American Trucking Ass'n, Inc. v. U.S.

• Citation: 688 F.2d 1337
• Decision Date: 12 October 1982
• Docket Number: No. 80-7674,80-7674
• Parties: AMERICAN TRUCKING ASSOCIATION, INC., et al., Petitioners, v. UNITED STATES of America and Interstate Commerce Commission, Respondents.
• Court: United States Courts of Appeals. United States Court of Appeals (11th Circuit)

Page 1337

688 F.2d 1337

AMERICAN TRUCKING ASSOCIATION, INC., et al., Petitioners, v. UNITED STATES of America and Interstate Commerce Commission Respondents.

No. 80-7674.

United States Court of Appeals Eleventh Circuit.

Oct. 12, 1982.

Rea, Cross & Auchincloss, David H. Coburn, Bryce Rea, Jr., Washington, D.C., for American Trucking Ass'n et al.

Lawrence H. Richmond, Gen. Counsel, ICC, Washington, D.C., for ICC.

Barry Grossman, Kenneth P. Kolson, U.S. Dept. of Justice, Washington, D.C., for the U.S.

Thomas M. Auchincloss, Jr., Washington, D.C., for intervenors Ohio Motor Freight Tariff Committee, Inc., Household Goods Carriers' Bureau, Inc., Steel Carriers' Tariff Ass'n, Inc., Heavy & Specialized Carriers Tariff Bureau, Alaska Carriers Ass'n, Inc.

Belnap, McCarthy, Spencer, Sweeney & Harkaway, Daniel J. Sweeney, Steven J. Kalish, Washington, D.C., for intervenors Nat. Small Shipments Traffic Conference, Inc. and Drug and Toilet Preparation Traffic Conference, Inc.

Leonard A. Jaskiewicz, Edward J. Kiley, Washington, D.C., for intervenors Bulk Carriers Conference, Inc.

Born, Kohlman & Duvall, P.C., Robert E. Born, Atlanta, Ga., for intervenor Nat. Ass'n of Sp. Carriers, Inc.

J. Raymond Clark, Washington, D.C., for intervenor Motor Carriers Traffic Ass'n, Inc.

Petition for Review of an Order of the Interstate Commerce Commission.

Before GODBOLD, Chief Judge, ANDERSON, Circuit Judge, and HOFFMAN ^*, District Judge.

GODBOLD, Chief Judge:

Petitioners ¹ brought this action to challenge the validity of rules promulgated by the Interstate Commerce Commission implementing and interpreting recent statutory amendments to the provisions of the Interstate Commerce Act governing the antitrust exemption of motor carrier rate bureaus. We uphold the rules in large part but find one portion of the rules invalid for failure to comply with notice and comment procedures and another portion invalid as being in conflict with the statute.

I. Introduction

Since 1948 members of motor carrier rate bureaus have enjoyed antitrust immunity for their activities of collectively submitting motor carrier rates ² to the Interstate Commerce Commission. See Reed-Bulwinkle Act, 62 Stat. 472, codified at 49 U.S.C. § 10706. Rate bureaus traditionally perform two general functions: docketing and collective ratemaking. Broadly speaking, the docketing function involves informing bureau members and the subscribing public of proposed rates prior to submitting rates to the ICC. This provides other carrier bureau members an opportunity to engage in parallel behavior by joining in proposed rates if they wish. Also it provides advance notice to the shipping public enabling them to better object to the Commission if they find fault in a proposed rate. Collective ratemaking involves carrier members of the bureau meeting and conferring on what rates should be submitted to the ICC, creating essentially a forum for cartelization. Both activities are immunized from antitrust scrutiny by the rate bureau provisions of the Interstate Commerce Act, 49 U.S.C. § 10706(b).

Antitrust immunity is obtained by submitting a "rate bureau agreement" with the ICC for its approval, detailing the procedures of a bureau's operations and the rights of its members. Under the old provisions of the Act the ICC exercised sole discretion over the approval of rate bureau agreements. In § 14 of the Motor Carrier Act of 1980, however, Congress enacted a detailed set of statutory restrictions with which motor carrier rate bureaus must comply in order to obtain approval of their agreements from the ICC. 94 Stat. 793, 803, codified at 49 U.S.C. § 10706(b).

In August 1980 the Commission announced without prior notice an interim decision implementing and interpreting these new statutory provisions and inviting comments on the proposed rules. Motor Carrier Rate Bureaus-Implementation of P.L. 96-296, 45 Fed. Reg. 55734 (August 21, 1980). On December 30, 1980, the Commission announced its final decision, 46 Fed. Reg. 30092 (June 5, 1981). This proceeding is a petition to review the final decision. ³ The rules announced in the final decision have not been codified in the Code of Federal Regulations but instead are in the form of a narrative description of the conditions and restrictions that must be contained in rate bureau agreements in order to obtain ICC approval. All rate bureaus are required to resubmit their agreements, modified to conform with the statutory provisions as interpreted in this decision.

II. Standard of Review

In order to establish the proper standard of review in this case it is necessary to determine whether the Commission's rules are legislative or nonlegislative. ⁴ Legislative rules are those that are promulgated pursuant to a Congressional delegation of power to issue rules and regulations that have the force of law. Valid legislative rules are binding on the courts because they are the source of law that the court and agency must enforce. Legislative rules are valid unless "arbitrary, capricious, an abuse of discretion or otherwise not in accordance with law." 5 U.S.C. § 706(2)(A). Not all rules are of a legislative character, however. See the broad definition of "rule" in 5 U.S.C. § 551(4). Nonlegislative rules are those not promulgated pursuant to a power to issue regulations with binding effect; they are merely an expression of how the agency interprets and intends to enforce its governing statute, how it intends to exercise a discretionary function, or the procedure an agency intends to use in exercising its powers. ⁵ Nonlegislative rules do not have the same binding effect on the courts because they do not form the law which the courts enforce; the statute remains the source of the law. In the case of interpretative nonlegislative rules, ⁶ that is, rules that give the agency's opinion as to what the governing statute means, the rules are advisory only and the court is free to substitute its own judgment for that of the agency. 5 U.S.C. § 706 ("the reviewing court shall decide all relevant questions of law (and) interpret statutory provisions"). Courts frequently, however, give great deference to an agency's nonbinding interpretative rules, upholding the rules if they are reasonable and consistent with past decisions. See Davis Treatise, supra, at §§ 7:13, 7:14. Thus, in practice it is often difficult, and frequently unnecessary, to determine which standard of review a court is applying. ⁷

Here, however, it is necessary to determine whether certain of the Commission's rules are legislative or nonlegislative ⁸ because the standard of review normally applied to legislative rules is potentially altered in this instance by a recently added provision of the statute, which we now explain.

Congress in the Motor Carrier Act of 1980 intended to restrict significantly the discretion of the ICC to issue regulations enlarging on the motor carrier provisions of the Interstate Commerce Act. In its prefatory statement of findings and purpose Congress explained:

the (ICC) should be given explicit direction for regulation of the motor carrier industry and well-defined parameters within which it may act pursuant to congressional policy; ... the (ICC) should not attempt to go beyond the powers vested in it by the Interstate Commerce Act and other legislation enacted by Congress.

Motor Carrier Act of 1980 § 3, 94 Stat. 793, reprinted at 49 U.S.C. § 10101 note. Congress carried out this purpose in different fashions in the various portions of the Act. For instance, concerning the issuance to motor carriers of certificates of authority to provide transportation service, Congress expressly withdrew a degree of rulemaking authority. See 49 U.S.C. § 10922(b) (3) ("The Commission may not make a finding relating to public convenience and necessity ... based upon general findings developed in rulemaking proceedings."). Concerning approval of rate bureau agreements, however, Congress did not withdraw rulemaking authority but tempered that authority by creating a presumption that any additional rules are unnecessary. Under the prior provisions there were virtually no statutory conditions to the approval of a rate bureau agreement. Instead the ICC was given broad discretion to approve agreements "when it finds that the ... agreement will further the (national) transportation policy," see 49 U.S.C. § 10706(c) (now applicable only to non-rail and non-motor carriers), and was given broad power to require compliance with conditions it considered necessary to further that policy. Under the new provisions, Congress has established a detailed set of conditions for approval and has instructed that a rate bureau agreement "shall be approved by the Commission upon a finding that the agreement fulfills each requirement of (the statute), unless the Commission finds that such agreement is inconsistent with the (national) transportation policy." 49 U.S.C. § 10706(b)(2) (emphasis added). Congress explained in the legislative history the meaning of this change in emphasis:

Under the (old) statutes, the (ICC) has substantial discretion in approving or disapproving rate bureau agreements.... (The new statute) is a clear example of Congress defining the limits which it believes the Commission should follow (and) reducing the discretion of the Commission to expand those limits. When the parties to an agreement meet all the conditions in the (statute), there is a presumption that the Commission should find the agreement to be in the public interest.

H.R. Rep. No. 1069, 96th Cong., 1st Sess. 27, 29, reprinted in 1980 U.S. Code Cong. & Admin. News 2283, 2309, 2311.

Contrary to petitioners' contentions, then, the Motor Carrier Act of 1980 has not virtually eliminated the ICC's legislative rulemaking authority over rate bureau agreements. The ICC retains the power to impose new conditions to further the national transportation policy. As the Commission concedes, though, "(i)t is apparent that...