Atchison, T. & S. F. Ry. Co. v. I.C.C.
| Decision Date | 02 May 1978 |
| Docket Number | Nos. 76-2048,76-2070,s. 76-2048 |
| Citation | 580 F.2d 623,188 U.S.App.D.C. 360 |
| Parties | * ATCHISON, TOPEKA & SANTA FE RAILWAY COMPANY, et al., Petitioners, v. INTERSTATE COMMERCE COMMISSION and United States of America, Respondents, Commonwealth of Pennsylvania, Alabama Power Co., etc. (the Southern Co.), the National Cotton Council, Commonwealth Edison Co. et al., Consumers Power Co., National Steel Corp., Board of Trade of the City of Chicago et al., National Industrial Traffic League, American Electric Power Service Corp., Copper Development Assn., Inc., Central Louisiana Electric Co. et al., Farm and Industrial Equipment Institute, Aluminum Assn., Inc., Intervenors. COMMONWEALTH EDISON COMPANY et al., Petitioners, v. INTERSTATE COMMERCE COMMISSION and the United States of America, Respondents, Commonwealth of Pennsylvania, National Cotton Council, American Electric Power Service Corp., Railroads, Atchison, Topeka, et al., Farm and Industrial Equipment Institute, the National Industrial Traffic League, Intervenors. |
| Court | U.S. Court of Appeals — District of Columbia Circuit |
Michael Boudin, Washington, D. C., with whom Harry J. Breithaupt, Jr., Washington, D. C., was on the brief, for petitioners in No. 76-2048 and intervenors Railroads, Atchison, Topeka, et al. in No. 76-2070.
Charles J. McCarthy, Washington, D. C., for petitioners in No. 76-2070 and intervenors, National Cotton Council, et al. in Nos. 76-2048 and 76-2070.
David I. Wilson, Washington, D. C., with whom Owen M. Johnson, Jr., Washington, D. C., was on the brief, for amicus curiae, Federal Trade Commission urging reversal of order of Ex Parte No. 320 and remanding record in No. 76-2048.
Robert Thompson, Atty., Dept. of Justice, Washington, D. C., with whom Barry Grossman, Lloyd John Osborn, Joseph J. Saunders and Mark M. Levin, Attys., Dept. of Justice, Washington, D. C., were on the brief, for respondent United States of America in Nos. 76-2048 and 76-2070.
Henri F. Rush, Atty., I.C.C., Washington, D. C., with whom Mark L. Evans, Gen. Counsel and Charles H. White, Jr., Associate Gen. Counsel, Washington, D. C., were on the brief, for respondent, Interstate Commerce Commission in Nos. 76-2048 and 76-2070.
Gordon P. MacDougall, Washington, D. C., was on the brief for intervenor, Commonwealth of Pennsylvania in Nos. 76-2048 and 76-2070.
John F. Donelan, Frederic L. Wood, John K. Maser, III and Renee D. Rysdahl, Washington, D. C., were on the brief, for intervenor, The National Industrial Traffic League in Nos. 76-2048 and 76-2070.
J. Raymond, Clark, Washington, D. C., with whom W. Randall Tye, Augusta, Ga., John P. Tucker, Jr., Atlanta, Ga., Charles J. McCarthy and John Guandalo, Washington, D. C., were on the brief, for intervenor, Alabama Power Co., et al. in No. 76-2048.
Harold E. Spencer, Chicago, Ill., and John M. Cutler, Jr., Washington, D. C., were on the brief, for intervenors, Board of Trade of the City of Chicago, et al. in No. 76-2048.
Dickson R. Loos and Barry Roberts, Washington, D. C., were on the brief, for intervenors, Aluminum Association, Inc. in No. 76-2048.
Daniel J. Sweeney, Chicago, Ill., entered an appearance for intervenor, Farm and Industrial Equipment Institute in No. 76-2048.
Edmund E. Harvey, Washington, D. C., entered an appearance for intervenor, Copper Charles W. Chapman, Washington, D. C., entered an appearance for intervenor, National Steel Corp. in No. 76-2048.
Development Assn., Inc., in No. 76-2048.
Before LEVENTHAL, MacKINNON and ROBB, Circuit Judges.
Opinion for the Court filed by LEVENTHAL, Circuit Judge.
This case involves the efforts of the Interstate Commerce Commission to implement the Railroad Revitalization and Regulatory Reform Act of 1976, 90 Stat. 31. That statute is hereafter referred to as the Reform Act, or the Act. The provisions critical in this case are in § 202, part of which is set forth in Appendix A. They deprive the ICC of jurisdiction to regulate railroad rates except where a railroad possesses "market dominance," 1 and require the Commission to establish standards and procedures for determining whether a railroad possesses market dominance over a service that it renders or proposes to render at a particular rate. 2
The Act was passed February 5, 1976. On October 1, 1976 the Commission issued an order promulgating procedures for making findings of market dominance. At the core of these procedures are four rebuttable presumptions, which are triggered by a variety of fact situations. Three of these are presumptions of market dominance; the fourth is a presumption of lack of effective competition from certain carriers.
In No. 76-2048, petitioner railroads argue that the presumptions of market dominance are invalid because they nullify Congress's attempts at reform. In No. 76-2070, petitioner electric companies urge that the presumption of lack of effective competition from certain carriers is inadequate, and should be replaced by a presumption of market dominance.
Prior to the 1976 enactment of the Reform Act, all rail rates for interstate service were subject to regulation by the Commission under the "just and reasonable" standard. 3 In enacting the Reform Act, Congress instituted a major change in the regulatory framework governing rail rates, by mandating the deregulation of rates that are not a product of market dominance.
The legislation was prompted by congressional awareness of the financial difficulties encountered, in recent years, by many railroads throughout the nation. 4 Through the Act, and particularly by means of its deregulatory features, Congress sought to restore the financial stability of our railway system and promote its revitalization. 5 While the Act embodies a policy of permitting railroads greater freedom to raise or lower rates in competitive markets, and of increasing the attractiveness of investing in railroads, it also enunciates Congress's concern that the needs of the railroads for The statutory scheme reflects such a balanced approach by establishing a two-stage process for the exercise of regulatory authority by the Commission. Before the Commission may find that a rate challenged as excessive is unjust or unreasonable (or that it has not been shown to be just and reasonable), it must first find that the proponent carrier has market dominance over the service to which the rate applies. Having found market dominance, the Commission applies its "just and reasonable" standard to the challenged rate, as it did before the Reform Act. Where market dominance is not found, the Commission is deprived of jurisdiction to scrutinize the rate. 7
economic revitalization be balanced against the interests of shippers and the public. 6
Section 202(a) defines "market dominance" as "an absence of effective competition from other carriers or modes of transportation, for the traffic or movement to which a rate applies. . . ." As noted, § 202(b) directs the ICC to establish standards and procedures for determining whether a railroad possesses market dominance for the particular service to which the rate applies. These standards and procedures must be "designed to provide for a practical determination without administrative delay."
Pursuant to this directive, the Commission issued a notice of proposed rulemaking on March 10, 1976. In addition to setting forth proposed rules regarding the production of evidence in the various types of proceedings in which a proposed rate may be challenged as excessive, the notice set out a series of seven fact situations that would trigger a rebuttable presumption of market dominance, 8 together with a brief explanation of the basis for each. Comments were submitted by a number of interested persons, including railroads, utilities, the Justice Department, the Federal Trade Commission, and the Department of Transportation. J.A. 9-723. On August 20, 1976, after consideration of these comments On October 1, 1976, the Commission issued the final order that is now before us, in which it promulgated, with some adjustments, 10 the four presumptions that it had proposed in its interim report. 11 Under the final order, the following fact situations will give rise to a rebuttable presumption that the carrier whose rate is in issue has market dominance over the involved traffic or movement:
the Commission issued an interim report, in which it reduced to four the number of fact patterns that would trigger presumptions facilitating market dominance determinations. 9 Additional comments were submitted and considered by the Commission
(1) Where the proponent carrier has handled 70 percent or more of the involved traffic or movement during the preceding year; the market share of the proponent will be deemed to include the share of any affiliates, and of any carrier participating in the rate or with whom the proponent carrier has discussed, considered, or approved the rate in issue;
(2) Where the rate in issue exceeds the variable cost of providing the service by 60 percent or more; and,
(3) Where affected shippers or consignees have made a substantial investment in rail-related equipment or facilities which prevents or makes impractical the use of another carrier or mode.
Final order of Oct. 1, 1976, Appendix A at 3-4, J.A. 1206-07. In addition, where a rate in issue has been
(4) discussed, considered or approved under a rate bureau agreement filed with the Commission pursuant to section 5a or 5b of the Interstate Commerce Act, a rebuttable presumption will arise that a carrier participating in the rate or in such discussion or consideration does not provide effective competition to the proponent rail carrier for the involved traffic or movement.
Id. at 3, J.A. 1206.
In determining whether the presumptions established by the ICC are valid, we apply, as our standard of review, whether a rational...
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