Students Chal. Reg. Agcy. Pro.(SCRAP) v. United States

• Decision Date: 19 February 1974
• Docket Number: Civ. A. No. 971-72.
• Citation: 371 F. Supp. 1291
• Parties: STUDENTS CHALLENGING REGULATORY AGENCY PROCEDURES (S.C.R.A.P.), Plaintiff, and Council on Environmental Quality, Involuntary Plaintiff, and Environmental Defense Fund et al., Plaintiff-Intervenors, and National Association of Secondary Materials Industries, Inc., et al., Plaintiff-Intervenors, and Institute of Scrap Iron and Steel, Inc. and Julian C. Cohen Salvage Corporation, Plaintiff-Intervenors, v. UNITED STATES of America and Interstate Commerce Commission, Defendants, and The Aberdeen and Rockfish Railroad Company et al., Defendant-Intervenors.
• Court: U.S. District Court — District of Columbia

371 F. Supp. 1291

STUDENTS CHALLENGING REGULATORY AGENCY PROCEDURES (S.C.R.A.P.), Plaintiff and Council on Environmental Quality, Involuntary Plaintiff and Environmental Defense Fund et al., Plaintiff-Intervenors and National Association of Secondary Materials Industries, Inc., et al., Plaintiff-Intervenors and Institute of Scrap Iron and Steel, Inc. and Julian C. Cohen Salvage Corporation, Plaintiff-Intervenors, v. UNITED STATES of America and Interstate Commerce Commission, Defendants, and The Aberdeen and Rockfish Railroad Company et al., Defendant-Intervenors.

Civ. A. No. 971-72.

United States District Court, District of Columbia.

February 19, 1974.

John F. Banzhaf, III, and Peter H. Meyers, Washington, D.C., for plaintiff SCRAP.

John F. Dienelt and Scott H. Lang, Washington, D.C., for plaintiff-intervenors Environmental Defense Fund and others.

Edward L. Merrigan, Washington, D. C., for plaintiff-intervenors National Association of Secondary Materials Industries, Inc. and others.

Thomas H. Boggs, Jr., George Blow, and E. Bruce Butler, Washington, D.C., for plaintiff-intervenors Institute of Scrap Iron and Steel, Inc., and others.

Asst. Atty. Gen. Shiro Kashiwa, Harold H. Titus, Jr., U. S. Atty., and William M. Cohen, Atty., Dept of Justice, for defendant United States of America.

Fritz R. Kahn, Gen. Counsel, Betty Jo Christian, Associate Gen. Counsel, and Theodore C. Knappen, Hanford O'Hara, Charles H. White, Jr., and James F. Tao, Attys., Interstate Commerce Commission, for defendant Interstate Commerce Commission.

T. A. Miller, San Francisco, Cal., Albert B. Russ, Jr., Richmond, Va., Edward A. Kaier, Philadelphia, Pa., and Charles A. Horsky, Michael Boudin, Michael J. Henke, Walter Hellerstein and James L. Tapley, Washington, D.C., for defendant-intervenors Aberdeen and Rockfish Railroad Company and others.

Before WRIGHT, Circuit Judge, and RICHEY and FLANNERY, District Judges.

J. SKELLY WRIGHT, Circuit Judge:

Plaintiff and plaintiff-intervenors challenge an order of the Interstate Commerce Commission (ICC) authorizing railroad rate increases on shipment of recyclable commodities on the ground that the Commission has failed to comply with the prescriptions of the National Environmental Policy Act (NEPA), 42 U.S.C. § 4321 et seq. (1970). Both plaintiffs and defendants have moved for summary judgment. We find that the Commission's efforts to meet the commands of NEPA were substantially deficient. We thus vacate the Commission's order authorizing the rate increases on recyclable commodities and remand the proceeding to the Commission for fulfillment of its NEPA obligations. However, because of our uncertainty concerning the meaning of the Supreme Court's decision last term in Atchison, Topeka & Santa Fe R. Co. v. Wichita Board of Trade, 412 U.S. 800, 93 S.Ct. 2367, 37 L.Ed.2d 350 (1973), we refrain from issuing an injunction restraining the railroads from collecting the increased rates pending the Commission's reconsideration.

I

This case has had a long and complicated history. Inasmuch as it has produced two previous opinions¹ by this court² and one by the Supreme Court,³ however, we shall attempt to set forth only those facts relevant to the motions now before us. Having secured Commission approval of a two and a half per cent temporary emergency surcharge in February 1971 on nearly all freight rates, the nation's railroads on March 17, 1972 filed tariffs with the Commission for permanent selective increases averaging four per cent on most commodities. Under the Interstate Commerce Act tariff changes filed by carriers go into effect automatically unless the Commission deems that an investigation of the lawfulness of these tariffs is advisable and that the rates should be suspended pending such an investigation. 49 U.S.C. § 15(7) (1970). On April 24, 1972 the Commission announced its intention to investigate the permanent increases and suspended these increases for the full seven-month period permitted by Section 15(7).

Students Challenging Regulatory Agency Procedures (SCRAP) then commenced this action, contending that NEPA compelled the Commission to prepare and consider an environmental impact statement before permitting any rate increases—including the temporary two and a half per cent surcharge. SCRAP, which was later to be joined by other environmental groups and scrap dealer associations,⁴ argued that the rate increases discouraged the environmentally desirable use of recyclable commodities not only by raising the costs of shipping recyclables, but also by aggravating "the preexisting disparity in shipping costs between these materials and the primary goods with which they compete."⁵ In response to this theory, we held that even the temporary surcharge was a major action "significantly affecting the quality of the human environment," 42 U.S.C. § 4332(2)(C), and that the Commission therefore had violated NEPA by not preparing and considering a NEPA impact statement before issuing its order permitting the temporary surcharge. We held that any challenge to the permanent increase was not ripe for review inasmuch as the Commission had not then yet issued an order approving this increase. We did, however, retain jurisdiction to ensure that the Commission would comply with NEPA.⁶ We further issued a preliminary injunction restraining the temporary surcharge insofar as it applied to recyclable commodities. The Supreme Court reversed the injunction on June 18, 1973. United States v. SCRAP, 412 U.S. 669, 93 S.Ct. 2405, 37 L.Ed.2d 254 (1973). Relying on Arrow Transportation Co. v. Southern R. Co., 372 U.S. 658, 83 S.Ct. 984, 10 L.Ed.2d 52 (1963), the Court held that Section 15(7) vested exclusive jurisdiction in the Commission to suspend rates pending its final decision on their lawfulness.⁷

Meanwhile the Commission's investigation of the proposed permanent increases culminated in a hearing consisting of submission of briefs and oral argument by concerned parties. Though the Commission had told the Chief Justice, in connection with its application for a stay of our order against the temporary surcharge, as well as this court, that it was developing an impact statement, no statement was prepared for consideration at this hearing or even for consideration by the Commission before issuing its decision on the permanent increases. That decision, which was issued October 4, 1972, approved most of the selective increases. Ex Parte No. 281, Increased Freight Rates and Charges, 1972, 341 ICC 288 (1972). The decision included some discussion of environmental considerations and limited the rate increases on nonferrous scrap to three per cent, but it generally concluded that the new tariffs would not significantly affect the quality of the human environment and that there was thus no necessity for a formal impact statement. The Commission's failure to prepare a formal statement provoked vehement protestations from the President's Council on Environmental Quality (CEQ), from the Environmental Protection Agency (EPA), and from plaintiffs.⁸ Plaintiff SCRAP filed with this court on November 7, 1972 a motion to enjoin the approved increases. On the same day as this filing, the Commission suddenly shifted its position by suspending, until June 1973, rate increases on all goods being shipped for purposes of recycling and by reopening its investigation in Ex Parte No. 281.⁹ The Commission stated that the proceeding was reopened for "the limited purpose of further evaluating, in accordance with NEPA, the environmental effects of increased railroad freight rates and charges on the movements of commodities being transported for the purpose of recycling * * *."¹⁰ In light of the Commission's action, we denied SCRAP's request for a preliminary injunction. We found that no relief was necessary for the suspended increases on recyclables and that there was not sufficient likelihood that the plaintiffs would be successful in showing that an impact statement was required before increasing rates on nonrecyclables. We reserved decision on the merits.

The Commission proceeded to prepare its statement on the environmental impact of the recyclable rate increases. The Commission's draft statement was issued March 5, 1973. It was circulated to several concerned Executive agencies and departments and to all of the parties in this action. Not only the plaintiffs but also the Executive agencies and departments, including EPA, CEQ, General Services Administration, Department of the Interior, and Department of Commerce, responded with extensive comments critical of this draft statement and its conclusions. These comments, although acknowledged by the Commission in its final statement, did not move the Commission to change in any substantial way its conclusions or even its analysis. The Commission denied the request of plaintiffs to schedule a new set of hearings in the reopened proceedings. The Commission served its final environmental impact statement on May 7, 1973. The statement's analysis was limited to the marginal impact of the most recent rate increases; it stated that a general rate increase proceeding did not provide an appropriate occasion to examine whether the underlying rate structure discriminated against recyclable commodities with significant adverse environmental consequences.¹¹ Though it contained no rigorous economic analysis of the responsiveness of the demand for recyclables to changes in transportation costs, the statement's conclusion echoed the Commission's original position in its October 1972 order that the increases would not have a significant adverse effect on the environment. The statement further pronounced that even if some adverse environmental impact could be anticipated¹² the increases would be justified by the need to ensure a viable and efficient railroad system. The Commission did not use this staffprepared statement and the critical comments on the draft statement to develop a new...