Dana Corp. v. I.C.C.

Decision Date01 April 1983
Docket NumberNo. 82-1022,82-1022
Citation703 F.2d 1297
PartiesDANA CORPORATION, Ford Motor Company, General Motors Corporation, Checker Motors Corporation, Budd Company, Petitioners, v. INTERSTATE COMMERCE COMMISSION and United States of America, Respondents, Consolidated Rail Corporation, et al., Intervenors.
CourtU.S. Court of Appeals — District of Columbia Circuit

Dennis J. Helfman, Detroit, Mich., and Frederic L. Wood, Washington, D.C., with whom John F. Donelan, John K. Maser, III, Washington, D.C., David Larrouy, Dearborn, Mich., and Benson T. Buck, Detroit, Mich., were on the brief, for petitioners.

Sidney L. Strickland, Jr., Attorney, I.C.C., Washington, D.C., with whom John H. Broadley, Gen. Counsel, and Henri F. Rush, Associate Gen. Counsel, I.C.C., John J. Powers, III, and Kenneth P. Kolson, Attorneys, Dept. of Justice, Washington, D.C., were on the brief, for respondents.

John A. Daily, Philadelphia, Pa., for intervenors.

Before WRIGHT, WILKEY and SCALIA, Circuit Judges.

Opinion for the Court filed by Circuit Judge SCALIA.

SCALIA, Circuit Judge:

Petitioners appeal under 28 U.S.C. Secs. 2321(a), 2342(5) (1976) the action of the Interstate Commerce Commission in holding that storage rates assessed by several railroads were not unreasonable. Their challenge raises issues regarding the Commission's compliance with its own procedures, the standard of review applicable to the Commission's determinations, and the legal sufficiency of the determinations themselves.

The shipment of gear frames, rectangular steel bases upon which automobile body, engine, transmission and drive train assemblies are mounted, requires specially equipped flat cars. Because these cars contain appurtenances which severely limit their usefulness for carrying goods other than the specific frames for which they have been designed, they are generally set aside for the exclusive use of particular shippers. During the period here at issue, such exclusive assignment was arranged pursuant to Rule 16 of the Commission's In 1977, for the first time, a number of carriers began charging "storage rates" for periods during which the specially equipped cars were not in revenue-producing ("line-haul") use. On November 3, 1978, affected shippers filed a complaint with the Interstate Commerce Commission seeking a cease and desist order against these charges and reparation for charges already paid. They alleged violation of various provisions of the Interstate Commerce Act, 2 notably Title 49 U.S.C. Sec. 10701 (Supp. IV 1980), which requires rates and practices to be reasonable; Sec. 10741, which prohibits unreasonable discrimination in rates; Sec. 10750, which requires demurrage charges to be computed in a manner that fulfills the national needs relating to the use, distribution and supply of freight cars; and Sec. 11121, which requires railroads to furnish adequate car service and to enforce reasonable rules and practices concerning the same. One of the two principal bases of the complaint was that the daily charges for the cars (which applied only when they lay idle) were excessive, in part because the railroads' line-haul rates for the relevant commodities included compensation for assignment of the cars as well. That ground was rejected at every level within the Commission; we do not understand it to be pressed on this appeal, but in any event find sufficient evidence to support the Commission's determination that the level of the daily charges, taking into account the line-haul rates, was not shown to be more than compensatory. 3 The other principal ground, as well as the procedures followed by the Commission in disposing of the complaint, is the matter before us here: Petitioners asserted that the idleness of the cars was attributable to the carriers' erratic delivery, which caused alternate unavailability and "bunching" at their facilities. They contended that charging them for the idleness produced by the carriers' own fault was both unreasonable and contrary to the practice required by the Commission in other demurrage and storage cases.

Car Service Rules, 49 C.F.R. Sec. 1033.16 (1979), which permitted the carrier to reject all or part of a car assignment request, and enabled either shipper or carrier to terminate the assignment on one day's written notice. 1

Relying on the rule of Ormet Corp. v. Illinois Central R.R., 341 I.C.C. 647 (1972), the administrative law judge held that the storage charges should be remitted in their entirety since "the shippers and receivers here have exercised due diligence ... it is in their own best interests to insure prompt return of the cars to service, and ... the major cause of the idle time is attributable to the defendants." Dana Corp. v. Atchison, Topeka & Santa Fe Ry., I.C.C. No. 37072 at 8, Jt.App. at 695 (June 26, 1979) [hereinafter cited as ALJ Decision]. The Commission's Review Board affirmed, not on the basis of Ormet, but because "the slow transit times and erratic rail service (whether caused by track conditions, bad order cars, or the low productivity of railroad employees all of which are within defendants' control) when coupled with the severely restrictive conditions of the assailed storage rule, combine to constitute an unreasonable practice." Dana Corp. v. Atchison, Topeka & Santa Fe Ry., I.C.C. No. 37072 at 5, Jt.App. at 726 (Jan. 18, 1980).

The Acting Chairman of the Commission stayed the Review Board decision, and the Commission subsequently reversed it in two separate opinions. It first held that storage charges were not unreasonable per se when the duration of the storage depended on the conduct of both parties. Dana Corp. v. Atchison, Topeka & Santa Fe Ry., I.C.C. No. 37072 at 5, Jt.App. at 796 (Sept. 3, 1980) [hereinafter cited as Dana I]. While that decision was on appeal to this court, the Commission withdrew its opinion for lack of sufficient findings, see Order (Mar. 9, 1981), Jt.App. at 799, and subsequently issued a second opinion which held that the imposition of non-remittable storage charges was not in and of itself an unreasonable practice and that the level of line-haul and storage charges together had not been shown unreasonable. Dana Corp. v. Atchison, Topeka & Santa Fe Ry., I.C.C. No. 37072, Jt.App. at 867 (Nov. 9, 1981) [hereinafter cited as Dana II]. That opinion offered two bases for its former conclusion. First, the carriers were not the cause of the delay within the meaning of Ormet, since the service problems were not the result of carrier action but of deterioration of equipment and plant inherited from Conrail's predecessors, and since the shippers did not design their manufacturing processes to allow for fluctuation in the number of cars to be loaded and were unwilling to release cars from assigned service. Second, Ormet did not apply because the storage charge was essentially different in its nature and purpose from traditional demurrage charges.

PETITIONERS' PROCEDURAL CLAIMS

Four procedures employed in the proceeding are challenged as contrary to the Commission's regulations, all relating to the stay of the Review Board's order. Two involve timing aspects: the Commission's acceptance of a petition for stay that was filed late, and its issuance of a stay after the Board's decision had become effective. The other two touch upon the delegated authority of the Acting Chairman: his authority to issue a stay pending administrative review, and to make the finding of "general transportation importance," necessary to grant Commission reconsideration, 49 U.S.C. Sec. 10327(g)(2)(A) (Supp. IV 1980).

None of these procedural challenges is valid. The Commission has not violated its own rules, given the broad discretion it is accorded in interpreting them. See Udall v. Tallman, 380 U.S. 1, 16-17, 85 S.Ct. 792, 801, 13 L.Ed.2d 616 (1965). As far as the timing rules are concerned, no specific sanction is set forth for noncompliance with the filing deadline, 49 C.F.R. Sec. 1100.98(c)(3) (1981), and while 49 C.F.R. Sec. 1100.98(c)(7)(i) (1981) specifically provides for the stay of a decision prior to its effective date, it does not specifically preclude a stay thereafter. In light of the Commission's overriding responsibility to protect the public interest, we do not think it necessary to imply either an absolute requirement for dismissal of late filed petitions or an inability to stay arguably erroneous determinations after their effective date. That is especially the case since these are provisions designed not primarily to safeguard private rights but rather to facilitate the Commission's orderly transaction of its business. The Supreme Court has said that " '[i]t is always within the discretion of a court or administrative agency to relax or modify [such] rules ... when in a given case the ends of justice require it,' " and that such action " 'is not reviewable except upon a showing of substantial prejudice to the complaining party.' " American Farm Lines v. Black Ball Freight Service, 397 U.S. 532, 539, 90 S.Ct. 1288, 1292, 25 L.Ed.2d 547 (1970), quoting NLRB v. Monsanto Chemical Co., 205 F.2d 763, 764 (8th Cir.1953). See also Papago Tribal Utility Authority v. FERC, 628 F.2d 235, 241 (D.C.Cir.1980); Note, Violations by Agencies of Their Own Regulations, 87 HARV.L.REV. 629, 629-30 & nn. 2-5 (1974) (citing cases). No substantial prejudice is apparent in this case, as petitioners effectively concede when they disclaim any desire to "relitigate the merits of the stay." Petitioners' Brief at 27.

As for the Acting Chairman's authority to issue the stay and to make the "general transportation importance" finding:

                Again the regulations can reasonably be read to permit what has occurred.  The Acting Chairman has the authority of the Chairman, 49 C.F.R. Sec. 1011.4(a)(3) (1981).  Under 49 C.F.R. Sec. 1011.5(a)(2) (1981), the Chairman has the
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