Aberdeen & Rockfish R. Co. v. U.S.

• Decision Date: 27 December 1977
• Docket Number: No. 77-1054,77-1054
• Citation: 565 F.2d 327
• Parties: ABERDEEN & ROCKFISH RAILROAD COMPANY et al., Petitioners, v. The UNITED STATES of America and the Interstate Commerce Commission, Respondents.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 327

565 F.2d 327

ABERDEEN & ROCKFISH RAILROAD COMPANY et al., Petitioners, v. The UNITED STATES of America and the Interstate Commerce Commission, Respondents.

No. 77-1054.

United States Court of Appeals Fifth Circuit.

Dec. 27, 1977.

Paul M. Haygood, New Orleans, La., for petitioners and intervenor, Chessie System Lines.

Howard J. Trienens, R. Eden Martin, Richard L. Miller, Lawrence A. Miller, George L. Saunders, Jr., Chicago, Ill., for petitioners.

Carl E. Sanders, John L. Taylor, Jr., Atlanta, Ga., for SEARUC & Southern Governors' Conference.

H. N. Babcock, Cleveland, Ohio, for Chessie System Lines.

Griffin B. Bell, U. S. Atty. Gen., U. S. Dept. of Justice, Peter A. Fitzpatrick, Asst. Gen. Counsel, Mark L. Evans, Kenneth G. Caplan, Attys. ICC, Gen. Counsel, Washington, D. C., for respondents.

Moise W. Dennery, Atty., J. William Vaudry, Jr., New Orleans, La., Walter J. Myskowski, Washington, D. C., Richard H. Stokes, George M. Onken, Jamaica, N. Y., for Long Island Rail Road Co.

Petition for Review of an Order of the Interstate Commerce Commission (Texas Case).

Before GOLDBERG, and HILL, Circuit Judges, and WYZANSKI, Senior District Judge. ^*

WYZANSKI, Senior District Judge:

This case comes before us upon the petition of Southern and Western railroads, invoking our alleged jurisdiction under 28 U.S.C. § 2342 to review and set aside an order dated November 23, 1976, served December 9, 1976, modifying an order dated August 15, 1975, served September 12, 1975, issued by the Interstate Commerce Commission (ICC) in its Docket Ex Parte 299 (Sub. No. 1) "Increases in Freight Rates and Charges to Offset Retirement Tax Increases 1973." The ICC Report, setting forth the opinions and findings relevant to the August 15, 1975 order, has been published in 350 I.C.C. 673, 705-718 (1975).

Intervening as petitioners are Southeastern Association of Regulatory Utility Commissioners and Southern Governors' Conference.

Respondents are the United States and the Interstate Commerce Commission. Intervening as respondent is Long Island Rail Road Company (Long Island).

Stated broadly, the dominant issue in this case is whether, under Title II Interstate Commerce Act Amendments, Act of July 10, 1973, 83 Stat. 162, 166-167, (which was originally codified as 49 U.S.C. § 15a(4), and is so referred to by the ICC, by the parties, and by us, but which the Railroad Revitalization and Regulatory Reform Act of 1976, P.L. 94-210 has re-designated as 49 U.S.C. § 15a (6)), the ICC had authority, and if so whether its report sets forth an adequate basis for exercising its authority, to require the petitioning railroads to incorporate into all tariffs naming the rates applicable to total line-haul freight charges on shipments originating or terminating on the Long Island Rail Road a 12.5 percent surcharge which accrues solely to the Long Island, and which Long Island uses to recoup its increases in Railroad Retirement taxes, imposed by Title I Railroad Retirement Act Amendments, Act of July 10, 1973, 87 Stat. 162.

We shall address ourselves, first, to a summary description of the 1973 statute which gave rise to the problem, then, to such facts about the Long Island as were disclosed in the administrative proceeding and are virtually uncontested next, to the findings and conclusions of the report adhered to by the majority of the Interstate Commerce Commissioners, and thereafter, to the contentions presented to us.

In 1973 Congress by Title I of the Act of July 10, 1973, 87 Stat. 162 increased the rate of contributions by railroads under the Railroad Retirement Act. This affected rates payable on account of railroad employees regardless of whether they themselves were employed in interstate commerce or in purely local activities. See 45 U.S.C. § 228a(b).

With the purpose of permitting the railroads, by pass-through procedures, to recoup the expenses thus incurred, the Congress, in Title II of the same Act of July 10, 1973, 87 Stat. 162, 166-167, in the following words authorized interim rates, provided for in paragraph 4(b) infra, and final rate determinations by the ICC, provided for in paragraph 4(c) infra:

Sec. 201. Section 15a of the Interstate Commerce Act (49 U.S.C. 15a) is amended by adding at the end thereof the following new paragraph:

"(4)(a) The Commission shall by rule, on or before August 1, 1973, establish requirements for petitions for adjustment of interstate rates of common carriers subject to this part based upon increases in expenses of such carriers resulting from any increases in taxes under the Railroad Retirement Tax Act, as amended, occurring on or before January 1, 1975, or as a result of the enactment of the Railroad Retirement Amendments of 1973. Such requirements, established pursuant to section 553 of title 5 of the United States Code (with time for comment limited so as to meet the required date for establishment and subject to future amendment or revocation), shall be designed to facilitate fair and expeditious action on any such petition as required in subparagraph (b) of this paragraph by disclosing such information as the amount needed in rate increases to offset such increases in expenses and the availability of means other than a rate increase by which the carrier might absorb or offset such increases in expenses.

"(b) Notwithstanding any other provision of law, the Commission shall, within thirty days of the filing of a verified petition in accordance with rules promulgated under subparagraph (a) of this paragraph, by any carrier or group of carriers subject to this part, permit the establishment of increases in the general level of the interstate rates of said carrier or carriers in an amount approximating that needed to offset increases in expenses theretofore experienced or demonstrably certain to occur commencing on or before the effective date of the increased rates, as a result of any increases in taxes under the Railroad Retirement Tax Act, as amended, occurring on or before January 1, 1975, or as a result of the enactment of the Railroad Retirement Amendments of 1973. Such increases in rates may be made effective on not more than thirty nor less than ten days' notice to the public, notwithstanding any outstanding orders of the Commission. To the extent necessary to effectuate their establishment, rates so increased shall be relieved from the provisions of section 4 of this part and may be published in tariff supplements of the kind ordinarily authorized in general increase proceedings.

"(c) The Commission shall within sixty days from the date of establishment of interim rates under paragraph (4)(b) of this section commence hearings for the purpose of making the final rate determination. The Commission shall then proceed to make such final rate determination with the carrier having the burden of proof. In making such determination, the Commission may take into account all factors appropriate to ratemaking generally under part I of this Act and shall determine such final rates under the standards and limitations applicable to ratemaking generally under part I of this Act. If the increases in rates finally authorized by the Commission are less than the increases in rates initially made effective, the carrier or carriers shall, subject to such tariff provisions as the Commission shall deem sufficient, make such refunds (in the amount by which the initially increased rate collected exceeds the finally authorized increased rate) as may be ordered by the Commission, plus a reasonable rate of interest as determined by the Commission. Nothing contained in this paragraph shall limit or otherwise affect the authority of the Commission to authorize or to permit to become effective any increase in rates other than the increases herein specified."

The ICC in Ex Parte No. 298, Requirements and Procedures Relating to Railroad Rate Adjustment Act of 1973 (49 C.F.R. § 1107) specified the information to be furnished by carriers utilizing the pass-through procedures.

The initial proceeding related to interim rates governed by Paragraph 4(b) above.

August 13, 1973 all railroads except the Long Island filed with the ICC a petition for permission to increase their interim freight rates by 2 percent effective October 1, 1973 and 2.7 percent effective January 1, 1974 to offset their increased retirement taxes. Included was an increase in the "joint rates" which cover the freight carried by two or more railroads participating in a joint haul. The proceeds of such a joint rate are divided in accordance with principles enunciated in Class Rates Investigation, 262 ICC 447 (1939), affirmed in New York v. United States, 331 U.S. 284, 67 S.Ct. 1207, 91 L.Ed. 1492 (1947), whereby there is a uniform rate structure in the North, the South, and the West, east of the Rocky Mountains, and the Northern and the Southern railroads receive the same share of revenue for the same amount of service. That so-called "equal factor" basis of divisions governs unless the ICC specifically finds that a departure is justified by a difference in costs. Baltimore & Ohio R. Co. v. Aberdeen & Rockfish R. Co., 393 U.S. 87, 89 S.Ct. 280, 21 L.Ed.2d 219 (1968).

August 24, 1973 Long Island, being opposed to increases in joint rates which would have reimbursed the Long Island for only a small fraction of its increases in retirement taxes, filed a separate petition for permission to file a tariff providing for an interim terminal surcharge of 3.5 percent effective October 1, 1973, and 5.5 percent effective January 1, 1974.

The ICC, by Report and Order dated September 13, 1973, allowed the other railroads to increase their interim rates by 1.9 percent effective October 1, 1973, and 2.6 percent effective January 1, 1974, but denied the Long Island's petition for an interim terminal surcharge.

The Long Island sought review in the Eastern District of New York. A three-judge court held that paragraph 4(b) (49 U.S.C. § 15a(4)(b)),...