Amicus Curiae Brief — ICC v. Oregon Pacific Industries, Inc.

7 as 43

tor chs Doster 9f Oragne

INDEX

INTEREST OF AMICUS CURIAE ..000000..0220.0.0..0.0..0ccceeeeceeees

SUMMARY OF ARGUMENT ...................-.---sccscecceeeeeeeeeeeeeeeeeeees

I. CAR SERVICE ORDER 1134 IS A VALID EMERGENCY

REGULATION ISSUED UNDER SECTION 1(15) OF

THE INTERSTATE COMMERCE ACT TO IMPROVE

CAR UTILIZATION.

1. Car service orders can affect the application of pub-

TREO CE ssa cesirosiicseewesesssb eevee eerceseereeeecinecknasniens

2. Car service orders can regulate shippers ......................

3. Car Service Order 1134 is a conventional regulation of

MI NO icc ee raster cere cece oes cee

4. Emergency car service orders are controlled by the

duration and the nature of the emergency ................

II. CAR SERVICE ORDER 1134 IS NOT A RATE ORDER

SUBJECT TO SECTION 15 OF THE INTERSTATE

A PGE iaisccssisinsinictesacsvecanssauctsanianarnecennnenssaninanicy

III. THE DISTRICT COURT’S DECISION REQUIRES THE

COMMISSION TO PROCEED UNDER SECTION 15 OF

THE INTERSTATE COMMERCE ACT, WHICH IS A

SEVERE AND UNREASONABLE LIMITATION IN ITS

AUTHORITY TO REMEDY EMERGENCY CAR

SHORTAGES.

1. Section 1(15) authorizes the Commission to regulate

car use without a hearing to alleviate emergency car

shortages ..... Saisie gnaw ohana exiecsrsstes sass aniwesewecsiainwntaneseabass

2. It is uncertain whether a regulation limiting hold time

is authorized by Section 15 20.0.2... .ceeeeeceeeeeeeeeeeees

AIR adic sctete ccs eectnpe clears nncentindiin ahvsiptnseneeecs

TABLE OF AUTHORITIES

CASES

Page

Armour & Co. v. Louisiana Southern Ry. Co., (5th Cir 1951)

190 F2d 925, cert den (1952) 342 US 913 -...000..... 4, 5, 8, 10

Atchison, T. & S. F. R. Co. v. Bd. of Trade, (1973) 412 i

800

Avent v. United States, (1924) 266 US 127 0.0.00... 14

Chicago, M., St. P. & P. R. Co. v. McCree Co., (D Minn 1950)

OE OF shag pce ese cee en

Daugherty Lumber Co. v. United States, (D Or 1956) 141 F

Es er any a ne ae nee 13

Investigation of Adequacy of Freight Car Owership, (1969),

OP ZO ene One Sri nn nro ew Oe ee 16

Iverson v. United States (D DC 1946), 63 F Supp 1001, aff

CUD) Se IS TF ices care ncecpentescee nnn 4, 6, 8, 15

Palmer v. United States (D DC 1947) 75 F Supp 68 ................ 20

Peoria & Pekin Union Railway Co. v. United States, (1923)

Co Bi \* cn 4,5, 11, 13

—— v. Commodity Credit Corp., (3d Cir 1961) 289 F2d

Sion tar ican uheniennsertdaceassnoacaaestndoacsanctatentonteas 5, 6, 8, 9, 10, 15

Turner, Dennis & Lowery Lumber Co. v. Chicago, M. & St. P.

Ry. Co., (1926) 271 US 259... eet ieaeeo 3

United States v. Allegheny-Ludlum Steel Corp., (1972) 406

NF cg ness ape omens a eedaegeesercaees 1, 10, 16, 18

United States v. Florida East Coast Railway’ Co., (1973) 410

| 5 5”, Zenner een Even 4, 6, 12, 16, 18

United States v. Michigan Portland Cement Co., (1925) 270 a

Be FR acca cies eechioncarinct ee pipnnetosrtereie tents Peete 11,12

—_ States v. Southern Railway Co., (4th Cir 1967) 380 F2d

PEGE OE SS LALO OS DOOR

PALI FLU Wz

al BOERNE LE RD

mettle cece,

UNITED STATES STATUTE

Page

Transportation Act of February 28, 1920, ch. 91, § 402, 41 Stat.

456, 476, amending Act of May 29, 1917, ch. 23, 40 Stat.

101; 49 USC § 1015) 20... eee ee eeeceeecececceeeeeeteeceneceneee passim

OTHER AUTHORITIES

Interstate Commerce Comm’n, Service Order No. 1134

0 7 ) Neen ner nn ne en rs en passim

| Interstate Commerce Comm’n, Corrected Service Order No. 905

CNS sssicscdecencacevsvesersesvvesncseseetieneectes acne biet erences

Interstate Commerce Comm’n, Service Order No. 858 (1950)... 11

| Interstate Commerce Comm’n, Service Order No. 775 (1948)... 8

Interstate Commerce Comm'n, Revised Service Order No. 180

pd CR) acres escent eee eens ranean erine es eenemntntanses 8

National Transportation Policy, 49 US.C. preceding Section 1.. 19

U.S. Congress, H.R. Rep No. 456, 66th Cong. 1st Sess. (1919)... . 4

U.S. Congress, H.R. Rep. 18, 65th Cong., 1st Sess. (1917).......... 17

PFET NPL DIES | PRONE BS OTST LEFT SOIL RN

POLL OPES TELE OES OLA A IOI APSO

an the Supreme Court

of the Wnited States

October Term, 1973

No. 73-1210

INTERSTATE COMMERCE COMMISSION,

Appellant,

Vv.

OREGON-PACIFIC INDUSTRIES, INC.,.ARTHUR A. POZZI CO.,

TIMBERLAND LUMBER CO., CHAPMAN LUMBER CO., NORTH

PACIFIC LUMBER CO., and AMERICAN INTERNATIONAL

LUMBER CO.,

Appellees.

On Appeal irom the United States District Court

for the District of Oregon

INTEREST OF AMICUS CURIAE

Western railroads which are members of Western

Railroad Traffic Association are primarily responsible

for moving wood products from western mills to east-

ern markets, traffic which requires a sufficient sup-

ply of boxcars and other freight cars suitable for ship-

ping lumber and plywood.'/ In October 1972 high do-

1/ See United States v. Allegheny-Ludlum Steel Corp., (1972)

406 US 742 at 750 discussing recurring car shortages affecting

the wood products industry.

Eateeseres ENEMA Fe SSN NE SPB NSS SAE E RAI T MDEPR EPI MIG Te SA NORT SPIRIT NEL LT aw SRS

2

mestic demand and grain shipments to the U.S.S.R.

combined to create a critical shortage of cars suitable

for transporting grain and lumber, and the shortage

grew progressively worse during 1973. By May, the

average daily shortage of plain boxcars, which are used

for both grain and wood products and are the “work

horse of the car fleet,” exceeded 13,000 cars (Comm

Letter 5/14/73; Byrne aff). Much of the burden of the

shortage fell upon members of Western Railroad Traf-

fic Association.

The shortage was aggravated by inefficient car

utilization practices employed by shippers.2/ Among

these practices is one referred to by the District Court.

as “sales-in-transit” marketing. Under this system,

brokers who sell approximately 75% of all lumber and

plywood produced in the nation (Cheatham affidavit)

commonly ship loaded cars from western mills to recon-

signment points prior to sale and without a destination.

There the cars are held until completed sales — hope-

fully made in a rising market — permit the shippers

to notify the carriers of their destinations. Under pub-

lished tariffs, shippers receive the benefit of through

rates to those points.

The practical effect of in-transit sales is to immo-

bilize large numbers of cars by using them as ware-

2/ See Atchison, Topeka & Santa Fe Railway v. Witchita Trade

Board, (1973) 412 US 800, 803 n. 2, 829 n. 1, 836.

3

houses, and the practice has been harshly criticized.3/

The extent of this non-transportation use of cars is

_ shown by appellees’ evidence that they house 55,000

carloads of lumber in boxcars each year, and their con- —

tention that the economic effect of the order is to make

them provide storage for an additional 2.5 million

board feet of wood products (Cheatham affidavit).

Car Service Order 1134 was issued in May 1973

under Section 1(15) of the Interstate Commerce Act

(49 USC Sec 1(15)) to afford relief from such prac-

tices during the emergency which had developed, by

limiting hold time at reconsignment points to five days.

After that period, through rates to final destinations

would no longer apply and charges would be calcu-

lated by combining local rates. The order succeeded in

_its purpose. While it was in effect, shippers ceased to

hold cars at reconsignment points for excessive periods.

(Byrne affidavit)

The District Court’s decree setting the order aside

has had a substantial and adverse impact on the sup-

ply of cars available to the western lines. This, how-

ever, is not its entire significance. It nullified an im-

portant decision of the Commission which had been

taken in the public interest to alleviate an emergency

car shortage. In doing so, it gave no weight to the

3/ Turner, Dennis & Lowry Lumber Co. v. Chicago M & S T P

RR Co., (1926) 271 US 259 at 262.

4

Commission’s duty under Section 1(15) ‘“*** to act

promptly on the spur of the moment in case of emer--.

gency,’’*/ and required it instead to follow procedures

which have been criticized for involving “too many

hearings and .. . too little action.”5/ 7

This Court should not merely analyze and sustain

the order; it should support the Commission’s determi- |

nation to meet emergencies promptly and vigorously

by effective temporary measures such as this, which

supplement decisions under other provisions of the law

that require a longer time to have their intended ef-

fect of improving the national car supply.

SUMMARY OF ARGUMENT

I

Car service orders, including emergency orders un-

der Section 1(15), commonly affect published tariffs,

regulate shippers and increase charges for transporta-

tion service. Jverson v. United States, (D DC 1946) 63

- F Supp 1001, aff (1946) 327 US 767; Armour &

Co. v. Louisiana Southern Ry Co., (5th Cir 1951) 190

F2d 925 at 927, cert den (1952) 342 US 913. They are

not limited to orders which fix demurrage charges or

_-—...which regulate carriers as opposed to shippers. Reading

4/ See

/ House Report 456, 66th Congress, ist Sess ath17, quoted in

Peoria Ry. Co. v. United States, (1923) 263 US 528 at 533, n. 7.

5/ See United States v. Florida East Coast Railway Co., (1973)

410 US 224 at 232.

5

Co. v. Commodity Credit Corp., (34 Cir 1961) 289 F2d

744; Armour & Co. v. Louisiana Southern Ry Co., (5th

Cir 1951) 190 F2d 925, cert den (1952) 342 US 913.

Their character as car service orders is established by °

their purpose to regulate the use and supply of cars.

- Segtion 1(10); Peoria & Pekin Union Railway Co. v.

United States, (1923) 263 US 528. Their validity is not

affected by any incidental effect on published tariffs,

shippers, or charges for transportation services. Like all

emergency orders, this one is controlled by the nature

and duration of the emergency which called it forth,

which provides sufficient protection against abuse of

the Commission’s authority under Section 1(15). United

States v. Thompson, (ED Mo 1944) 58 F Supp 213.

Car Service Order 1134 is purely regulatory; its suc-

cess is not measured by revenues it generates for car-

riers, but by its effect on shippers’ use of cars. In sub-

stance, it does no more than limit hold time at recon-

signment points. References in the order to local ‘rates

do not change it into a compensatory rate order, but

merely explain the economic effect of limiting hold

time. Reading Co. v. Commodity Credit Corp., (3d Cir

1961) 289 F2d 744 at 748. The order supplements the

Commission’s long range efforts to eliminate car short-

ages through incentive per diem and other measures,

6

by providing temporary relief in an emergency. United

States v. Florida East Coast. _ Co.; (1973) 410.

US 224.

Wl.

|

Circumstances arising from time to time can ele-

vate the chronic shortage of cars in the national car

pool into an emergency requiring immediate action in

the national interest, and unwarranted limitations on

the Commission’s authority under Section 1(15) will

cause hardship to shippers and carriers, and to the pub-

lic. By requiring the Commission to employ lengthy

hearing procedures before meeting the emergency in

the way its judgment dictates, the District Court ignored

the legislative history of the Esch Car Service Act and |

forced the Commission to adopt a course which has been

| harshly criticized and is inconsistent with the purpose

of emergency measures. 7

The District Court’s narrow definition of car service

orders will apply equally to orders entered after limited

hearing procedures under Section 1(14) and to emer-

gency orders entered without hearing. under Section

1(15). The unfortunate result of its decision is to Tre-

quire proceedings under Section 15 of the Act, which

characterize changes of compensatory rates, before ac-

tion deemed responsive to an emergency car shortage

can‘be taken. However, it is not at all clear that such an

order is authorized under Seyion 15, and the Commis-

sion’s authority io deal effectively with an emergency

car shortage contributed to by sales-in-transit may exist

only under Section 1(15).

ARGUMENT

I.

Car Service Order 1134 is a valid emergency regula-

tion issued under Section 1(15) of the Interstate Commerce

Act to improve car utilization.

The District Court attempted to distinguish between

“car service orders” and “rate orders,” holding that an

emergency car service order to improve the use of cars

by shippers cannot affect the application of published

tariffs. Section 1(10) of the Act contains no such con-

ceptual limitation on orders to control the use of cars,

and none have been implied by the courts, which have

refused to restrict the remedies available to the Com-

mission to alleviate emergency car shortages.

1. Car service orders can affect the application of pub-

lished tariffs.

Car Service Order 1134 is one of several orders which

have been required from time to time during emer-

gency car shortages to regulate shippers’ use of cars by

suspending published tariffs and increasing transpor-

8

tation charges. Thus, orders increasing demurrage

charges paid by shippers and suspending published de-

murrage tariffs have been uniformly sustained.®/ Such

orders commonly establish car retention periods beyond

which charges become burdensome, and they operate

like this one, through temporary economic incentives to

regulate the use of cars by shippers.

In Iverson v. United States, (D DC 1946) 63 F Supp

1001 at 1006, aff (1946) 327 US 767 the court held that

orders suspending published tariffs. which determine

transportation charges are authorized by Section

1(15).’/ Such orders are sustained hecause they “clearly

provide an effective means of relieving a shortage of

railroad freight cars.”* Armour & Company v. St. Paul

Railroad Company, (5th Cir 1951) 190 F2d 925 at 927,

cert den (1952) 342 US 913.

In Reading Co. v. Commodity Credit Corp., (3a Cir

1961) 289 F2d 744 the court sustained Car Service Or-

der 905, which provided, economic incentives to improve

car utilization by limiting free time to seven days. Un-

6/ E.g., Car Service Order 180 (October 2, 1944) sustained in

Iverson vs United States, (D DC 1946) 63 F Supp 1001, aff

(1946) 327 US 767; Car Service Order 775 (A rt 96, 1948)

sustained in Chicago, M. St. P. & P. R. Co. v. McCree & Co.,

(DC Minn 1950) 91 F Supp 57 and Armour & Co. v. Louisi-

ana Southern Ry. Co., (5th Cir 1951) 190 F2d 925, cert den

(1952) 342 US 913; Car Service Order 905 (July 13, 1955)

sustained in Reading Company v. Commodity Credit Corp.,

(3d Cir 1961) 289 744.

7/ “. . . Ifa published rule or — affects or determines a

charge, it is nevertheless a rule or regulation.” Jd at 1006.

9

like the present order, it did not contain any: explana-

tion of its effect on charges after that period. The court

refused to limit emergency orders under Section 1(15)

to those applying to demurrage charges and sustained

the order as a proper and effective regulation of car use

by affecting the application of published tariffs.°/

Such orders affecting published tariffs are designed

to provide economic incentives to increase car utiliza-

tion in an emergency. Their character as car service

orders is established by their purpose, and is not

changed by reason of the particular published tariff

which may be involved. Such incentive regulation is an

essential alternative to direct regulation, and it should

be sustained as a reasonable measure which preserves

to shippers continuing control over transportation

charges which they will pay during periods of emer-

gency.

2. Car service orders can regulate shippers.

The Distzict Court’s conclusion that Aad 1(10)

8/ The court stated:

- “|. Another cause [of car shortages] is diversion of

the car from its primary use as an instrument of trans-

— by cnplevien it as 4 place of storage, either at

estination or at reconsignment points, for a long peri

while seeking a market for the goods stored therein. If

Order 905 were held to apply only to oe charges it

would not have the effect of expediting the release of cars

utilized by shippers for storage purposes. Thus, the Order

would less efficiently accomplish its purpose of alleviati

a critical shortage of box cars a1.4 refrigerator cars.”

at 748.

10

of the Act limits car service orders to rules affecting

carriers, not shippers, is not required by its terms and

has been rejected by the courts which have considered

it. Reading Co. v. Commodity Service Corp., (3d Cir

1961) 289 F2d 744 at 750 (order reducing free time

from.20 to 7 days is legitimate regulation which forces

shippers to reduce detention time at destination and at

reconsignment points) ; Armour & Co. v. Louisiana

Southern Railway, (5th Cir 1951) 190 F2d 925 at 927,

cert den (1952) 342 US 913.

Clearly, the need for increased car utilization dur-

ing periods of shortage requires authority to regulate

shippers as to relevant matters which shippers control}, : °

principally the time required to return the car to the |

carrier for other transportation service. The retention

of cars by shippers for non-transportation purposes bur- _

dens the national pool no less than delays by carriers

in returning cars to originating lines. See United States

v. Allegheny-Ludlum Steel Corp., (1972) 406 US 742.

The regulation of car use under the Esch Car Service

Act must extend equally to both.

3. Car Service Order 1134 is a conventional regulation

of car service.

The District Court was concerned that Car Service

Order 1134 constitutes an unprecedented use of the

Commission's emergency power to deny shippers an es-

11

tablished business practice. However, the order is not

an innovation. It is substantially identical in material

respects to Service Order 858, which was promulgated

in 1950 to alleviate an emergency car shortage affecting

the lumber industry during the Korean War. It is also

identical in its economic effect to demurrage and other

orders referred to above, which control shippers’ use of

cars through economic incentives without the complete

ban on given practices which is suggested by the District

Court. In substance and effect, it is not different from

orders which have preceded it and are an established

part of the Commission’s jurisdiction.

Peoria & Pekin Union Railway Co. v. United States,

(1923) 263 US 528 does not suport a narrow construc-

tion of Section 1(10) or suggest

t car service orders

cannot affect charges for transportation services or the

application of published tariffs. In the Peoria case, the:

Court broadly defined “car service” as connoting “the.

use to which the vehicles of transportation are put; not ad

the transportation service rendered by means of them.”

263 US at 533.9/

@

9/ In United States v. Michigan Portland Cement Co., (1925) 270

US 521 the Court limited Peoria to a restriction on the Com-

mission’s power to impose an “affirmative duty on another

carrier” to perform switching services, and approved orders

under Section 1(15) regulating “preference or, priority’? in

transportation:

‘*. . . It was in this connection that this court»used the

expression that car service connotes the use to which ve-

hicles of transportation are put, but not the transportation

12

Car Service Order 1134 is a conventional and valid

order for the regulation of car use, and it is authorized

under 1(15) of the Act regardless of its incidental effect

on published tariffs, its regulatory impact on shippers,

and its indirect effect on transportation charges.

4. Emergency car service orders are controlled by the

duration and the nature of the emergency.

Orders issued without hearing under Section 1 (15)

of the Act are by their nature limited in duration and

narrow in scope; it is their temporary and limited na-

ture and the conditions to which they respond which

justify issuing them without following the limited pro-

cedural requirements of Section 1(14). See United

States v. Florida East Coast Railway Co., (1973) 410 US

224.

In this case, the record demonstrates the existence

of a critical shortage of cars used to ship plywood

and lumber and the need for immediate relief. Indeed,

the District Court did not question the Commission’s

opinion that an emergency existed. Nor is there any

doubt that the order was carefully tailored to the spe-

cific shortage which prevailed when it was issued. It

affected only cars commonly used for shipping lumber

service rendered by means of them. The opinion expressly

affirms the authority of the Commission under 915 [sec 1

(15) ] to give regulatory directions for preference or priority

in transportation.” 270 US at 527.

\

and plywood and was issued in the first instance for

13

only six weeks. It could be extended only upon a ra-

tional determination that the emergency had not ceased

and that such regulation was still necessary. United

States v. Thompson, (ED Mo 1944) 58 F Supp 213.

Emergency orders do not pose a threat to established

rate-making procedures or deprive shippers of any right

they may have under published tariffs to use cars as

warehouses. Because they are responsive to an emer-

gency, pect remedy adopted by the Commission

will be limited'®/ as well as temporary. However, the

fact that there is an emergency requires that the range

of action available to the Commission be broadly con-

ceived. The Commission has — and needs — wide dis-

cretion in selecting appropriate remedies to deal with

such cases. It also follows that emergency orders are

subject to only limited judicial review. Daugherty Lum-

ber Co. v. United States, (D Or 1956) 141 F Supp 576.

The controlling: consideration is the congressional de-

sire that the Commission should act promptly “on the

spur of the moment in case of an emergency.” Peoria

Ry. Co. v. United States, (1923) 263 US 528 at 533, n. 7.

10/ aa United States v. Southern Ry. Co., (4th Cir 1967) 380

49:

“The contours of a ‘direction’ issued in response to a

— emergency situation are necessarily shaped by the

character of emergency.” 380 F2d at 55-56, n. 7.

_14

The Commission should be encouraged to follow

that mandate, and the Court should not circumscribe

action it can take in such cases. The Commission’s power

is broad, but it is sufficiently limited by the statute,

which “confines the power of the Commission to emer-

gencies and the requirement that the rule shall be rea-

sonable wine interests of the public and of commerce

fixes the only standard that is practical or needed.”

Avent v. United States, (1924) 266 US 127 at 130.

Car Service Order 1134 is not a rate order subject to

Section 15 of the Act. |

References in the order to the application of local

rather than through rates after five days were unnec-

essary to its regulatory operation and had no visible

purpose except to explain the result of limiting hold

time to that period and to notify shippers of charges

which should be considered in making their selling d

cisions at reconsignment points. The impact of the o der

is the same, with or without those references, and fe

cannot affect its character as a rule whose purpose is

to regulate car use and increase car supply.

The purely regulatory purpose ofthe order is clear

from its text, which describes the emergency that

called it forth and its objective. Clearly, it would achieve

a

acs scl Sp:

15

its purpose only if it did not generate revenue for car-

riers, and it would fail if it did so. The order is designed

to discourage in-transit sales, not to compensate carriers

for the use of their cars, and it is not its ‘only result

* * * to cause payments to be made to the railroad by

shippers.” Iverson v. United States, (D DC 1946) 63 F

Supp 1001, aff (1946) 327 US 767. Indeed, it was al-

most completely successful in eliminating excessive de-

tention of cars prior to the decree of the District Court.

The effect of the order on the application of pub-

lished tariffs does not deny shippers all freedom of

choice as to rates they will pay for transportation serv-

ices. An order like this one, which limits hold time,

achieves its regulatory purpose without imposing on

shippers an inflexible rule which arbitrarily bans in-

transit sales or establishes flat increases in demurrage

| charges. This was a flexible and effective response to

a critical situation, which did not become a rate order

simply because it was reasonable. Reading Co. v. Com-

modity Credit Corp., (3d Cir 1961) 289 F2d 744.

Emergency regulations such as Car Service Order

1134 are important supplements to the Commission’s

long-range program of action, including orders under

Section 1(14), to alleviate the chronic shortage of cars

in the national pool. /nvestigation of the Adequacy

P

16

of Freight Car Ownership, (1969) 335 ICC 264; United

States v. Allegheny-Ludlum Steel Corp., (1972) 406

US 742 at 746. Orders under Section 1(14), such as

the one sustained in Allegheny-Ludlum, require time

to achieve their purpose, and this Court recognized

in that case that “the railroad and shippers were in-

flicted with an economic illness that might have to get

worse before it-gets better.”” 406 US at 754. See also

United States v. Florida East Coast Railway Co., (1973)

410 US 224. The Commission must depend heavily

at this time on its emergency authority to meet tem-

porary situations which may arise and threaten to turn

a chronic shortage into a disaster for carriers, shippers

and the public. The Commission’s authority to handle

these cases must extend to this kind of temporary incen-

tive regulation of shipper practices which so decisively

affect car supply. :

The District Court’s decision requires the Commission

to proceed under Section 15 of the Interstate Commerce

Act, which is a severe and unreasonable limitation of its

authority to remedy emergency car shortages.

1. Section 1(15) authorizes the Commission to regulate

car use without a hearing to alleviate emergency car

shortages.

17

An underlying question in this case is whether an

order regulating car use to alleviate an emergency car

shortage can be issued without a hearing when it affects

the application of published tariffs for transportation

services, which in other instances would require pro-

ceedings, including hearings, under Section 15 of the

Act. The effect of the District Court’s decision is that

it cannot, although the Act places no such limitation

on orders under Section 1(15) and the courts have

refused to do so.

When the Esch Car Service Act was before Congress,

the report of the House Committee on Interstate and

Foreign Commerce, HR Rep No 18, 65th Cong, 1st Sess

at 7 (1917) emphasized the need for summary proce-

dures and broad options to deal with emergency car

shortages: .

“It may be objected that this [see 1(15)]

authorizes a summary proceeding, but similar lan-

guage may be found in section 15 of the interstate

commerce act relating to the investigation of new

schedules. The authority to make just and reason-

able direction with respect to car service during the

emergency as in the opinion of the commission will

best meet the emergency and promote operation of

car service in the interest of the public and the ad-

vantage of convenience and commerce of the peo-

ple presents in general terms the main object for

the enactment of the pending bill, and if through its

enactment the operation of car service in the inter-

18

ests of the public and to the advantage of conven-

ience and commerce of the people is secured its en-

actment is wise.” (Emphasis added)

; ee .

Present conditions in the industry do not suggest

that the Commission’s authority to respond promptly

in such cases without a hearimg has become less nec-

essary. Indeed, this Court has-recently held that the

hearing required before issuing car service orders un-

der Section 1(14) of the Act need not be adjudicatory

in nature. United States v. Allegheny-Ludlum Steel

Corp., (1972) 406 US 742. See also United States v.

Florida East Coast Railway Co., (1973) 410 US 224, in

which the Court took note of criticism of the Commis-

sion for “conducting too many hearings and taking too

little action.” 410 US at 232.

It is clear from the statute and from the decided

cases that car service orders do not depend upon oral

testimony and cross-examination, and that hearing

procedures designed to determine “reasonable com-

pensation for use” are unnecessary in proceedings for

such orders. A corresponding liberality should be ex-

tended to orders under Section 1(15), which are the

only summary proceedings authorized by the Act

19

to deal with emergency situations. The right to a hear-

ing in rate proceedings under Section 15 should not in-

hibit or limit the scope of emergency orders under Sec-

tion 1(15).

The| District Court’s view that Car Service Order

1134 caii only be issued after hearings because it affects

transportation charges unreasonably restricts the Com- ,

wa authority to deal with emergency car short-

ages and is not consistent with the Congressional pur-

pose or with the ve of this Court.

2. It is uncertain if a regulation limiting hold time is

authorized by Section 15.

i shown above, Car Service Order 1134 is a regula-

tory limitation on hold time which is limited in scope

and duration, Consequently, there was no need to ‘en-

| gage in lengthy proceedings under Section 15, which

would be appropriate if it was an order ‘to establish |

compensation to’ reimburse railroads for loss of use

of cars held at reconsignment points.

We should add that it is not clear that a regulatory

order of this kind, which does not contemplate increased

revenue for carriers and would fail if there were any,

is authorized by Section 15. This Court has recognized

that in applying the National Transportation Policy (49

USC preceding Section 1) orders under Section 15 can

20

be shaped by regulatory considerations,!1/ inchiding

considerations. of car supply.

However, it is difficult to find in the dieiie of

Section 15 authority to engage in regulation, as such,

for purposes other than to determine reasonable com-

pensation and to prevent or remedy unjust or discrimi-

natory charges, and a purely regulatory order whose

only purpose is to control the use of cars does not ap-

pear to be contemplated by Section 15. See Palmer v.

United States, (D DC 1947) 75 F Supp 63 at 68. Cer-

tainly, orders such as this are commonly issued as car

service orders under Section 1(14) or 1(15).

: If the Commission cannot, deal with in-transit salés

ethene: under Section 15 or through car service’ or-

ders under its emergency power when circumstances

require such action, it follows that it has little authority

to deal with the matter at all. However, the practice of

in-transit sales is a substantial factor contributing to car

shortages, and the Court should not invite such a result.

11/ In Atchison, T. & S. F. R. Co. v. Bd. of Trade, (1973) 412 US

800 the Court considered i ge forget in accessorial charges for

in-transit grain inspections t were esigned primarily to

eliminate wasteful Moy we g ager in the grain industry.

The Court order was the result of car

— eae re at the Russian grain —— agen | and

; ustices descri it as a’ “promising effort to solve a

critical: problem.” “12 US at 836.

21

CONCLUSION

Car Service Order 1134 was a valid order under

Section 1(15) of the Act, and the decree of the District

Court should be reversed.

Respectfully submitted,

JAMES H. CLARKE,

Counsel for Western Railroad

Traffic Association, amicus curiae.

June 10, 1974 . §

OGLESBY H. YOUNG

MARK S. DODSON

of Counsel