U.S. Lines, Inc. v. Federal Maritime Com'n

Decision Date25 August 1978
Docket Number77-1470,Nos. 76-2004,s. 76-2004
Citation189 U.S. App. D.C. 361,584 F.2d 519
Parties, 1978-2 Trade Cases 62,158 UNITED STATES LINES, INC., Petitioner, v. FEDERAL MARITIME COMMISSION and United States of America, Respondents, Hapag-Lloyd A. G. et al., Intervenors.
CourtU.S. Court of Appeals — District of Columbia Circuit

Russell T. Weil, Washington, D. C., with whom Mary L. Montgomery, Washington, D. C., was on the brief, for petitioner.

Carol J. Neustadt, Atty., Federal Maritime Commission, Washington, D. C., with whom Edward G. Gruis, Deputy Gen. Counsel, Federal Maritime Commission, Washington, D. C., was on the brief, for respondent Federal Maritime Commission.

Robert J. Wiggers, Atty., Dept. of Justice, Washington, D. C., with whom Robert B. Nicholson, Atty., Dept. of Justice, Washington, D. C., was on the brief, for respondent United States. Barry Grossman, Atty., Dept. of Justice, Washington, D. C., also entered an appearance for respondent United States.

Edward Schmeltzer, Washington, D. C., with whom George J. Weiner, Washington, D. C., was on the brief, for intervenors Hapag-Lloyd A. G. et al.

Before WRIGHT, Chief Judge, and McGOWAN and ROBINSON, Circuit Judges.

Opinion for the court filed by Chief Judge J. SKELLY WRIGHT.

J. SKELLY WRIGHT, Chief Judge:

United States Lines, Inc. (USL), a common carrier, petitioned this court for review of an order of the Federal Maritime Commission (FMC) approving an amendment to a joint service agreement between two of USL's competitors. The amendment's primary effect was to permit addition of a third party to the joint service for the duration of the agreement. When the basic agreement expired five months later the Commission extended it, as amended, pending completion of an investigation and hearing as to whether the joint service authority, including new proposed amendments, should be extended for an additional five-year term. USL petitioned for review of this order as well, and the two cases were consolidated for hearing and decision.

These orders were issued by the Commission under its limited authority to grant exemption from the antitrust laws for anticompetitive agreements among ocean carriers when it is in the public interest to do so, pursuant to Section 15 of the Shipping Act of 1916, 46 U.S.C. § 814 (1970). 1 It is our view that in its order approving the initial amendment to the agreement the Commission did not adequately consider the antitrust implications of adding a third party, and that a remand of the record to the Commission for further consideration is therefore required. Part II A. In addition, we hold that the Commission improperly relied on unspecified materials known only to it and on Ex parte contacts nowhere mentioned or recorded in the public record in reaching this decision. Part II B & C. Finally, because of our view that further Commission consideration of the initial amendment is required before we can uphold the Commission's approval, we must also remand the record on which the Commission's second decision is based, for there the FMC, without further justification for the initial amendment, extended the agreement as amended Pendente lite.

I. BACKGROUND

The FMC order at issue here concerns an amendment to the Euro-Pacific Joint Service Agreement. When originally established in 1971 this joint service included two parties, Hapag-Lloyd, Aktiengesellschaft A.G. (Hapag-Lloyd), and Compagnie Generale Transatlantique (CGT). Soon afterward the agreement was amended to include a third line, Holland-America Line (HAL), but HAL chose to withdraw from the joint service in 1973. The agreement allowed the parties to operate a joint all-water service using conventional breakbulk vessels between the United States and the Canadian Pacific Coast and Europe. As part of this joint service the parties were permitted to agree on and fix rates, share profits and losses, rationalize services, and employ common agents, all exempted from the antitrust laws by virtue of the Commission's authority under Section 15 of the Shipping Act.

In April 1976 Euro-Pacific applied to the FMC for approval of an amendment to its joint service agreement, the proposal being designated as Agreement No. 9902-3. 2 This amendment would permit entry of a third party, Intercontinental Transport (ICT) (successor to Holland-America Line), to the existing service, would reapportion the parties' share of expenses, profits, and losses, and would permit replacement of the breakbulk fleet with eight containerships having a capacity averaging approximately 1,000 TEU's 3 each. Notice of the filing of Agreement 9902-3 with the FMC was published in the Federal Register 4 and an opportunity was afforded interested parties to submit comments and requests for hearing. Petitioner USL submitted comments and requested a hearing on the agreement, emphasizing the antitrust issues raised by the amendment and noting certain specific items of the agreement which were unclear. Euro-Pacific replied to these comments, and USL filed a response and again requested a hearing. No affidavits of fact were submitted by either party.

The FMC considered Agreement 9902-3 at its regular meeting on August 26, 1976. At that time the Commission voted to (1) approve the portion of 9902-3 which allowed for replacement of the current fleet, on condition that such replacement fleet be limited to six containerships with an average capacity of 650 TEU's each; and (2) set down for investigation and hearing the questions whether ICT should be allowed to join the Euro-Pacific service, and whether the Euro-Pacific fleet should be allowed to expand to eight 1,000-TEU containerships. The Commission directed that an appropriate order effectuating this action be issued and served upon the parties. 5

The order, however, was not issued. During the period between August 26 and September 28 a number of communications relating to the merits of Agreement 9902-3 were received by the FMC staff. These included unclassified notices from the governments of France and Germany strongly supporting ICT's participation in the joint service and urging the Commission to approve ICT's admission. 6 In addition, there was further communication from the Euro-Pacific parties asserting their financial need for ICT's membership in their service and urging that this was merely a reentry by ICT into the agreement, not a new service or a new participant. 7 At its meeting of September 29, acting on a memorandum from its managing director, the Commission reconsidered its determination of August 26 regarding Agreement 9902-3. At the September 29 meeting the Commission voted to modify its prior decision so as to allow immediate inclusion of ICT as a third party to Euro-Pacific. 8 An order to this effect was issued, dated September 29, and the new Agreement 9902-3 as modified became effective October 15. 9 It would remain in effect until the March 21, 1977 expiration of the underlying agreement. Since Euro-Pacific accepted the lower capacity fleet limitation, the Commission decided no hearings were necessary.

Although USL was a party-protestant to these proceedings, it was not served with nor was it informed of the communications to the FMC staff from the French and German governments or of the additional information and argument provided by the Euro-Pacific parties during the interval between the two Commission meetings. In addition, the Commission's order approving the amendment was not served on USL. 10 USL learned of the Commission's action only during the course of inquiry as to the status of its protests.

USL then petitioned this court for review and summary reversal of the Commission's order approving Agreement 9902-3, docketed here as No. 76-2004. The Commission requested remand of its order so that it might more fully articulate its reasons for approval. By order of February 7, 1977 this court granted the Commission's motion for remand, retaining jurisdiction of USL's petition for review, and dismissed USL's motion for summary reversal.

Upon remand, without further submissions by the parties, the Commission issued a supplemental opinion outlining the balancing process it applied in reaching the decision to approve the amendment to the Euro-Pacific agreement allowing inclusion of ICT. 11 It compared the harm to be suffered by USL with the benefits to be gained by Euro-Pacific should no trial-type hearing be held. Relying upon the original submissions of the parties, their identities, and "the reliable data reposing in the files of the Commission," the FMC concluded that no further hearing was required and that immediate approval of Agreement 9902-3 was appropriate. 12

By the time the Commission issued its second opinion, the underlying agreement authorizing the Euro-Pacific joint service was due to expire. In a separate opinion the Commission on March 21, 1977 ordered an investigation and hearing on the question whether the agreement should be extended for five additional years and whether the additions to the fleet, proposed by Euro-Pacific, should be permitted. 13 At the same time, the Commission approved an amendment, 9902-5, extending the joint service agreement, as previously amended, pending completion of the investigation and hearing. 14 This extension allowed ICT, which had been admitted to the joint service effective October 15, 1977 by the Commission's earlier order, to remain in that service at least until the final decision of the Commission on the extension of the agreement.

II. THE STANDARD OF REVIEW

The Administrative Procedure Act (APA) 15 embodies a broad determination by Congress to subject the decisions of government agencies to review by the courts. Under the APA the action of "each authority of the Government of the United States," which includes the Federal Maritime Commission, is subject to judicial review except where review is statutorily prohibited or...

To continue reading

Request your trial
108 cases
  • State v. Ross, Case No. 18-cv-01865-RS
    • United States
    • United States District Courts. 9th Circuit. United States District Courts. 9th Circuit. Northern District of California
    • 6 Marzo 2019
    ...... that it will suffer a loss of federal funding and face a substantial risk of losing ... by a favorable judicial decision." Spokeo, Inc. v. Robins , ––– U.S. ––––, 136 ... Secretary Ross "talked about the fact that the US census does not currently ask respondents about ... has empowered it." Burlington Truck Lines, Inc. v. United States , 371 U.S. 156, 168, 83 ...Lines, Inc. v. Federal Maritime Comm'n , 584 F.2d 519, 534-535 (D.C. Cir. 1978) ......
  • Lloyd v. Illinois Regional Transp. Authority, 75 C 1834.
    • United States
    • United States District Courts. 7th Circuit. United States District Court (Northern District of Illinois)
    • 30 Septiembre 1982
    ......Barnhart, Administrator of Federal Highway Administration U.S. Dept. of Transp. . ...Organ., Inc. v. Camp, 397 U.S. 150, 90 S.Ct. 827, 25 L.Ed.2d ... See U. S. Lines v. Federal Maritime Commission, 584 F.2d 519, ......
  • Bedford County Memorial Hosp. v. Heckler, Civ. A. No. 83-0386-R.
    • United States
    • United States District Courts. 4th Circuit. United States District Court (Western District of Virginia)
    • 28 Marzo 1984
    ......They then instituted this suit in federal district court pursuant to 42 U.S.C. § 1395 oo ...§ 405(g). VNA of Greater Tift County, Inc., v. Heckler, 711 F.2d 1020, 1025, n. 7 (1983). ... Id., see also United States Lines, Inc., v. Federal Maritime Commission, 584 F.2d ... number of defendants "they could not provide us with specific information about their ......
  • Farmers Union Cent. Exchange, Inc. v. F.E.R.C., MID-AMERICA
    • United States
    • United States Courts of Appeals. United States Court of Appeals (District of Columbia)
    • 26 Junio 1984
    ......v. . FEDERAL ENERGY REGULATORY COMMISSION, and United States .... ASSOCIATION OF OIL PIPE LINES and Williams Pipe Line . Company, Petitioners, . ... The supplement, Williams tells us, is in the nature of a check on gross abuse. . ......
  • Request a trial to view additional results
4 books & journal articles
  • Beyond Chevron's Domain: Agency Interpretations of Statutory Procedural Provisions
    • United States
    • Seattle University School of Law Seattle University Law Review No. 30-03, March 2007
    • Invalid date
    ...U.S. 224, 234-38 (1973); United States v. Allegheny-Ludlum Steel Corp., 406 U.S. 742, 756-58 (1972); U.S. Lines, Inc. v. Fed. Mar. Comm'n, 584 F.2d 519, 536 (D.C. Cir. 1978); Nofelco Realty Corp. v. United States, 521 F. Supp. 458, 461-62 (S.D.N.Y. 75. City of West Chicago, 701 F.2d at 638 ......
  • THE REDISCOVERED STAGES OF AGENCY ADJUDICATION.
    • United States
    • Washington University Law Review Vol. 99 No. 2, October 2021
    • 1 Octubre 2021
    ...170, at 437. (304.) See United States v. Fla. E. Coast Ry., 410 U.S. 224 (1973). (305.) But see U.S. Lines, Inc. v. Fed. Maritime Comm'n, 584 F.2d 519,536 (D.C. Cir. 1978) (citing Fla. E. Coast Ry., 410 U.S. at 324 38; United States v. Allegheny-Ludlum Steel Corp., 406 U.S. 742, 756-58 (197......
  • CHAPTER 8 NOTICE, COMMENT AND DISCOVERY IN RULEMAKING: A COMPARISON BETWEEN THE ADMINISTRATIVE PROCEDURE ACT AND AN EXEMPTED AGENCY—THE SYNTHETIC FUELS CORPORATION
    • United States
    • FNREL - Special Institute Natural Resources Administrative Law and Procedure (FNREL)
    • Invalid date
    ...[59] Id. § 557(d)(1). [60] United Steelworkers of America v. Marshall, 647 F.2d 1189 (D.C. Cir. 1980); United States Lines, Inc. v. FTC, 584 F.2d 519 (D.C. Cir. 1978); Action for Children's Television v. FCC, 564 F.2d 458 (D.C. Cir. 1977); Home Box Office, Inc. v. FTC, 567 F.2d 9 (D.C. Cir.......
  • CHAPTER 7 CONTROL OF INFORMAL AGENCY RULEMAKING BY CONGRESS AND THE PRESIDENT
    • United States
    • FNREL - Special Institute Natural Resources Administrative Law and Procedure (FNREL)
    • Invalid date
    ...denied, 434 U.S. 829 (1977). See also United Steelworkers v. Marshall, 647 F.2d 1189 (D.C. Cir. 1980); United States Lines, Inc. v. FMC, 584 F.2d 519 (D.C. Cir. 1978); and Action for Children's Television v. FCC, 564 F.2d 458 (D.C. Cir. 1977). [44] 657 F.2d 298 (1981). [45] Id. at 400-02. [......

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT