Opposition Brief — B. J. Alan Co. v. Interstate Commerce Commission

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No. 91-1267 APR 2 1992

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In the Supreme Court of the Gnited States

OCTOBER TERM, 1991

B.J. ALAN COMPANY, INC., ET AL., PETITIONERS

INTERSTATE COMMERCE COMMISSION AND

UNITED STATES OF AMERICA, ET AL.

ON PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE DISTRICT OF COLUMBIA CIRCUIT

BRIEF FOR THE FEDERAL RESPONDENTS

IN OPPOSITION

KENNETH W. STARR

Solicitor General

Department of Justice

Washington, D.C. 20530

(202) 514-2217

ROBERT S. BURK

General Counsel

CRAIG M. KEATS

Associate General Counsel

MICHAEL L. MARTIN

Attorney

Interstate Commerce Commission

Washington, D.C. 20423

QUESTION PRESENTED

Whether this Court’s decision in Maislin Industries,

U.S., Inc. v. Primary Steel, Inc., 110 S. Ct. 2759 (1990), is

a changed circumstance requiring the Interstate

Commerce Commission to reopen a decision finding that

a common carrier did not violate its common carrier

obligation by refusing to carry common fireworks.

TABLE OF CONTENTS

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TABLE OF AUTHORITIES

(‘ases:

American Trucking Ass’ns, Inc. v Atchison, T. & S.F.

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B.J. Alan Co. v. ICC, 897 F.2d 561 (D.C. Cir. 1990).........

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Chevron U.S.A. Inc. v. National Resources Defense

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ICC vy. Brotherhood of Locomotive Engineers, 482 U.S.

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Lechmere, Inc. v. NLRB, 112 S. Ct. 841 (1992).......00.......

Maislin Industries, U.S., Inc. v. Primary Steel, Inc., 110

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National R.R. Passenger Corp. v. Boston & Maine Corp.,

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Pennsylvania R.R. v. Puritan Coal Mining Co., 237 U.S.

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Restrictions on Service by Motor Common Carriers, 111

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United Parcel Service, Inc. (Ohio), In re, 889 F.2d 1195

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Statutes and regulation:

Rail Passenger Service Act of 1970, 45 U.S.C. 5€@2(d).......

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Statutes and regulation—Cont.:

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49 U.S.C. 10762

49 U.S.C. 11101(a)

Miscellaneous:

Elimination of Certificates as the Measure of “Holding

Out”, 48 Fed. Reg. 11,136 (1985)

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In the Supreme Court of the Chuted States

OCTOBER TERM, 1991

No. 91-1267

B.J. ALAN COMPANY, INC., ET AL., PETITIONERS

i «

INTERSTATE COMMERCE COMMISSION AND

UNITED STATES OF AMERICA, ET AL.

ON PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE DISTRICT OF COLUMBIA CIRCUIT

BRIEF FOR THE FEDERAL RESPONDENTS

IN OPPOSITION

OPINIONS BELOW

The opinion of the court of appeals (Pet. App. la-5a) and

the underlying agency decisions (Pet. App. 8a-17a, 18a-

25a) are all unreported.

JURISDICTION

The judgment of the court of appeals was entered on

October 4, 1991, and a petition for rehearing was denied

on December 10, 1991 (Pet. App 6a). The petition for a

writ of certiorari was filed on February 3, 1992. The

jurisdiction of this Court is invoked under 28 U.S.C.

1254(1).

STATEMENT

1. The “filed rate doctrine” of the Interstate Com-

merece Act (ICA) requires that motor common carriers

file tariffs with the Interstate Commerce Commission

setting forth the rates that they charge for the services

they hold out. 49 U.S.C. 10761 and 10762. Under the

common earrier obligation, which is codified in the ICA

at 49 U.S.C. 11101(a), common carriers must provide

service within the scope of their holding out on

reasonable request. Congress did not define the term

“reasonable request,” nor did it specify how carriers can

broaden or narrow their holding out.

In the early days of regulation, when licenses were

narrowly drawn and entry into the industry was limited,

the ICC construed the obligation relatively strictly: the

Commission’s policy was to equate a carrier’s holding

out with its license, and to require carriers to serve all

shippers within the scope of their licenses. See

Restrictions on Service by Motor Common Carriers,

111 M.C.C. 151 (1970) (Restrictions). As motor carrier

entry controls and rate regulation were relaxed,

however, the Commission moved away from this strict

interpretation, and in 1983 it announced that carriers

can reasonably refuse to provide service that is within

the scope of their licenses if providing such service

would be “economically or operationally impracticable.”

BRlimination of Certificates As the Measure of “Holding

Out”, 48 Fed. Reg. 11,136 (1985) (Rlimination).

The Commission's 1983 action in E/imination, which reversed

the approach set out in Restrictions, followed the declaration of

the United States Court of Appeals for the Fifth Circuit that “[a]

common carrier is free to carve out as large or as small a [niche] as

it feels appropriate.” Steere Tank Lines, Inc. v. ICC, 675 F.2d 105,

105 (Sth Cir. 1982) (per curiam), citing Pennsylrania RR.

Puritan Coal Mining Co., 237 U.S. 121, 183 (1915).

2. In 1987, United Parcel Service, Inc., a motor

common carrier, filed with the Interstate Commerce

Commission a tariff announcing its intention to

terminate its holding out to carry common fireworks.

After unsuccessfully seeking to enjoin the tariff in

court, various fireworks shippers filed a complaint

before the ICC, alleging that the tariff was unlawfully

discriminatory and in violation of the common carrier

obligation. The Commission initially held that UPS's

termination of service was unreasonably discriminatory

(Pet. App. 6la-88a) “U/PS 1). On reconsideration, how-

ever, the Commission reversed, finding that UPS’s

action could not be discriminatory because it treated all

fireworks shippers the same (Pet. App. 26a-60a) (UPS

I1).8

3. In UPS II the Commission assessed UPS's pro-

posed service termination in light of the standard it had

set up in 1983 in Elimination. Applying the “oper-

ationally impracticable” test, the ICC found that UPS

had justified its refusal to serve fireworks shippers. The

fireworks trade, which is subject to a variety of federal,

state, and local laws, is highly concentrated during the

short season preceding the July 4th holiday. The

Commission found that, because many fireworks ship-

pers had proven “unwilling or unable to conform” (Pet.

App. 39a n.8) to destination prohibitions and permit

requirements, the expensive and time-consuming task of

ensuring compliance had fallen on UPS. /d. at 29a-50a,

45a. Adding to this burden was the fact that, during this

concentrated transportation period, UPS had to comply

with United States Department of Transportation

2 In re United Parcel Service, Inc. (Ohio), 839 F.2d 1195 (6th

Cir. 1988) (per curiam).

That finding was summarily affirmed on appeal (B./. Alan

Co. vy. 1CC, 897 F.2d 561, 564 n.8 (D.C. Cir. 1990) (B.J. Alan 1)),

and is not at issue here.

regulations requiring placards on trucks transporting

1,000 pounds or more of fireworks. /d. at 30a, 45a-46a.

These unique difficulties, the Commission found, ham-

pered the efficient operation of a “system that derives its

strength from the ability to ignore the contents of the

package and treat all packages alike.” /d. at 39a n.8.

Accordingly, the Commission approved UPS’s proposed

‘ancellation of service. |

4. The court of appeals affirmed. B.J. Alan Co. v. ICC,

897 F.2d 561 (D.C. Cir. 1990) (BJ. Alan 1).4 The court

thoroughly addressed and rejected petitioners’ claim

that “laln unlimited duty of carriage was [historically |

the rule” (B.J.Alan I, 897 F.2d at 563), and that thus the

Commission lacked authority to approve UPS's discon-

tinuance of service. The court also affirmed the Commis-

sion’s factual finding that fireworks shipments cansed

UPS inordinate operational problems and that, there-

fore, the service was operationally impracticable. /d. at

564-565.

5. Petitioners did not seek further review of B./.

Alan I either before the court of appeals or before this

Court. Instead, they filed various papers before the

agency seeking to have the proceeding reopened.’ Long

after UPS II had become administratively final,

petitioners filed the instant petition to reopen, con-

tending that under Maislin Industries, U.S., Inc. v.

Primary Steel, Inc., 110 S. Ct. 2759 (1990), the Com-

mission could not allow carriers to limit their holding

‘ Petitioners’ application for a stay of the Commission’s decision

pending the appeal was denied by this Court. B.J. Alan Co. v. ICC,

492 U.S. 935 (1989).

Under 49 U.S.C. 10327(g)(1) and 49 C.F.R. 1115.4, the

Commission may reopen a proceeding at any time on its own

initiative or at the request of a party because of material error,

new evidence, or substantially changed circumstances.

out to anything less than the full extent of their existing

operational capacity.®

6. The Commission refused to reopen the proceeding.

Pet. App. 8a-17a. Noting that the common carrier

obligation—unlike the filed rate doctrine—has never

been considered absolute, the Commission found that

JPS II was not inconsistent with any statutory

directive or Supreme Court precedent. /d. at 12a-13a. For

that reason, it concluded that petitioners’ “reliance on

Maislin as a basis to reopen is misplaced.” Jd. at 14a.

7. Petitioners sought review of the refusal to reopen

in the United States Court of Appeals for the Sixth

Circuit, which transferred the proceeding to the

District of Columbia Circuit. Finding that the Maislin

decision established no new principles of law, the

District of Columbia Circuit concluded that petitioners

had not demonstrated that Maislin was a changed

circumstance, and that petitioners’ real basis for

reopening was their claim of material error. Pet. App. 2a-

24 (B.J. Alan II). Because an agency’s decision not to

reconsider based on material error is unreviewable (JCC

v. Brotherhood of Locomotive Engineers, 482 U.S. 270

(1987)), the court summarily denied the petition for

review. Pet. App. 3a.

ARGUMENT

The opinion of the court of appeals is correct and does

not conflict with any decision of this Court or of any

other court of appeals. Further review by this Court is

not warranted.

6 In Maislin, this Court held that the Commission had violated

the legislatively and judicially mandated filed rate doctrine by

adopting a policy under which common carriers that had offered

reduced (but unfiled) rates might be barred from collecting their

higher filed rates in a later collection case.

Petitioners incorrectly contend that Maislin estab-

lished a new rule of law that requires reconsideration of

the decisions in the UPS litigation. In fact, Maislin

simply reiterates the established principle that an

agency must follow its statute, as interpreted by a series

of Supreme Court decisions establishing a longstanding

precedent.’ That is scarcely a new principle of law con-

stituting a changed circumstance sufficient to require a

reopening in this case.*

Nor does the specific holding of Maislin—that the

ICC may not undercut the filed rate doctrine by requir-

ing carriers to charge their negotiated but unfiled

rates—require reopening of the Commission’s decision

in the UPS litigation, which involved the interpretation

‘ Petitioners’ contention that Maislin placed new limitations on

the ICC’s discretion under Chevron U.S.A. Inc. v. National

Resources Defense Council, Inc., 467 U.S. 837 (1984), to interpret

ambiguous statutory language is refuted by National R.R.

Passenger Corp. v. Boston & Maine Corp., No. 90-1419 (Mar. 25,

1992), slip op. 8-11. In National R.R. Passenger Corp., this Court

explained that “[jjudicial deference to reasonable interpretations by

an agency of a statute that it administers is a dominant, well

settled principle of federal law” (slip op. 9, citing Chevron)—in

that case, those principles required deference to the ICC

interpretation of a term in the Rail Passenger Service Act of 1970,

45 U.S.C. 562(d). See also Maislin, 110 S. Ct. at 2771-2772 (Scalia,

J., concurring); Lechmere, Inc. v. NLRB, 112 5S. Ct. 841 (1992).

Nor did Maislin reduce the agency’s ability to modify policies to

keep up with new developments in the industry. 110 S. Ct. at 2770,

citing American Trucking Ass’ns, Inc. v. Atchison, T. & S.F. Ry.,

387 U.S. 397 (1967).

* Petitioners also contend that the Commission incorrectly

interpreted its governing statute and longstanding precedent

concerning the extent of the common carrier obligation. But that is

the very argument that petitioners advanced unsuccessfully in

B.J. Alan I. Petitioners did not seek timely review of B.J. Alan 1

in this Court, and therefore cannot challenge that aspect of the

decision now.

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of an entirely different provision of the ICA. Petitioners

assert that the logic of Maislin requires the conclusion

that a common carrier may not narrow its holding out of

service to less than the full extent of its authority. This

assertion ignores the differences both in the relevant

statutory commands, and in the applicable judicial

precedents.

As the Court emphasized in Maislin, 110 8. Ct. at

2765-2767, the ICA has long been read to “create strict

filed rate requirements” (id. at 2766) which “govern|] the

legal relationship between shipper and carrier” (id. at

2765)—a “rigid approach” (id. at 2766) deemed necessary

to prevent evasion of the Act’s requirements. In

contrast, 49 U.S.C. 11101(a), incorporating the common

carrier obligation, requires the carrier to “provide the

transportation or service on reasonable request”—thus

providing room for consideration of equitable and

discretionary factors in the determination of what

constitutes a “reasonable” request.'°

Although they rely heavily on a few passing

references to the common carrier obligation in early

cases (Pet. 15), petitioners cite no decision of this Court

construing the “reasonable request” requirement as

narrowly as they suggest here. And they certainly offer

no explanation of why the reasonableness of the request

should not be considered in light of current conditions,

9 Indeed, to the extent that Maislin nas any relevance to this

case, UPS complied with the filed rate doctrine by putting its

service limitation into a tariff.

10 As the Commission observed in UPS //, “even in the earliest

rail cases, the obligation to provide service was not held to be

absolute, but rather was qualified by a rule of reason that excused

carriers from service failures that were reasonable under the

prevailing circumstances.” Pet. App. 41a, citing Pennsylvania

R.R. v. Puritan Coal Mining Co., 237 U.S. 121, 183 (1915).

including the current regulatory and economic context

in which the shipper and the carrier are operating.

Petitioners’ contention that Maislin constitutes a

changed circumstance requiring reopening of the UPS

litigation thus overlooks the significant differences be-

tween the filed rate doctrine and the cases interpreting

that doctrine on the one hand, and the common carrier

obligation and the cases interpreting that obligation on

the other.

In sum, petitioners have not demonstrated the exis-

tence of any material changed circumstance or new evi-

dence requiring reconsideration of UPS II. Instead, peti-

tioners’ only rea) claim is that that decision involved ma-

‘terial error—the claim that was rejected in B../. Alan I.

It is clear that the refusal to reopen UPS II to consider a

claim of material error is not itself reviewable. JCC v.

Brotherhood of Locomotive Engineers, 482 U.S. 270, 280

(1987). Thus, the court of appeals correctly denied the in-

stant petition for review.

CONCLUSION

The petition for a writ of certiorari should be denied.

Respectfully submitted.