Aberdeen Rockfish Co v. Students Challenging Regulatory Agency Procedures Scrap Interstate Commerce Commission v. Students Challenging Regulatory Agency Procedures Scrap

• Decision Date: 19 July 1972
• Docket Number: Nos. A-72,A-73,s. A-72
• Citation: 34 L.Ed.2d 21,409 U.S. 1207,93 S.Ct. 1
• Parties: ABERDEEN & ROCKFISH R. CO., et al., Applicants, v. STUDENTS CHALLENGING REGULATORY AGENCY PROCEDURES (SCRAP) et al. INTERSTATE COMMERCE COMMISSION, Applicant, v. STUDENTS CHALLENGING REGULATORY AGENCY PROCEDURES (SCRAP) et al
• Court: U.S. Supreme Court

409 U.S. 1207

93 S.Ct. 1

34 L.Ed.2d 21

ABERDEEN & ROCKFISH R. CO., et al., Applicants,

v STUDENTS CHALLENGING REGULATORY AGENCY PROCEDURES

(SCRAP) et al.

INTERSTATE COMMERCE COMMISSION, Applicant,

v. STUDENTS CHALLENGING REGULATORY AGENCY PROCEDURES

(SCRAP) et al.

Nos. A-72, A-73.

July 19, 1972.

Mr. Chief Justice BURGER, Circuit Justice.

These applications request me, as Circuit Justice for the District of Columbia Circuit, to stay a preliminary injunction entered by a three-judge United States District Court for the District of Columbia, 346 F.Supp. 189. The applicants are the Interstate Commerce Commission and a long list of railroad companies composing most of the rail transport in the Nation. Opposing the applications are the plaintiffs below, Students Challenging Regula- tory Agency Procedures, who describe themselves as 'SCRAP,'¹ and a coalition of organizations dedicated to the protection of environmental resources. The applicants say that they intend to seek prompt review in this Court on the merits of the preliminary injunction entered below.

(1)

The Interstate Commerce Act, 49 U.S.C. § 1 et seq., permits increases in railroad freight rates to become effective without prior approval of the Interstate Commerce Commission. A carrier may file a proposed tariff and, after 30 days unless the Commission shortens the period, the new rate becomes effective as a carrier-made rate. 49 U.S.C. § 6(3). The Commission may, however, choose to suspend the effectiveness of newly filed rates for as much as seven months, in order to investigate the lawfulness of the rates. 49 U.S.C. § 15(7). At the end of seven months, the carrier-proposed rates go into effect by operation of law unless the Commission has completed its investigation and affirmatively disapproved the new rates. Ifid. Prior decisions of this Court confirm the Commission's broad discretion in the exercise of its power of suspension; judicial review of suspension action or inaction is most severely limited, if not foreclosed. Arrow Transportation Co. v. Southern R. Co., 372 U.S. 658, 83 S.Ct. 984, 10 L.Ed.2d 52 (1963); Board of Railroad Comm'rs of State of North Dakota v. Great Northern R. Co., 281 U.S. 412, 429, 50 S.Ct. 391, 396, 74 L.Ed. 936 (1930).

Against this legal background and prodded by an increasingly precarious financial condition, the railroads, on December 13, 1971, asked the Commission for leave to file on short notice a 2.5% surcharge on nearly all freight rates. The railroads asked that the surcharge be effective as of January 1, 1972. The surcharge was conceived as an interim emergency means of increasing railroad revenues by some $246 million per year, a sum the railroads describe as slightly less than one-sixth of the increased expenses incurred annually since the last general ratemaking proceedings. Selective increases on a more permanent basis would follow.

By order dated December 21, 1971, the Commission denied the railroads' request to make the 2.5% surcharge effective as of January 1, 1972. The Commission stated that it was aware of the carriers' need for additional revenues, but concluded that publication of the interim surcharge on short notice 'would preclude the public from effective participation' in proceedings to evaluate the surcharge. 340 I.C.C. 358, 361. The Commission did, however, rule that the railroads might refile their proposed surcharge on January 5, 1972, to be effective no earlier than February 5, 1972.

On January 5, 1972, the railroads filed tariffs to put the 2.5% surcharge into effect on February 5. SCRAP and other environmental groups asked the Commission to suspend the surcharge for the statutory seven-month period. They opposed the across-the-board surcharge on the ground that the present railroad rate structure discourages the movement of 'recyclable'² goods in commerce and that every across-the-board increase would further increase disincentives to recycling. The environmental groups contended that added disincentives to recycling would result in the increased degradation of the natural environment by discarded, unrecycled goods and in the increased exploitation of scarce natural resources. At a minimum, SCRAP objected to the Commission's failure to issue an 'impact statement' evaluating the effect of the 2.5% surcharge on the shipment and use of recyclable materials. SCRAP contended that such a statement was required by the National Environmental Policy Act of 1969 (NEPA), 42 U.S.C. § 4321 et seq. Section 102(2)(C) of NEPA, 83 Stat. 853, requires an impact statement 'in every recommendation or report on proposals for legislation and other major Federal actions significantly affecting the quality of the human environment. . . .' 42 U.S.C. § 4332(2)(C).³

The railroads took the position that interim application of the across-the-board surcharge would not 'significantly affect the quality of the human environment' within the meaning of NEPA. The railroads pointed out that the 2.5% surcharge would apply equally to all products; that past experience indicated little likelihood of reduced shipments of recyclable materials as a result of the across-the-board rate revision; that the increase was small relative to the normal increase approved in general freight rate revision cases; and that the increase would be short-lived.

By order dated February 1, 1972, the Commission announced that it would not suspend the 2.5% surcharge. It would, in effect, allow the surcharge to go into effect on February 5 and terminate on June 5, 1972. The order specifically stated the Commission's view that the surcharge would 'have no significant adverse effect on the movement of traffic by railway or on the quality of the human environment within the meaning of the Environmental Policy Act of 1969.' The Commission's order of February 1 further provided that the Commission would not resume the investigation begun by its December 21 order until the railroads asked to file the promised selective 4.1% rate increase. After that tariff was filed, on April 24, the Commission suspended the 4.1% selective increase for the statutory seven-month period until November 30, 1972. Since the original June 5 expiration date for the surcharge had assumed that selective increases would become effec- tive by that time, the Commission's order suspending the 4.1% selective increase eliminated the June 5 surcharge expiration date. The railroads then modified the temporary surcharge tariffs so that the 2.5% surcharge will expire on November 30, 1972, unless the 4.1% selective increase is approved prior to that time. The Commission's study of the proposed selective rate increase is still in progress and will include an environmental impact statement.

(2)

SCRAP filed suit on May 12, 1972, in the United States District Court for the District of Columbia, seeking, among other relief requested, a preliminary injunction to require the Commission to prevent the railroads from further collecting the 2.5% surcharge.⁴ Other environmental groups and the railroads were allowed to intervene as a matter of right. The primary thrust of SCRAP's suit was that the Commission's orders, permitting and then extending the 2.5% surcharge, constituted 'major Federal action significantly affecting the quality of the human environment.' The plaintiffs argued that the Commission's action was unlawful because the Commission had not issued an environmental impact statement as required by NEPA. On July 10, 1972, the District Court issued a preliminary injunction enjoining the railroads from collecting the 2.5% surcharge on shipments originating after July 15, 1972, 'insofar as that surcharge relates to goods being transported for purposes of recycling, pending further order of this court.' In its opinion, the District Court rejected the Government's contention that SCRAP and its fellow plaintiffs lacked standing under this Court's decision in Sierra Club v. Morton, 405 U.S. 727, 92 S.Ct. 1361, 31 L.Ed.2d 636 (1972). The court's opinion noted that the SCRAP plaintiffs had alleged 'that its members use the forests, streams, mountains, and other resources in the Washington (D.C.) area for camping, hiking, fishing and sightseeing, and that this use is disturbed by the adverse environmental impact caused by nonuse of recyclable goods.' 346 F.Supp. 189, 195 (1972). This allegation, said the District Court, removed this case from the ambit of Sierra Club, 'where the Sierra Club failed to allege 'that its members use Mineral King for any purpose, much less that they use it in any way that would be significantly affected by the proposed actions of the respondents." 405 U.S. at 735, 92 S.Ct. at 1366.

Having thus dealt with our decision in Sierra Club, the District Court focused on Arrow Transportation, supra, and related cases⁵ drastically curtailing the jurisdiction of the federal courts to review the suspension power of the Interstate Commerce Commission. 'The thrust of the doctrine,' reasoned the District Court, 'seems to be that judicial review is available only when the rates in question are Commission-made rather than carrier-made.' 346 F.Supp., at 196. The District Court noted that the present case was not one 'where the Commission merely stands silently by and allows carrier-made rates to take effect without suspension.' Ibid. The Commission had found the surcharge rates just and reasonable, and it had authored a detailed set of conditions on approval of the rates without suspension. The District Court concluded that '(a) suspension decision which effectively blackmails the carriers into submitting agency-authored rates is functionally indistinguishable from an agency order setting those rates . . .. (S)uch orders are, of course, judicially reviewable.' Id., at 197.

Yet the District Court found it unnecessary to decide the degree of Commission involvement in effectuating the 2.5% surcharge. The court held that 'NEPA implicitly confers authority on the federal courts to...