719 F.2d 772 (5th Cir. 1983), 81-4415, Western Coal Traffic League v. United States
|Docket Nº:||81-4415, 81-4423 and 82-4021.|
|Citation:||719 F.2d 772|
|Party Name:||WESTERN COAL TRAFFIC LEAGUE and its Members, et al., Petitioners, v. UNITED STATES of America and Interstate Commerce Commission, Respondents. Nos. 81-4257, 81-4259, 81-4277, 81-4299, 81-4334, 81-4347, 81-4354, 81-4357, 81-4365 to 81-4369, 81-4373,|
|Case Date:||November 14, 1983|
|Court:||United States Courts of Appeals, Court of Appeals for the Fifth Circuit|
Richard A. Allen, Gen. Counsel, Timm L. Abendroth, Henri F. Rush, ICC, William F. Smith, Atty. Gen., U.S. Dept. of Justice, John J. Powers, III, James H. Laskey, Antitrust Div., Washington, D.C., for respondents in all cases.
J. David Forsyth, Cicero C. Sessions, New Orleans, La., William L. Slover and Donald J. Avery, Washington, D.C., for Western Coal Traffic League and Its Members, et al.
C. Michael Loftus, Washington, D.C., for Western Coal Traffic League and Its Members, et al., Consumer Owned Power Coalition, Eastern Coal Transp. Conference,
Western Coal Traffic League and Its Members.
J. Raymond Clark, Mary Todd Foldes, Washington, D.C., for Arkansas-Missouri Power Co., et al.
Edward B. Poitevent, II, Jones, Walker, Waechter, Poitevent, Carrere & Denegre, New Orleans, La., for Arkansas-Missouri Power Co., et al. and Middle South Utilities.
John M. Cleary, Nicholas J. DiMichael, Washington, D.C., for Gulf States Utilities Co., et al.
Dickson R. Loos, Barry Roberts, Washington, D.C., for The Aluminum Ass'n, Inc.
John Guandolo, Washington, D.C., for Consumers Power Co.
Charles J. McCarthy, Washington, D.C., for Commonwealth Edison Co., et al.
Leonard M. Trosten, Harry H. Voight, Michael F. McBride, Daniel J. Conway, Washington, D.C., for Edison Elec. Institute.
John F. Donelan, John K. Maser, III, Washington, D.C., for American Paper Institute, Inc., The National Indus. Traffic League, Carolina Power & Light Co., et al.
John H. LeSeur, Slover & Loftus, Washington, D.C., for Consumer Owned Power Coalition, and Eastern Coal Transp. Conference.
Edmund E. Harvey, Washington, D.C., for Copper Development Ass'n, Inc.
R. Dennis Wright, Mark G. Flaherty, Kansas City, Mo., for Nebraska Public Power Dist.
Harold E. Spencer, Richard S.M. Emrich, Chicago, Ill., for International Minerals & Chemical Corp. and The Fertilizer Institute.
John R. Molm, Atlanta, Ga., for Alabama Power Co., et al.
John L. Oberdorfer, Washington, D.C., for National Coal Ass'n & Chemical Mfrs. Ass'n.
Paul M. Donovan, Washington, D.C., for The Chlorine Institute, Inc.
Mike Miller, Fargo, N.D., for The North Dakota Public Service Comm., et al.
Martin W. Bercovici, Lawrence P. Halprin, Washington, D.C., for The Committee on Transp. and Distribution of the Society of Plastic Ind., Inc.
Dennis N. Barnes, Washington, D.C., for Electric Fuels Corp.
Frederick W. Claybrook, Jr., Herbert J. Martin, Karen Shoos Lipton, Washington, D.C., for American Iron and Steel Institute.
David A. Sutherlund, Washington, D.C., for Coastal States Energy Co. and National Ass'n of Mfrs.
Frederick P. Furth, Bruce J. Wecker, San Francisco, Cal., for Kellogg Co.
John J. Powers, III, James H. Laskey, Kenneth P. Kolson, Antitrust Div., U.S. Dept. of Justice, Timm L. Abendroth, Henri F. Rush, ICC, Washington, D.C., for U.S.A. and ICC.
Michael Boudin, Washington, D.C., Walter J. Suthon, III, New Orleans, La., James R. Atwood, Washington, D.C., for The Ass'n of American Railroads.
Petitions for Review of Orders of the Interstate Commerce Commission.
Before CLARK, Chief Judge, BROWN, RUBIN, REAVLEY, POLITZ, TATE, JOHNSON, WILLIAMS, JOLLY and HIGGINBOTHAM, Circuit Judges[*].
JOHNSON, Circuit Judge:
Prior to 1976, the Interstate Commerce Commission (ICC) had unfettered authority to review all railroad rates under the "just and reasonable" standard promulgated by Congress. 1 Then, through enactment of the
Railroad Revitalization and Regulatory Reform Act of 1976 (the 4R Act), 2 Congress sought to reduce regulatory restraints on railroad pricing decisions. 3 Under the 4R Act, the ICC now has jurisdiction to review a rate only if it determines that the carrier can exclude effective competition to the extent that the carrier has "market dominance," defined as "an absence of effective competition from other carriers or modes of transportation for the transportation to which a rate applies."
Whether the ICC, in administering the "market dominance" 4 standard, may consider evidence of product and geographic competition is the issue before the en banc Court. 5 A divided panel of this Court concluded that the 4R Act "limits the definition of market dominance to transportation of the same product from the same origin to the same destination." See Western Coal Traffic League v. United States, 694 F.2d 378, 382 (5th Cir.1982), reh'g en banc granted, Order of March 7, 1983. Since we conclude that such a result fails to afford the ICC the deference due under existing law and places undue emphasis upon certain terms contained in the 4R Act, we affirm the ICC's orders allowing consideration of product and geographic competition. We also affirm the ICC's guidelines as in conformance with the congressional directive to the ICC to establish standards and procedures to be utilized in making the market dominance determination.
I. Background and Procedural History 6
Throughout the nineteenth century, railroads constituted the dominant mode of transportation in the United States. Unaffected by any meaningful competition, the railroads were able to set rates that often proved to be unjust and unreasonable. As Justice Fortas noted in American Truck Associations v. Atchison, T. & S.F. Railroad Co., 387 U.S. 397, 87 S.Ct. 1608, 1613, 18 L.Ed.2d 847 (1967): "In this country, the railroads had a practical monopoly of freight transportation, and secret rebates, special rates to favorite shippers, and discriminations flourished." Hence, in 1887, the Interstate Commerce Act was enacted and virtually all interstate railroad rates became subject to exacting scrutiny under the just and reasonable standard set forth in the Interstate Commerce Act. 49 U.S.C. Sec. 1(5) (1976).
By 1976, however, many of the justifications for extensive regulation of railroad rates no longer existed. The premise of railroad dominance had become outdated and, as the ICC found as early as 1971, "there are few significant commodities which are not practically susceptible to transportation by at least two competing modes of surface transportation." Illinois Central Gulf Railroad-Acquisition G., M. & O, et al., 338 I.C.C. 805, 836 (1971). Additionally, as was noted by Congress in enacting the 4R Act, significant financial losses were being incurred by the railroads and extensive, industry-wide regulation was no
longer justified. Sen.Rep. No. 499, 94 Cong.2d Sess. 2-3, reprinted at 1976 U.S.Code Cong. & Ad.News 14, 15-17. Nevertheless, recognizing that certain carriers still were unrestrained by effective competition, Congress refused to completely deregulate the railroad industry.
The 4R Act evidences Congress' intent to deregulate the railroad industry only in the areas in which effective competition exists. Today, in order for the ICC to intercede in ratemaking practices, it must make an initial, jurisdictional determination that the carrier has market dominance. The 4R Act defines market dominance as "an absence of effective competition from other carriers or modes of transportation for the transportation to which a rate applies." 49 U.S.C. Sec. 10701a(b)(1) (Supp. IV 1980). Significantly, however, Congress empowered the ICC to adopt "standards and procedures" for determining whether a railroad possessed market dominance. 7
Soon after the enactment of the 4R Act, the ICC embarked upon its attempt to provide standards and procedures to determine the market dominance issue. The ICC's first attempt at establishing such standards and procedures occurred in Ex Parte No. 320. See Ex Parte No. 320, Spec.Proc. for Findings of Market Dominance, 353 I.C.C. 873, modified, 355 I.C.C. 12 (1976). 8 One of the many issues presented involved the role of product and geographic competition in determining whether a carrier possessed market dominance. Although the Department of Justice, Department of Transportation, and the railroad industry urged the ICC to consider evidence of product and geographic competition, the ICC determined that such evidence would not be considered. Two reasons for this initial conclusion were advanced by the ICC. First, the ICC concluded that such evidence would create complex antitrust-type litigation and, second, the ICC felt that the statutory definition of market dominance precluded consideration of such competition. See Ex Parte No. 320, 353 I.C.C. at 904-05.
The regulations initially advanced by the ICC in Ex Parte No. 320 underwent judicial attack in Atchison, T. & S.F. Railroad v. ICC, 580 F.2d 623 (D.C.Cir.1978). As in the case sub judice, a major issue before the D.C. Circuit involved the ICC's refusal to consider geographic and product competition. Although the D.C. Circuit ultimately upheld the ICC's regulations, finding "sufficient basis in the statutory language and purpose to merit our deferral to the Commission's view," id. at 634, the court noted that the ICC's construction "may appear to some as an attempt to attribute excessive significance to a terse statutory clause." Id. In concluding, the D.C. Circuit emphasized that its role was one "of deference and deferral" and noted that "[t]he Commission will be in a position to evaluate the regulation more fully in light of experience." Id.
After several years of experience with the...
To continue readingFREE SIGN UP