45 191 Aberdeen and Rockfish Railroad Company v. Students Challenging Regulatory Agency Procedures United States v. Students Challenging Regulatory Agency Procedures 8212 1966, 73 8212 1971

Decision Date24 June 1975
Docket NumberNos. 73,s. 73
Citation95 S.Ct. 2336,422 U.S. 289
Parties. 45 L.Ed.2d 191 ABERDEEN AND ROCKFISH RAILROAD COMPANY et al., Appellants, v. STUDENTS CHALLENGING REGULATORY AGENCY PROCEDURES (S.C.R.A.P.) et al. UNITED STATES et al., Appellants, v. STUDENTS CHALLENGING REGULATORY AGENCY PROCEDURES (S.C.R.A.P.) et al. —1966, 73—1971
CourtU.S. Supreme Court
Syllabus

In December 1971, the Nation's railroads, citing sharply increasing costs and decreasing or negative profits, collectively proposed to file tariffs increasing their freight rates by a temporary surcharge across the board. The Interstate Commerce Commission (ICC), in the ensuing general revenue proceeding, finding that the railroads had a critical and immediate need for revenue, declined to exercise its power to suspend proposed rate increases, and the surcharge became effective in February 1972. The railroads shortly filed for larger, selective rate increases, but in April 1972 the ICC suspended the effectiveness of these increases pending its investigation of their lawfulness, the ICC the previous month having served a brief draft environmental impact statement on all parties to the investigation, discussing the environmental consequences of rate increases with respect to recyclables in general terms and concluding that there was no basis yet to believe that the environment would be substantially affected thereby. Thereafter, appellee SCRAP and other environmental groups filed suit alleging that the ICC had decided not to suspend the surcharge pending its investigation—which decision would have a substantial effect on the environment without preparing an environmental impact statement or considering environmental issues as required by the National Environmental Policy Act (NEPA); that the pre-existing rate structure discriminated against recyclables and in favor of virgin materials; and that the surcharge exacerbated this situation with the unfortunate consequence to the environment that use of recyclable materials would be inhibited and use of virgin materials encouraged. A three-judge District Court was convened under 28 U.S.C. § 2325 (now repealed), which required that an injunction restraining the enforcement, operation, or execution of an ICC order would not be granted unless the application therefor was heard and determined by a three-judge court, and relief was granted. On direct appeal, this Court reversed in United States v. SCRAP, 412 U.S. 669, 93 S.Ct. 2405, 37 L.Ed.2d 254 (SCRAP I), holding that § 15(7) of the Interstate Commerce Act lodges in the ICC exclusive power to suspend rate increases pending final determination of their lawfulness. Meanwhile, in October 1972, after an oral hearing, the ICC issued a final report declining to declare the selective rate increases unlawful, terminating the previously entered suspension order, canceling the surcharge that had been subsumed in the selective increases, and ordering a ceiling on rate increases with respect to some but not all recyclables. The report stated that having given extensive consideration to environmental factors, the ICC would not file a separate, formal impact statement under the NEPA, and pointed out that the ICC had begun a separate investigation into the entire rate structure focusing on whether it interfered with the Government's environmental program. However, in November 1972, the ICC reopened its investigation into the lawfulness of selective rate increases to reconsider the environmental effects of the new rates on recyclables, such rates being suspended for an additional period with the railroads' consent. In March 1973 the ICC served an expanded draft impact statement, and in May 1973 issued a final impact statement, concluding that its order of October 1972 had been correct, and finally terminating its investigation without declaring any of the proposed rates unlawful except as previously provided in the October 1972 order. In May 1973, shortly before the increased rates on recyclables were to become effective, appellees SCRAP and Environmental Defense Fund (EDF) filed a motion for a preliminary injunction to restrain the implementation of increased rates on recyclables, and the three-judge court granted the motion. The railroads and the ICC appealed, and in June 1973, The Chief Justice stayed the order on the railroads' motion, and the full Court declined to vacate the stay, 413 U.S. 917, with the result that the increased rates on recyclables went into, and remain in, effect. In November 1973 this Court vacated the preliminary injunction and remanded the cases for reconsideration, 414 U.S. 1035, 94 S.Ct. 532, 38 L.Ed.2d 326. Meanwhile, appellees had filed motions for summary judgment in the three-judge court. Finding that the ICC had failed to comply with the NEPA, in that, inter alia, it failed to hold an oral hearing before adopting the final impact statement, having previously held such a hearing (presumptively an 'existing agency review process') before issuing its October 1972 order, and should have started over again after it decided to issue a final impact statement, that court set aside the ICC order terminating the general revenue proceeding without declaring the rate increases unlawful and ordered the ICC to reopen the proceeding, prepare a new impact statement under the NEPA, hold hearings, and reconsider, in light of the new statement, its determination to declare the rate increases on recyclables lawful. The railroads appealed, claming that the District Court had no jurisdiction over the case, and that the ICC had, in any event, fully complied with the NEPA, and the ICC and the United States appealed, claiming only that the ICC had so complied with the NEPA. Held:

1. This Court has jurisdiction over the appeals under 28 U.S.C. § 1253, which gives this Court jurisdiction to determine appeals from 'an order granting or denying . . . an . . . injunction in any civil action . . . required . . . to be heard and determined' by a three-judge district court, since the District Court's order, which not only declared that the ICC had failed to comply with the NEPA but also directed the ICC to perform certain acts, was an 'injunction' within the meaning of § 1253, and since, moreover, such order restrained 'the enforcement, operation or execution' of the ICC order within the meaning of 28 U.S.C. § 2325, and hence could have been issued only by a three-judge court. Pp. 306-309.

2. The District Court had jurisdiction to review the ICC's decision not to declare the increased rates unlawful, notwithstanding such decision was made in a general revenue proceeding. Pp. 310-319.

(a) There is no merit to the railroads' argument that the ICC's decision is just as much an interim decision as a decision not to suspend a particular rate pending investigation, and hence is unreviewable under SCRAP I, supra. Since the District Court did not enjoin collection of the rates so as to come within the rule barring courts from entering disruptive injunctions against collection of rates not finally declared unlawful by the ICC, the rule of SCRAP I is not applicable even if what the railroads say is true. P. 317.

(b) Nor is there any merit to the nailroads' argument (1) that, treating the District Court's decision as a review of whether the record supported the ICC's decision not to suspend the rates as to recyclables, the District Court reviewed an issue not yet decided finally by the ICC in violation of the principles of finality and exhaustion of remedies, and (2) that the District Court's conclusion that the rule against review of general revenue proceedings does not apply to NEPA cases is contrary to the decision in SCRAP I that the NEPA does not change pre-existing jurisdictional rules. Here the issue as to whether the ICC had adequately considered under the NEPA environmental factors in the general revenue proceeding, had already been finally decided by the ICC and the relief sought from and granted by the District Court could not have been obtained from the ICC in a subsequent proceeding under § 13 of the Interstate Commerce Act. While the interim nature of a general revenue proceeding may be relevant to the extent of the consideration of environmental factors required, its nature does not prevent review of the question, finally decided by the ICC, whether the environmental impact statement prepared for that proceeding is adequate. When agency consideration of environmental factors in connection with major 'federal action' is complete, notions of finality and exhaustion do not bar judicial review of the adequacy of such consideration, even though other aspects of the rate increase are not ripe for review. Pp. 317-319.

3. The District Court erred in deciding that the oral hearing that the ICC held prior to its October 1972 order was an 'existing agency review process' during which a final environmental impact statement should have been available. The NEPA provides that a formal impact statement 'shall accompany the proposal through the existing agency review processes,' and hence does not affect the time when the 'statement' must be prepared, but simply provides what must be done with the 'statement' once it is prepared. Under this provision the time at which the agency must prepare the final 'statement' is the time at which it makes a recommendation or report on a proposal for federal action. Here, until the October 1972 report, the ICC had made no proposal, and hence the earliest time at which the statute required a statement was the time of the October 1972 report—some time after the oral hearing. Pp. 319-321.

4. The District Court also erred in deciding that the ICC should have 'started over again' after it decided to propose a formal impact statement, even assuming that the ICC erred in failing to prepare a separate impact statement to accompany its October 1972 report or that the consideration given to environmental factors in that report was inadequate. To the...

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