over inspection at the destination. If
the grain were to be found to be of a different grade than
expected only after arrival at the destination, sending it to
another market might be quite expensive. The advantages
of in-transit inspections to purchasers, instead of inspection
at the source that might satisfy shippers, are less marked but
are nonetheless significant. The grain might deteriorate
while in transit, thus leaving the purchaser with grain of a
lower quality than he expected. And the possibility of bias
of the inspector is greater if the inspection is made at the
source,
The Commission found that “the orderly marketing of
grain under present practices requires that a substantial
'We have previously stayed the judgment of the District Court on
condition that appellant railroads keep accouts of the amounts received
from the in-transit charges. 409 U.S. 801 (1972). We hereby direct the
District Court to enter an order, consistent with this opinion, regarding
the disposition of those amounts,
*Such a charge is already made for the first in-transit inspection inthe
eastern territory. The proposed rates would increase that charge from
$7.42 to $14.33. There would be a slight increase in the currently
effective charge for the second and sunsequent inspections. A large
majority of the number of in-transit inspections occur in the western
territory, where most of this country’s grain is produced and where no
separate charge is now made for the first in-transit inspection. Only a
few cars are stopped for more than one inspection. Thus, for
convenience of exposition, we treat this litigation as involving a
proposal for a seperate new charge; that is the real effect of the railroads’
proposal in most instances.
A-32
portion of the commodity moving in commercial channels
must be subjected to some form of sampling and inspection
to determine grade or quality.” 339 1.C.C, 364, 385 (1971).3
However, it also found that this sampling need not take
place while the grain is in transit. The practice of in-transit
inspections developed when federal law required
inspections for the purpose of grading. 39 Stat. 483. But the
diversion of grain from railroads to motor trucks made it
difficult to enforce the inspection requirements. When
trucks are used, in-transit inspections are not generally
made. Thus, in order to simplify the movement of grain,
Congress abolished the requirement of inspections. Pub. L.
90-487, 82 Stat. 761. In addition, the convenience of
sampling at the source of the grain has increased with the
widening reliance on low-cost mechanical samplers
installed at grain elevators. The Commission therefore
concluded that in-transil inspections were not necessary for
the orderly marketing of grain.
It also concluded that in-transit inspections resulted ina
substantial decrease in the number of freight cars available
for general use.4 Relying on a variety of studies conducted
by the railroads, the Commission found that each
inspection kept a freight car out of use for roughly three
days, and that the cumulative impact of the delays due to in-
transit inspection was to reduce the available freight car
fleet by several thousand cars.
Finally, the Commission considered whether the
proposed separate charge for each in-transit inspection
fairly reflected the cost to the railroad of such an inspection.
Again, it relied on quite detailed studies that established the
cost of detaining a car, the cost of switching it on and off the
‘The report of Division 2 of the Commission is found at 3391. C. C,
364 (1971). The entire Commission *adopt{[ed] and affirm[ed] the
findings and conclusions reached” in that report. 340 1. C. C. 69, 70
(1971).
4For a description of the car-utilization problem, see United States v.
Allegheny-Ludlum Steel Corp., 406 U.S. 742, 745-746 (1972).
A-33
main line, and the clerical costs of conducting inspections,
The Commission concluded that the proposed charges were
“not excessive in amount. ..on the basis of the convincing
evidence of record showing the costs sustained by the
railroads in performing the in-transit inspection service.”
340 1.C.C., at 71-72.
Shippers who had objected to the proposed new charges
before the Commission sought review of the Commission's
order, and a statutory three-judge District Court was
convened. The District Court found that these conclusions
were supported by substantial evidence, and they are not
challenged here. But the District Court held that the
Commission had not adequately justified its failure to
follow “its long established rule that it will not allow a
separate charge for an accessorial service previously
performed as part of the line-haul rates without substantial
evidence that such an additional charge is justified
measured against the overall services rendered and the
overall reasonableness of the increased line-haul rate
resulting therefrom.” 352 F. Supp. 368. The Commission,
although it analyzed the cost of each in-transit inspection,
had made no attempt to consider the reasonableness of
continuing the existing line-haul rate, which included some
charge for in-transit inspections. Instead, the Commission
had attempted to distinguish this case from prior cases in
which the rule was invoked, but the District Coun, relying
on Secretary of Agriculture v. United States, 347 U.S. 645
(1954), was “not convinced that the instant proceeding can
be ‘distinguished’ as the Commission has indicated.” 352 F.
Supp., at 369.
Although the Commission must be given some leeway to
re-examine and reinterpret its prior holdings, it is not
sufficiently clear from its opinion that it has done so in this
case. A reviewing court must be able to discern in the
Commission's actions the policy it is now pursuing, so that
it may complete the task of judicial review—-in this regard,
to determine whether the Commission's policies are
A-34
consistent with its mandate from Congress. Since we cannot
tell from the Commission's opinions what those policies
are, we therefore agree with the District Court that the
Commission's order finding the rates just and reasonable
cannot be sustained.
i
Judicial review of decisions by the Interstate Commerce
Commission in rate cases necessarily has a limited scope.
Such decisions “are not to be disturbed by the courts except
upon a showing that they are unsupported by evidence,
were made without a hearing, exceed constitutional limits,
or for some other reason amount to an abuse of power.”
Manufacturers R. Co. v. United States, 246 U.S. 457, 481
(1918).5 As this Court has observed, “The process of rate
making is essentially empiric. The stuff of the process is
fluid and changing the resultant of factors that must be
valued as well as weighed. Congress has theref ore delegated
the enforcement of transportation policy to a permanent
expert body and has charged it with the duty of being
responsive to the dynamic character of transportation
problems,” Board of Trade of Kansas City v. United States,
314 U.S. 534, 546 (1942),
The delegation to the Commission is not, of course,
unbounded, and it is the duty of a reviewing court to
determine whether the course followed by the Commission
is consistent with its mandate from Congress. See /CC
v. Inland Waterways Corp., 319 U.S. 671, 691(1943);
Burlington Truck Lines, Inc. v. United States, 371 U.S. 156,
167-169 (1962). Cf. NLRB v. Wyvman-Gordon Co., 394 U.S.
759, 767 (1969) (opinion of Fortas, J.). But a simple
examination of the order being reviewed is frequently
insufficient to reveal the policies that the Commssion is
pursuing. Thus, this Court has relied on the “simple but
fundamental rule of administrative law.” SEC v. Chenery
Corp., 332 U.S. 194, 196 (1947), that the agency must set
‘See also 5 U.S. C. § 706 (2).
A-35
forth clearly the grounds on which it acted. For “fw Je must
know what a decision means before the duty becomes our to
say whether it is right or wrong.” United States v. Chicago,
M., St. P. & P. R. Co., 294 U.S. 499, 511 (1935). See also
Phelps Dodge Corp v. NLRB, 313. U.S. 177, 197, (1941). And
we must rely on the rationale adopted by the administrative
process. Id.. at 88. Cf. NLRB vy. Metropolitan Life Ins. Co.,
380 U.S. 438, 443-444 (1965). Only in that way may we
“guard against danger of sliding unconsciously from the
narrow confines of law into the more spacious domain of
policy.” Phelps Dodge Corp. v. NLRB, supra, at 194.
An agency “may articulate the basis of its order by
reference to other decisions.” NLRB v. Metropolitan Life
Ins. Co., supra, at 443 n. 6. For “[La]djudicated cases may
and do, of course, serve as vehicles for the formulation of
agency policies, which are applied and announced therein.
See H. Friendly, The Federal Administrative Agencies 36-
52 (1962). They generally provide a guide to action that the
agency may be expected to take in future cases. Subject to
the qualified role of stare decisis in the administrative
process, they may serve as precedents.” NLRB v. Wiyman-
Gordan Co., supra, at 765-766 (opinion of Fortas, J.). This
is essentially a corollary of the general rule requiring that
the agency explain the policies underlying its action. A settled
course of behavior embodies the agency's informed
judgment that, by pursuing that course, it will carry out the
policies committed to it by Congress.
There is, then at least a presumption that those policies
will be carried out best if the settled rule is adhered to. From
this presumption flows the agency's duty to explain its
departure from prior norms. Secretary of Agriculture vy.
United States, supra, at 653. The agency may flatly
repudiate those norms, deciding, for example, that changed
circumstances mean that they are no longer required in
order to effectuate congressional policy. Or it may narrow
A-36
the zone in which some rule will be applied, because it
appears that a more discriminating invocation of the rule
will best serve congressional policy. Or it may find that,
although the rule in general serves useful purposes,
peculiarities of the case before it suggest that the rule not be
applied in that case. Whatever the ground for the departure
from prior norms, however, it must be clearly set forth so
that the reviewing court may understand the basis of the
agency's action and so may judge the consistency of that
action with the agency's mandate.
A further complication arises when, as here, the agency’
distinguishes earlier cases in which it invoked the rule. An
initial step, and often the only one clearly taken, is to specify
factual differences between the cases. Those factual
differences serve to distinguish the cases only when some
legislative policy makes the differences relevant to
determining the proper scope of the prior rule. It is all too
easy for a court to judge the adequacy of an asserted
distinction in light of the policies the court, rather than the
agency, seeks to implement; that is, after all, what an
appellate court does with respect to courts of the first
instance. Yet when an agency's distinction of its prior cases
is found inadequate, the reviewing court may inadvertently
adopt the stance it ordinarily takes with respect to other
courts, and thereby may invade “the domain which
Congress has set aside exclusively for the administrative
agency.” SEC v. Chenery Corp., supra, at 196, that is, the
choice of particular actions to carry out the broad policies
stated by Congress. Instead, it is enough to satisfy the
requirements of judicial oversight of administrative action
if the agency asserts distinctions that, when fairly and
sympathetically read in the context of the entire opinion of
the agency, reveal the policies it is pursuing. So long as the
policies can be discerned, the court may exercise its proper
function of determining whether the agency's policies are
consistent with congressional directives:
‘
. b
A-37
These principles gain content when applicd to the present
cases. The District Court held that the Commission had not
repudiated or adequately distinguished its prior cases
establishing the rule that “it will now allow a separate charge
for an accessorial service previously performed as part of
the line-haul rates without substantial evidence that such an
additional charge is justified measured against the overall
services rendered and the overall reasonableness of the
increased line-haul rate resulting therefrom.” 352 F. Supp..
at 368. While this is a fair summary of the Commission’s
establish practice,.® it conceals the apparent purpose of
the rule, to protect two distinct classes: shippers who will
continue to utilize the accessorial service in this case,
those who will still have their grain inspected while in
transit.-and shippers who will not. To decide whether the
Commission has adequately explained its failure to follow
that rule, we must consider each class in turn, for the
‘In Transit Charges, Southern Territory, 3321. C. C. 664, 683 (1968),
the Commission stated the ruic in these terms: “[T he proposed charge
may not be divorced from the line-haul rate, for both, insofar as transit
is concerned, are inextricably interdependent. [Citations omitted.]
While it would seem preferable to have the various clements entering
into, and constituting, the whole analyzed, if indeed they could be
separated, the entire transportation service rendered, including transit,
must be examined in relation to the total rates and charges assessed.”
The District Court reviewing that case rephrased the rule: “The question
here is what should the carrier be paid for a service which it has been
rendering, and has been charging for, and has been paid for (one
knowceth not what) which it proposes to separate and charge separately
for. Both the courts and the Commission have consistently held that
what is a just and reasonable rate for the service to be separated and
charged for separately cannot be determined by cxamining only the
typical questions of cost, etc., with respect to the separate service. On the
contrary, the typical questions must be directed to the overall or
combined picture so that one may conclude (a) that the rate for the
separated service, looked at by itself in the light of the applicable
questions, is just and reasonable; and (b) that the remaining rate for the
services, sans the separated service, is not rendered unjust or
unreasonable.” Cincinnati, N. O. & T. P. R. Co. v. United States, Cwil
A-38
Commission may have made clear why it need not protect
one class by invoking the rule but it may nonetheless have
failed to say why it need not protect the other class.
Iw Unloading Lumber to New York Harbor, 256 1.C.C.
463 (1943). the Commission dealt with a proposal to charge
separately for unloading. a service that was inextricably
bound up with the line-haul service. Cf. Secretary of
Agriculture v. United States, supra, at 648-649. The
Commission said, “It follows th. * respondents may not now
segregate a component of that [line-haul] service, making a
separate charge therefor, without an adequate showing that
the aggregate charge for the through service is reasonable.”
256 I.C.C., at 468. The explicit purpose of the rule in this
situation is to guarantee that shippers receiving the same
service that they had previously received do not pay an
unreasonable amount. See also Duluth Dockage
Absorption, 44 1.C.C. 300 (1917); Terminal Charges at
Pacific Coast Ports, 255 1.C.C. 673, 682 (1943). The rule, in
this regard, is that the railraods must demonstrate both that
the proposed charge is reasonable in light of the costs of the
separate service, and that the total charge for line haul plus
the separate service is reasonable.
The Commission justified its departure from its prior case
by giving two reasons that relate to this aspect of the rule.
First, it noted that “[t]he line-haul rates applicable on the
grain to, from, and through [the]inspection points number
in the thousands and, because of the complexities of the
Action No. 6992 (SD Ohio. Jan. 12, 1970). aff'd. 400 U.S. 932 (1970).
The District Court continued, somewhat more obscurely: “Whether the
examination is in terms of ‘what portion of the line-haul rate represented
the rate for the service to be separated, or whether the search in
terminology is for the answer to this question: Does the new aggregate
rate, composed of line-haul plus transit rates represent a just and
reasonable rate for all of the services (the aggregate of theserved and the
non-served) the principle is the same.” And in Secretary of
Agriculture vy. United States, 347 U.S. 645, 654, (1954). this Court
referred to it as “the prevailing rule...that a service necessarily
encompassed by the line-haul rate cannot be spearately restated without
examining the sufficiency of the line-haul rate to cover it.”
A-39
grain rate structure, vary toa large degree.” Thus. applying
the general rule “effectively precludes respondents from ever
establishing a separate charge for the accessorial first stop
for inspection regardless of the need for such a charge.”
Second, the Commission said that “the line-haul rate
applicable to any movement of grain. .. when coupled with
the proposed charge is less than the maximum reasonable
level determined by this Commission. In no instance will the
combined rate and charge exceed the maximum level
prescribed in Grain and Grain Products [205 1.C.C. 301
(1934) and 215 1.C.C. 83 (1936)].” 339 1.C.C., at 386-387.
The maximum rates prescribed in Grain and Grain
Products have been subjected to a large number of general
rate increases.’ See, e. g.. Ex parte Nos. 265 and 26/7,
Increased Freight Rates, 1970 and 1971, 339 1.C.C. 125
(1971). In those proceedings, the Commission’s focus is on
the general revenue needs of the railroads. Across-the-board
percentage increases are permitted without detailed
examination of individual rates. As a result, there may be
specific routes on which the maximum is in fact
unreasonable, because, for example, the costs of operating
those routes have not increased as rapidly as the costs
elsewhere. Thus, the Commission has held that its approval
of a general increase “does not have the effect of approving
any particular increased rate as not being in excess of a
maximum reasonable rate.” Cval from Illinois to Altonand
East St. Louis, 274 1.C.C. 637, 670 (1949). See also
Tennessee Produce & Chemical Corp. v. Alabama G.S.R.
Co., 277 LC.C. 207 (1950); Brimstone R. Co. v. United
States, 276 U.S. 104 (1928). However, in other contexts, the
Commission has treated the prescribed rates as modified by
general increases as “the best evidence of the reasonableness
’Currently effective rates are, on almost every route, lower than the
rates permitted by the general maximum. Sce 340 1.C.C., at 71. Often
this results from competition from other modes of transport which
forces rates below what the railroads would like to charge. —
A40
of corresponding rates on a...date” after the general
increase. Agsco Chemicals, Ince. v. Alabama G.S. R. Co., 314
1.C.C. 725, 733 (1961). Cf. Public Service Comm'n of North
Dakota v. Great Northern R. Co., 340 1.C.C. 739, 750
(1972).
The Commission thus has not determined that a rate
which does not exceed the current general maximum is
reasonable. A shipper can challenge any such rate as
unreasonable and, if he succeeds, may recover reparations.
In addition, the Commission may prescribe a rate to be
charged in the future. 49 U.S.C. §§ 8 9, 13(1), 1S(1I); ICC v.
Inland Waterways Corp., 319 U.S. 671, 687 (1943). In such
proceedings, the shipper must show that the rate charged
was unreasonable. Cf. Louisville & N.R. Co. v. United
States, 238 U.S. 1 (1915); Shaw Warehouse Co. v. Southern
R. Co., 288 F. 2d 759 (CAS 1961).* In contrast, when a
proposed rate increase is challenged by a shipper before it
goes into effect, “the burden of proof shall be upon the
carrier to show that the proposed changed rate. . . is just and
reasonable.” 49 U.S.C. § 15(7).’
The Commission in this litigation referred to the burden
*MR. JUSTICE WHITE argues that, if a rate at the level of the
general maximum is reasonable, and if the separate charge is
reasonable, then surely a line-haul rate that is equal to the general
maximum less the separate charge is reasonable. The flaw in his
argument is that the Commission has never determined that rates at the
level of the current general maximum are reasonable. That is, in the
example suggested by MR. JUSTICE WHITE, the Commission has not
determined what he says that it has “previously found that 120 wa
reasonable charge for both services.” Without this premise, his
argument fails.
“lf the Commission finds that the proposed rates are unreasonable,
rather than that the railraods failed to carry their burden of proof, that
finding might be conclusive in a subsequent proceeding. Cf. Mitchell
Coal & Coke Co. v. Pennsylvania R. Co., 230 U.S. 247, 258(19 13), ICC
v. Atlantic Coast Line R. Co., 383 U.S. 576, 590-594 (1966). This does
not, however, affect the burden placed on carriers in the suspension
proceedings.
A-41
that applying the rule would place onthe railroads, It rather
clearly intended by this to suggest that the importance of
implementing the new charges and so of increasing the
supply of available freight cars justified some modification
of its usual allocation of the burden of going forward.
Instead of requiring the railroads to produce substantial
evidence that the total charges were reasonable, it would
leave that determination to later proceedings in which a
shipper secking reparations might point to particular
individual charges as unreasonable.
If this were all that was at stake, the Commission would
have adequately identified the concerns behind its course
in light of the pressing need to increase the freight car
supply, it was not too much to require that shippers carry
the burden of going forward. Such an assessment would
surely permit a reviewing court (o determine whether the
Commission's action was consistent with congressional
transportation policy. Unfortunately, though, the change
involved in making the shippers claim that particular rates
are unreasonable is not all that is at stake. For in
proceedings for reparations, 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 vy.
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
> ae
A42
theirs. Cf. Part I, infra."
The Commission did not suggest that its approval of the
proposed rates on the grounds it gave would alter the usual
practice in actions for reparations. Nor did it say why the
need for an increased supply of freight cars justified a
significant change in the burden of proof, In this sense, the
Commission's action was, as the District Court noted,
“discriminatory per se.”
It is even harder to understand from the Commission's
opinion why it departed from the rule in prior cases
protecting shippers who decide not to have in-transit
inspections, If the separate charges are to be effective in
alleviating the car-shortage problem, there must be a
substantial number of shippers who do not seck in-transit
"The argument urged in support of the Commission's order is, in
essence, that the separate charge approved by it was just like a general
rate increase because of the breadth of its application. However, the
Commission did not use the language characteristic of general increase
proceedings. See, ¢.g., Lx parte 259, Increased Freight Rates, 1968, 432
1 C. C, 714, 715, 792 (1969). And. if this were just like a general rate
increase, serious questions would arise about the jurisdiction of the
District Court to review the Commission's order. See Atlantic City
Llectric Co. v. United States, W6F, Supp. 3B(SDNY 1969), Alabama
Power Co. v, United States, 6b, Supp. 337 (DC 1969), both affd by
an equally divided court, 400 U.S. 73(1970). Yet. although the parties
have cited those cases to us, see Brief for the Interstate Commerce
Commission 35; Brief for the Secretary of Agriculture 18; Brief for
Wichita Board of Trade 32, they have not contended at any length that
the District Court lacked jurisdiction over this litigation, This suggests
that the parties, including the Commission, do not interpret the
Commission's opinion as resting on the similarity between these cases
and general rate increase cases,
A-43
inspections, Yet according to the Commission, the railroads
need not show that the present line-haul rates are
reasonable charges for the services provided to shippers
who do not seek in-transit inspections, | would appear, thus,
that the Commission has approved a policy that dis-
criminates against what it hopes will be a very large
number of shippers; it seems to have tried to justify its policy
by citing reasons that affect only a much smaller class.
Some of the shippers who previously sought in-transit
inspections will no longer do so, Others had the opportunity
for such inspections, Yow the railroads propose to eliminate
some of the service previously provided, yet charge the same
rates. The Commission in its prior cases has required rail-
roads proposing a similar reduction in service either to show
that the rates then in effect did not compensate them for the
service, and thus that the service was being provided at no
charge, or to reduce the existing rates. See, e. g., Transit
Charges, Southern Territory, 332 1.C.C. 664, 683 (1968);
Loading of Less-Than-Carload Freight on Lighters in
Norfolk, WVa.. Harbor, 91 LC.C. 394 (1924); ICC ¥,
Chicago, B. & Q. R. Co., 186 U.S. 320 (1902).
A-44
Nothing the Commission said suggests any reason why
the railroads should not be required to follow the same rule
in this case, At no time have rates ever been established, or
found just and reasonable, when the railroads did not
include the service of in-transit inspection, Perhaps the
imperative need to increase the number of freight cars
available to all shippers justifies some alteration of the
general rule, Yet the Commission, when dealing with
shippers who will continue to have in-transit inspections,
invoked the fact that the new charges would not raise rates
above those permitted by the general maximum. As to that
class, the Commission apparently believed that it could not
simply refuse to follow pre-existing practices on the ground
of exigency alone. The Commission offered no reason to
distinguish the larger class from the smaller one, in that
respect. But it might be that rates for services including an
in-transit inspection, at the level of the general maximum,
would be reasonable while rates for services without such
inspections would be unreasonable at that level, or even
below it. Thus, the fact that the new charges will not exceed
the general maximum seems to have no bearing on the
question of the reasonableness of the rates that will
continue to be in force for now-reduced services.!!
Perhaps the current line-haul rates really do not include a
substantial amount attributable to the cost of providing in-
transit inspections, But cf, Tr. 231-232, 258-266. Or perhaps
the Commission has some reason to reinterpret the prior
cases Suggesting that its rule reflects a concern for rates that
are “increased” simply because of a reduction in services.
As in Secretary of Agriculture v. United States, 347 U.S,
at 652, the Commission may have reasons for “following a
procedure fairly adapted to the unique circumstances of this
''The Commission may have intended to leave this question for later
proceedings, But this course runs into the difficulties noted supra, at
S13-S14,
A-45
case.”'? But, as in that case, it must make these reasons
known to a reviewing court with sufficient clarity to permit
it to do its job, Even giving the Commission's opinion the
most sympathetic reading that we find possible, we cannot
discover in it an expressed reason for permitting the
railroads to reduce their services without showing that the
rates they propose to maintain are reasonable rates for the
service they intend to provide,
Hl
After holding that the matter must be remanded to the
Interstate Commerce Commission for further proceedings,
the District Court ordered, “The proposed charges are
suspended and shall be ineffective until and unless
otherwise ordered by this Court.” No reasons for such an
order were given; the District Court did not, for example,
specify the nature of the harm o the shippers that would,
presumably, injure them irreparably, Nor did it explain the
basis for its apparent belief that Arrow Transportation Co.
v. Southern R. Co., 372 U.S. 658 (1963). was
distinguishable.
lt was error to enter such an injunction, The District
Court clearly had power to suspend the operation of the
Commission's order pending the final determination of the
shippers’ suit. That power is given in terms by 28 U.S.C.
§2324: “The pendency of an action to enjoin, set aside,
annual, or suspend any order of the Interstate Commerce
Commission shall not of itself stay or suspend the operation
On remand, the Commission might explain more fully the course it
followed, or it might adopt a different course, for example, by rey uiring
the carriers to demonstrate the reasonableness of the line-haul rates for
services provided without an in-transit inspection on @ representative
sample of routes. Most of the prior casts in which the Commission
invoked the rule involved quite limited problems, often confined to a
single route, But ef. Transit Charges, Souther territory, 4921.C. C. 664
(196%). If the Commission then explained why that procedure was
responsive to the needs of the particular case, the prerequisites of
judicial review would be satisfied.
A-46
of the order, but the court may restrain or suspend, in whole
or in part, the operation of the order pending the final
hearing and determination of the action.” But an injunction
forbidding the railroads to implementa proposed change in
rates is not, strictly speaking, an injunction suspending the
Commission's order. In this case, for example, the
Commission's order stated that “the proposed new or
increased charges for in-transit inspection of grain at
various points in the United States are just and
reasonable...” 340 L.C.C., at 74. The only consequence of
‘suspending that order is that the railroads may not rely, in
some subsequent proceeding, on a Commission finding that
the proposed rates were just and reasonable. In an action
for reparations, for example, the railroads could not gain
any benefit from the purported Commission approval of
the increases.'' See Arizona Grocery v. Atchison. T. & S.
F. R. Co., 284 U.S. 370 (1932). See also 49 U.S.C, §§1(5), 10
(1). The Commission's order also provided that the
proceeding be discontinued, and suspension of the order
requires the Commission to reopen its inquiry.
Carriers may put into effect any rate that the Commission
has not declared unreasonable. 49 U.S.C. §§ 6 (3), 15 (1)
Suspension of the Commission's order thus does not in itself
preclude the carriers from implementing a new rate. The
power conferred on the District Court by § 2324 does not in
itself include a power to enjoin the railroads from
implementing a proposed new charge. Rather, that power
must be considered as at best ancillary to the general
equitable powers of the reviewing court, and protective of
its jurisdiction. See Arrow Transportation Co. v. Southern
R. Co., supra, at 671 n. 22; Order of Conductors v. Pitney,
''The Commission may, of course, approve the rates on a theory
similar to that discussed in Part Hof the opinion, justifying its ref usalto
require a showing of reasonableness by the fact that questions would be
open it, subsequent proceedings. A suspension of the Commission order
would then have almost no practical meaning,
A-47
326 U.S. 561, 567 (1946). Cf. Pittsburgh & W. Va. R. Co. v.
United States, 281 U.S. 479, 488 (1930); 28 U.S.C. § 1651 (a).
As this Court noted in Seripps- Howard Radio, Inc. v. FCC,
316 U.S. 4 (1942), such a power must be inferred from
Congress’ decision to permit judicial review of the agency
action, “If the administrative agency has committed errors
of law for the correction of which the legislature has
provided appropriate resort to the courts, such judicial
review would be an idle ceremony if the situation were
irreparably changed before the correction could be made.”
Id, at 10.
Yet it would be surprising if that power could be exercised
to the extent that it might substantially interfere with the
function of the administrative agency. “The existence of
power in a reviewing court to stay the enforcement of an
administrative order does not mean, of course, that its
exercise should be without regard to the division of function
which the legislature has made between the administrative
body and the court of review.” /bid. Proper regard for that
division of function requires that we hold erroneous the
District Court's decision to enjoin not only the
Commission's order finding the proposed rates just and
reasonable but also the implementation of those rates.
In Arrow Transportation Co. v. Southern R. Co., supra,
this Court considered a similar problem. The Interstate
Commerce Commission has the power to suspend proposed
rate changes for seven months, while it proceeds to consider
the reasonableness of the proposal. “If the proceeding has
not been concluded and an order made within the period of
suspension, the proposed change of rate. ..shall go into
effect at the end of such period.” 49 U.S.C. § 15 (7). In
Arrow, parties affected by proposed reductions sought an
injunctions against the implementation of the proposed
reductions when, at the end of the suspension period, the
railroads announced that they intended to put the new rates
into effect. The Commission had not determined that those
A-48
rates were reasonable. The Court concluded that Congress,
by giving the Commission the power to suspend rates, had
intended to preclude the courts from doing the same.
Here, of course, the Commission's proceeding has been
concluded, or at least so the Commission thought when it
entered its order. The terms of § 15(7) do not specifically
govern this situation. Nor is there any other provision in the
relevant statutes depriving federal courts of their general
equitable power to preserve the status quo to avoid
irreparable harm pending review. Yet many of the
considerations, relied on in Arrow and influencing this
Court's definition of the proper relation between the courts
and the Interstate Commerce Commission, must be drawn
on to delineate guidelines for the exercise of the ancillary
power, in a proceeding to review a Commission order, to
enjoin a rate increase pending final determination of the
suit,
The most important of these considerations is the group
of policies that are encompassed by the term “primary
jurisdiction.” National transportation policy reflects many
often-competing interests. Congress has established an
administrative agency that has developed a close
understanding of the various interests and that may draw
upon its experience to illuminate, for the courts, the play of
those interests in a particular case. Cf. Great Northern R.
Co. v. Merchants Elevator Co., 259 U.S. 285 (1922); United
States v. Western Pacific R. Co., 352 U.S. 59 (1956).
Ordinarily, then a court should refrain from expressing a
preliminary view on what national transportation policy
permits, before the ICC expressees its view. But when a
court issues an injunction pending final determination, one
important element of its judgment is its estimate of the
probability of ultimate success of the merits by the party
challenging the agency action. Virginia Petroleum Jobbers
Assn. v. FPC, 104 U.S. App. D.C. 106, 110, 259 F. 2d 921,
925 (1958). Depending on the type of error the reviewing
A-49
court finds in the administrative proceedings, the issuance
of an injunction pending further administrative action may
indicate what the court believes is permitted by national
transportation policy, prior to an expression by the
Commission of its view. This is precisely what the doctrine
of primary jurisdiction is designed to avoid. Cf.Order of
Conductors v. Pitney, supra; Locomotive Engineers v. M.-
K.-T. R. Co., 363 U.S. 528, 533 (1960). The fact that issuing
an injunction may undercut the policies served by the
doctrine of primary jurisdiction is therefore an important
element to be considered when a federal court contemplates
such action.'4
As we have indicated in Part II of this opinion, we require
the agency to justify its departure from its prior decisions so
that we may understand what policies it is pursuing. If a
reviewing court cannot discern those policies, it may
remand the case to the agency for clarification and further
justification of the departure from precedent. But an
injunction pending the completion of those proceedings
would be warranted only if the reviewing court entertained
substantial doubt about the consistency of the
Commission's action with its mancate from Congress. Cf.
Virginian R. Co. v. United States, 272 U.S. 658, 673
(1926).'S When a case is remanded on the ground that the
47 ocomotive Engineers v. M.-K.-T. R. Co., 363 U. S. 528 (1960),
shows that not all judicial injunctions infringe on an agency's primary
jurisdiction. There the Court noted that the District Court's
“examination of the nature of the dispute is so unlike that which the
[agency] will make of the merits of the same dispute, and is for sucha
dissimilar purpose, that it could not interfere with the later
consideration of the grievance by the [agency] will make ofthe merits of
the same dispute, and is for such a dissimilar purpose, that it could not
interfere with the later consideration of the grievance by the [agency}.”
/d., at 534. Here, in contrast, the District Court must consider whether
the Commission is likely to find reasons for its action that are consistent
with congressional policy. Not only is such a question exceedingly
complex, it is also just what the Commission itself must decide before
approving the proposed new charges.
'SIn some cases, the reviewing court might explicity refrain from
considering the likelihood of success on the merits in deciding whether
A-SO
agency's policies are unclear, an injunction ordinarily
interferes with the primary jurisdiction of the Commission. '°
Cf. Arrow Transportation Co. v. Southern R. Co., U.S.
at 669-670.
In addition, the reviewing court must consider whether
or not to issue an injunction. The, if the possibility of irreparable
damage to the party seeking review or to other interests is great enough,
an injunction may perhaps be justified. See. e.g.. Semmes Motors.
Inc. v. Ford Motor Co., 429 F. 2d 1197, 1205-1206(CA2 1970); Checker
Motors Corp. v. Chrysler Corp. 405 F 2d 319, 323 (CA2 1969). Here.
however, the District Court did not clearly refuse to access the
likelihood of ultimate success and, as indicated infra. the possibility of
irreparable harm to the shippers ts quite small.
'eThis analysis turns on the fact that the type of error in these cases
involves precisely a failure by the Commission to do the job committed
to it, the proper performance of which is a predicate of the doctrine of
primary jurisdiction. Where the error might be considered purely
procedural, for example where the Commission failed to consider
relevant evidence on grounds the reviewing court finds inadequate, the
issuance of an injunction might not interfere with the agency's primary
jurisdiction quite so severly. Yet even there. before issuing an injunction
the reviewing court must consider whether the Commission would have
come to a different conclusion had it considered the evidence. And that
may sometimes impinge on the sphere committed to the Commission for
initial decision.
This Court has distinguished between blatantly lawless action and
mere procedural error in cases raising similar questions of the power of
courts to intervence in administrative action. See Oestereich v. Selective
Service Bd., 393 U.S. 233 (1968); Fein v. Selective Service Svstem, 405
U. S. 365 (1972).
Different considerations would come into play, too. when the
reviewing court finds some failure by the carriers in the suspension
proceeding, rather that a failure by the Commission to do its task. A
reviewing court might find. for example. that the Commission's
conclusion that the carriers had carried the burden of proofto justify the
increase was not supported by substantial evidence. Although phrased
as a finding of administrative error, that in fact relates to the
presentation of evidence by the carriers.
Finally, this litigation involves only claims under the Interstate
Commerce Act. Subsequent legislation might affect the relation
between court and agency and so the propriety of injunctive relief.
Whether it does so must be determined by cxamining that legislation.
A-SI
irreparable harm will result if the injunction is not issued
and the party seeking it prevails on the merits. Order of
Conductors v. Pitney, supra. That too may interfere with
the agency's primary jurisdiction. We deal here with a
dispute between shippers and carriers. In giving the
Interstate Commerce Commission power to suspend
proposed rate increases, Congress allocated the benefit and
harm of a suspension. For a period of up to seven months,
the carriers may not collect the increases if the Commission
suspends them. The income that they might have gained is
lost to them forever. Congress did provide protection to
shippers for the period after the rates go into effect. The
Commission may require the carriers to keep detailed
accounts of the income received asa result of the increase. If
the increase is ultimately found unjustified, the
Commission may order a refund. 49 U.S.C. § 15(7). Evenif
the Commission does not do so in a suspension proceeding,
the shippers may recover reparations under some
circumstances. 49 U.S.C. §§8, 9. Thus, it is often quite
unlikely that shippers will be irreparably damaged by the
implementation of a rate increase.'’
There are, however, public interests at stake in this
litigation, as well as the private interests of the shippers and
carriers. The Commission found that inspection of grain is
required for the orderly marketing of grain. 339 1.C.C., at
385. Inspections will thus continue to be made. But now if
the Commission ultimately approves the new charges, there
will be a separate charge for them, either by the railroads
under the new charges, or by someone else engaged in
marketing grain. This extra cost must be absorbed by
someone, perhaps by farmers, perhaps by the ultimate
'" The interests of other carriers who might object to a proposed rate
change are somewhat different. They are not damaged, as the shippers
are, by out-of-pocket expenditures, and refunds or reparations do not
remedy the loss of business that they might suffer. This factor would
thus have less weight in suits by such carriers, att houghthe problem of
interfering with primary jurisdiction must still be considered.
A-52
consumers of grain. See Tr. 1299. The impact of rates on
various groups in this country is surely relevant to deciding
that the rates are consistent with national transportation
policy.
But the public interest is not a simple fact, easily
dete-mined by courts. Here, for example, the interests of
fa; » s and consumers of grain must be balanced against
the interests of producers and consumers of all sorts of
other goods shipped by rail. For the premise of the
Commission's action in this case was that separate charges
for in-transit inspections would alleviate the freight-car
shortage. The shortage itself increases the cost of
transporting a wide range of products by rail. Thus, the
decision that must be made is whether the car shortage hasa
more significant impact on the national economy that does
increased cost for grain products. Congress has committed
that decision to the Interstate Commerce Commission in
the first instance, and the extent of harm to farmers and
consumers of grain cannot be estimated without interfering
with the primary jurisdiction of the Commission.'*
'*Although they are far less substantial than the problems of primary
jurisdiction and irrepable injury. procedural problems might also arise
when a district court consideres a request for an injunction like that
issued here. Review of Commission orders is by a three-judge district
court. The United States is the difendant. 28 U. S. C. §§2321, 2322.
Railroads which appeared before the Commission have a right to
intervene, 28 U.S. C. §2323, but they need not do so. If arailraod chose
not to intervene, the district court could not enjoin it from implementing
the new charge. The plaintiffs could, of course. compel an unwilling
railroad to appear. Fed. Rule Civ. Proc. 19(a). But. even though services
of process is nationwide, 2% U.S. C. §2321. some plaintiffs might findit
difficult to serve every railraod that did not appear willingly. The
presence before the reviewing court of all interested parties. or only
some of them, is therefore relevant to the exercise of the court's
discretion to enjoin a proposed rate increase. Like the other factors
discussed in the opimon. this does not establish that the district court
lacks power to enjoin the implementation of proposed rate increases
after a final Commission order. but it is a factor to be considered in
determining whether to exercise eyuitabie discretion to issue such an
injunction.
A-53
As this discussion shows, it is very likely thata decision to
enjoin rates pending reconsideration by the Commission in
order to clarify its policies will imply some view by the
District Court about decisions committed to the
Commission by the doctrine of primary jurisdiction. The
District Court’s power to enjoin rates, in order to protect its
jurisdiction to review Commission orders, must therefore
be exercised with great care and after full and detailed
consideration of the problems set out above. It will not do
to enter such an injunction in the off-hand manner of the
District Court. Cf. Virginian R. Co. v. United States, 272
U.S. 658 (1962). Here the District Court could not consider
the likelihood of success on the merits or where the public
interest lies without infringing on decisions committed by
Congress to the primary jurisdiction of the Interstate
Commerce Commission and the possibility of harm to the
shippers was small. It was therefore improper to enter an
injunction against the implementation of the proposed new
charges.
Here the Commission ordered the railroads to maintain
records of the amounts collected as a result of the new
charge. It may be that this adequately protects the shippers
from irreparable damage, in light of the availability of
actions for reparations. The Commission may determine on
remand that some further steps must be taken to protect the
shippers. But in any event, it is clear that the District Court
should not have entered the injunction it did. The action of
the District Court is affirmed as to the remand to the
Commission and is reversed as to the injunction suspending
the proposed charges.
So ordered.
Mr. Justice Powell took no part in the consideration or
decision of these cases.
Mr. Justice Douglas, concurring in the affirmance of the
remand to the Commission and dissenting from the reversal
of the decree authorizing the injunction.
A-54
Though I concur in the affirmance of the remand to the
Interstate Commerce Commission, | dissent from the
reversal of the decree authorizing the injunction, since in my
view the District Court was quite correct in issuing its
injunction. Arrow Transportation Co. v. Southern R. Co.,
372 U.S. 658, is not relevant here, for the reason that 49
U.S.C. § 15(7) only purports to control the suspension of
rates up until the time the Commission has rendered a
decision. After that decision has been made, the reviewing
court has, | believe, the power to enjoin the affected rates.
The new charges which the Commission would impose
would have an immediate impact upon the grain-marketing
system. It would affect the volume of business of the grain
merchants, it would affect the employment of grain
inspectors, and it would result in lower prices being paid
to the farmers. None of these incidences can be remedied
under the existing statutory scheme, because none of these
interests is enabled to bring suit for a later rate refund.
Hence, in my view, the grain trade and the farmers need this
interim protection lest in inspection the marketing system
suffer severe attrition during the period of remand. The
deciding principle is that the District Court sits as a court of
equity, United States v. Morgan 307 U.S. 183, 191, and asa
court of equity has, | believe. ample power to protect the
grain market nationally which would otherwise be without
remedy under the existing statutory regime.
Jurisdiction is granted the District Court “to enforce,
enjoin, set aside, annul or suspend” any order of the
Interstate Commerce Commission. 28 U.S.C. § 1336 (a).
For years, the type or order here involved* was not
reviewable. See Procter & Gamble Co. v. United States, 225
U.S. 282. But that “negative” order concept was abandoned
in Rochester Tel. Corp. v. United States, 307 U.S. 125, 145.
The provisions of 28 U.S.C. § 1336 (a), are an explicit grant
*The order of Division 2 of the Commission provided that the
proceeding “be, and it is hereby, discontinued.” 339 1. C. C. 364, 401.
The order of the Commission en banc affirming is in 340 1. C. C. 69, 74,
A-55
of power to provide injunctive relief. Under that Act the
“governing principle” is “that it is the duty of a court of
equily granting injunctive relief to do so upon conditions
that will protectall including the public —- whose interests
the injunction may affect.” Inland Steel Co. v. United
States, 306 U.S. 153, 157. That power exists whether the
Commission's authority over rates is challenged under 49
U.S.C. § 15 (1) as being unjust or unreasonable or under 49
U.S.C. § 15(7) relating, as here, to “a new individual or joint
rate, fare, or charge.” In all cases the District Court by
reason of 28 U.S.C. § 1336 (a) sits as a court of equity.
Mr Justice White, with whom Mr. Justice Brennan and
Mr. Justice Rehnquist join, concurring in the reversal of the
injunction and dissenting from the affirmance of the
remand to the Commission.
i dissent because the District Court erred both in holding
that the Commission had inadequately explained the basis
for its judgment and in suspending the new in-transit
inspection tariff beyond the time the statute permits new
rates to be suspended without a finding that they are unjust
and unreasonable.
As to the latter, 49 U.S.C. § 15 (7) forbids the suspension
of new freight rates for more than seven months without the
requisite finding of unreasonableness by the Commission.
Only the Commission may suspend in the first instance; and
if the agency refuses to do so, the court is powerless itself to
suspend. The Commission may postpone effectiveness of new
rates for seven months, but if it does, the statute commands
that, absent the appropriate order of the Commission
within that period, “the proposed change of rate. . .shall go
into effect. ...”To permit the District Court nevertheless to
extend this period seems to me to be flatly contary to the
will of Congress. | therefore cannot agree that, although the
District Court has no statutory power to do so, it
nevertheless retains sufficient power to enjoin the rates as
“ancillary to the general equitable powers of the reviewing
A-56
court, and protective of its jurisdiction.” Anve, at 819. As I
see it, the District Court contravened the precepts of Arrow
Transportation Co. v. Southern’ R. Co., 372 U.S. 658
(1963).
As for the remand to the Commission, there is somewhat
more to be said. The Commission found, and it is not
questioned by the District Court or by the majority here,
that in-transit inspection of grain is not an essential part of
transportation service but only ancillary to it; that the
premarketing inspection of grain, in transit or otherwise, is
no longer required by federal law; that in-transit inspection
of grain has been the regular practice in Western territory,
to some extent the practice in Southern territory, but not in
Eastern territory; that the line-haul rates for grain in
Western and Southern territories established by the
railroads or prescribed by the Commission have provided
one free in-transit inspection stop, but a separate charge for’
that service is the practice in Eastern territory; ' and that,
because of recent developments in-transit inspection is no
longer an essential service for the orderly marketing of grain
in Western and Southern territories. Furthermore, the
unquestioned finding of the Commission was that the
principal motivation for imposing a separate charge for in-
transit grain inspection was not to increase railroad
revenues through collection of the charge itself but to
'The Commission noted:
“It is again emphasized that the major impact of the proposal under
consideration will be on the movement of grain in the western district.
Most inspections occur in this territory. There is presently effective a
spearate charge for this service in the East. A sunstantial increase in
those charges will result, however, it the proposed charges are permitted
to become effective. The number of in-transit inspections in the South is
limited and take place chiefly at the ports on export grain tonnage.
There is little, if any, opposition to establishment of the charges in
southern territory. Practically all of the controversy is concerned with
establishment of the separate charge for the first inspection of grain
within the western district.” 339 1. C. C. 364, 385,
2
ie
a ee
A-57
promote efficient utilization of freight cars by discouraging
the practice of in-transit inspection which had proved
extremely wasteful in terms of car utilization, The
Commission finding, also undisturbed, was that the
separately stated inspection fee would discourage the
practice of in-transit inspection, would contribute toa more
efficient utilization of freight cars, and hence help relieve
the unquestioned grain-car shortage.
With, these important preliminary findings and
conclusions behind it, the Commission examined in detail
the reasonableness of the separate charge being imposed for
in-transit inspection of grain. Its conclusion was that the
charge was reasonable, a judgment not overturned either
here or in the District Court. Finally, the Commission
noted that by the terms of the new tariff itself, separate in-
transit inspection charges could not be collected where the
combination of the new, separate charge and the existing
line-haul rate exceeded the maximum reasonable level of
grain rates established in Docket 17,000, pt. 7, Grain and
Grain Products, 205 1.C.C. 301 (1934); 215 L.C.C. 83 (1936),
as raised by subsequent general revenue increases. Docket
17,000, pt. 7. Rate Structure Investigation, was a major
national effort, a comprehensive investigation of rates on
agricultural products, and resulted, among other things, in
the Commission's prescribing maximum reasonable freight
rate levels for movements of grain. Since that time, there
have been general rate increases for revenue purposes, in the
course of which the rates on grain and their structure as
required by the 1934 and 1936 determinations have been
given special attention. See, for example, /nceased Freight
Rates, 1967, 332 1.C.C. 280, 300 (1968).
Under the new tariffs now filed, as | have said, if the
applicable line-haul rate on the particular grain movement
involved is at the maximum reasonable level theretofore
prescribed by the Commission in previous proceedings, no
separate in-transit inspection charge is imposed or
A-58
allowable, nor may the combination of the new charge and
the existing line-haul rate collected by the railroad exceed
the maximum allowable rate as previously determined. This
is the key to understanding that, in approving the separate
inspection charge, the Commission did not ignore its
longstanding rule that railroads may not impose separate
charges for an ancillary service previously furnished under a
line-haul rate unless both the reasonableness of the separate
charge and the line-haul rate are scrutinized. Transit
Charges, Southern Territory, 332 UC.C. 664, 683-684
(1968), is. for example a relatively recent restatement of the
rule. The Commission thought this rule not controlling
here because, in the first place, the magnitude of the task of
justifying each one of a countless number of line-haul grain
rates would, as a practical matter, prohibit the imposition
of a separate in-transit inspection charge and so frustrate
the important nonrevenue goal of discouraging in-transit
inspection and so improving car utilization.
But, more fundamentally, the Commission in any event
deemed the rule satisfied; for here the reasonableness of the
line-haul rate was sufficiently examined and ensured by
proof that the new charge was itself reasonable and by
prohibiting its collection if thé total cost of the grain
movement--its line-haul charge plus the separate
inspection charge exceeded the maximum reasonable rate
theretofore prescribed by the Commission, that is, the
maximum reasonable rate the Commission had theretofore
prescribed for both the transportation service and the
privilege of in-transit inspection.
"The Commission's order was sustained, on other grounds, in
Cincinnati, N. O. & T. PR. Co.. United States, Cwil Action No, 6692
(SD Ohio, Jan. 12 1970), aff'd, 400 U.S, 932 (1970). The District Court
sustained the Commission on the basis that the proposed increase in
charges might well result in a substanital diversion of the considered
traffic, with a diminution, rather than an increase, in revenues. In the
present case, the Commission noted: “Similar conclusions are not
warranted here”
A-59
This approach seems straighforward and adequate.
Keeping in mind that Docket 17,000. Part 7, as was
customary in Western territory, prescribed rates for grain
movements permitting one in-transit inspection without
extra charge, let us assume, for example, that the maximum
rate prescribed by the Commission for a particular grain
movement with in-transit inspection privileges was 120.
Assume further what is the recurring situation in the case
before us— that the railroad is charging less than it may, say
100, for the grain movement with that privilege. The
railroad then publishes a tariff under which the line-haul
rate of 100 no longer entitles the shipper to in-transit
inspection, and a separate charge of 20 is imposed on those
who want that service. The line-haul charge plus the
separate in-transit inspection charge does not exceed what
the Commission has heretofore ruled the railroad may
collect for both the transportation and the inspection
service. This calculus seems to me an adequate basis for
concluding that the line-haul rate of 100 is itself within the
zone of reasonableness. If a railroad may charge 120 for a
grain movement with in-transit inspection provided, and
the inspection stop is proved reasonably worth 20, why
should there also be occasion for considering the
reasonableness of 100 as a line-haul rate and so proving
again what the Commission previously found —that 120isa
reasonable charge for both services?
The District Court thought the Commission ignored
Secretary of Agriculture v. United States, 347 U.S. 645
(1954), but I read that case far differently. There the Court,
although being of the opinion that the Commission had not
adequately explained why it was approving a separate
charge without examining the legality of the line-haul rate,
was careful to point out that the Commission was not
precluded “from following a procedure fairly adapted to the
unique circumstances of this case”; nor did the Court
question “the Commission's power, under appropriate
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findings, to approve such unloading charges without
pursuing one of these courses. In dealing with technical and
complex matters like these, the Commission must
necessarily have wide discretion in formulating appropriate
solutions.” /d., at 652. That case does not stand for the rule
that a separate charge for an ancillary service may in no
circumstances be permitted without new proof in thar
proceeding of the reasonableness of the line-haul rate.
The prior decisions of the Commission relied upon by the
District Court establish clearly enough that the
Commission must be satisfied with the reasonableness of
the line-haul rate as an exaction for the remaining services
before approving a separate charge for a service previously
covered by the line-haul rate. Transit Charges, Southern
Territory, supra; Terminal Charges at Pacific Coast Ports,
255 1.C.C. 637 (1943); Reconsignment Case No. 3, 531.C.C.
455 (1919); Loading of Less-Than-Carload Freight on
Lighters in Norfolk, Va., Harbor, 91 1.C.C. 394 (1924). In
these cases, the carriers simply failed to carry their burden
of proof.
The District Court also cited for this proposition Grand
Forks Chamber of Commerce v. Great Northern R. Co., 321
1.C.C. 356 (1963), but the Commission in that case, see i¢.,
at 360-362, did precisely what it has done in this one: it
approved a separate in-transit inspection charge in the case
of so-called Group 3 rates where the line-haul rate and the
new charge together were less than so-called Group | rates
prescribed in Grain and Grain Products, 205 1.C.C. 301
(1934); 215 LC.C. &3 (1936). See also Public Service
Comm'n of North Dakota v. Great Northern R. Co., 340
1L.C.C. 739 (1972); Alabama State Docks Dept. v. Alabama,
T. & N. R. Co., 321 LC.C. 347 (1963), Agsco Chemicals,
Inc. v. Alabama G. 8. R. Co., 314 1.C.C. 725 (1961).
Neither do | understand why the majority is comforted by
the opinion in Cincinnati N. O. & T. P. R. Co. v. United
States, Civil Action No, 6992 (SD Ohio, Jan. 12, 1970), in
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which the District Court affirmed, but on very limited
grounds (grounds that would save the cases before us now),
the Commission's disallowance of a separate transit charge
for cotton movements but disapproved the stringent
standard by which the Commission required the railroads
to prove the reasonableness of the resulting line-haul rate.
The District Court restated the prevailing rubric:
“The question here is what should the carrier be paid
for a service which it has been rendering, and has been
charging for, and has been paid for (one knoweth not
what) which it proposes to separate and charge
separately for. Both the courts and the Commission
have consistently held that what is a just and
reasonable rate for the service to be separated and
charged for separately cannot be determined by
examining only the typical questions of cost, etc., with
respect to the separate service. On the contrary, the
typical questions must be directed to the overall or
combined picture so that one may conclude (a) that the
rate for the separated service, looked at by itself in the
light of the applicable questions, is just and reasonable;
and (b) that the remaining rate for the services, sans the
separated service, is not rendered unjust or
unreasonable.”
The District Court continued:
“Whether the examination is in terms of ‘what portion
of the line-haul rate represented the rate for the service
to be separated,’ or whether the search in terminology
is for the answer to this question: Does the new
aggregate rate, composed of line-haul plus transit rates
represent a just and reasonable rate for all of the
services (the aggregate of the severed and the
nonsevered)—the principle is the same.” (Emphasis
added.)
A few paragraphs later, the court repeated the same
alternate approach. This Court affirmed the District Court
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summarily. 400 U.S. 932(1970)
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