Allegheny Ludlum Steel Corporation v. United States

• Decision Date: 18 March 1971
• Docket Number: Civ. A. No. 70-731.
• Citation: 325 F. Supp. 352
• Parties: ALLEGHENY LUDLUM STEEL CORPORATION et al. v. UNITED STATES of America and Instate Commerce Commission.
• Court: U.S. District Court — Eastern District of Pennsylvania

325 F. Supp. 352

ALLEGHENY LUDLUM STEEL CORPORATION et al. v. UNITED STATES of America and Instate Commerce Commission.

Civ. A. No. 70-731.

United States District Court, W. D. Pennsylvania.

March 18, 1971.

Samuel P. Delisi, Pittsburgh, Pa., Max O. Truitt, Jr., Washington, D. C., Reed, Smith, Shaw & McClay, Robert R. Wertz, Pittsburgh, Pa., Wilmer, Cutler & Pickering, Washington, D. C., for plaintiff.

Gordon E. Neuenschwander, Pittsburgh, Pa., William M. Moloney and James I. Collier, Jr., Washington, D. C., for Association of American Railroads.

Houston, Cooper, Speer & German, Pittsburgh, Pa., Donelan, Cleary & Caldwell, Washington, D. C., for National Industrial Traffic League.

Richard L. Thornburgh, U. S. Atty., Pittsburgh, Pa., John H. D. Wigger, Dept. of Justice, Washington, D. C., Houston, Cooper, Speer & German, Pittsburgh, Pa., for defendants.

Dwight L. Koerber, Pittsburgh, Pa., for National Ass'n of Shippers.

Before ALDISERT, Circuit Judge, MARSH, Chief District Judge, and MILLER, District Judge.

OPINION OF THE COURT

ALDISERT, Circuit Judge.

The Interstate Commerce Commission has promulgated mandatory rules governing the manner in which empty freight cars in the possession of non-owning railroads are to be returned to their owners. Before us is an action brought by fifteen steel producers and the American Iron and Steel Institute¹ seeking to enjoin, annul and set aside the order. We must determine whether the Commission's order is supported by "substantial evidence" and satisfies the statutory test of reasonableness. 49 U. S.C. § 1(14) (a).

The rules under review derive from a lengthy study begun in December, 1963, in which the Commission undertook to ascertain the adequacy vel non of the nation's supply of railroad freight cars. There followed on June 1, 1964, an announcement by the Commission's Division Three that there existed "a substantial inadequacy" of freight car ownership among America's railroads. 323 I.C.C. 48 (1964). At the same time, the Commission issued a formal notice of proposed rulemaking, pursuant to Section 1(14) (a) of the Interstate Commerce Act, 49 U.S.C. § 1(14) (a), broadening its inquiry to include all phases of car ownership, utilization, and distribution with a view toward alleviating the car shortage problem.

A seven-year study followed. Thirty verified statements were submitted by interested parties. In response to a verified statement by C. C. Robinson, of the Commission's Bureau of Enforcement, which advocated mandatory observance of car service rules promulgated by the railroad industry,² at least twenty corporations and shippers' associations, including the steel plaintiffs, obtained leave to intervene. They filed reply verified statements and were joined by twenty-five railroads, the American Short Line Railroad Association, The Association of American Railroads and many shipping interests. Over eight-five reply verified statements were received.

A hearing before an examiner commenced on March 28, 1967, extended 50 days and produced almost 6,000 pages of testimony. The hearing examiner filed a 63-page report recommending discontinuance of the proceeding. He concluded:

the record does not contain competent evidence upon which to base a conclusion as to the adequacy of freight car ownership; and that the adoption of the proposed car ownership formula, regulations, and car service rules has not been shown to be justified.

Eighteen months thereafter, in August, 1969, Division Three of the Commission reached a contrary conclusion, finding that the railroads lacked an adequate supply of freight cars, and ordering that car service rules 1 and 2 be mandatorily observed in order to increase car ownership by the railroads.³ In February, 1970, the I.C.C. modified its order to permit certain exceptions to the rules and to extend the effective date. In July, 1970, this court issued an order restraining enforcement of the order pending a determination in these proceedings.

At the threshold we are met with certain settled principles of law. Because the decision of the Commission carries a presumption of validity, the plaintiffs have the burden of showing that it is invalid. Waite v. United States, 161 F.Supp. 856, 860 (W.D.Pa. 1958); W. J. Dillner Transfer Co. v. I. C. C., 193 F.Supp. 823, 826 (W.D.Pa.), aff'd., 368 U.S. 6, 82 S.Ct. 16, 7 L.Ed.2d 16 (1961); W. J. Dillner Transfer Co. v. United States, 214 F.Supp. 941, 944 (W.D.Pa.1963). Moreover, in the limited scope of our judicial review of I.C.C. decisions, we defer to the expertise of the Commission and will disturb its orders only if there is no "warrant in the law and the facts for what the Commission has done." Leonard Express, Inc. v. United States, 298 F.Supp. 556, 559 (W.D.Pa.1969). Yourga Trucking, Inc. v. United States, 308 F.Supp. 625, 626-627 (W.D.Pa.1969). In addition, there exists a special statutory standard by which car service rules must be measured: "The Commission may, after hearing * * * establish reasonable rules, regulations, and practices with respect to car service by common carriers by railroads subject to this chapter. * * *" 49 U.S.C. § 1(14) (a).

The Commission's report declares that the rules "are not designed to improve the utilization of freight cars, except insofar as return loading is compatible with the primary objective of increasing availability of cars to the owner." 335 I.C.C. at 294. From this flows the necessary conclusion that the "primary objective" of the rules was to increase the availability of freight cars to the car owning line.⁴ Under the caption "Conclusions," the report states that

there is a continuing freight car shortage which requires affirmative, remedial action at this time. We believe that this situation results from a combination of an inadequate ownership of general purpose type freight cars by respondents as a group and improper utilization of the available freight car fleet. * * * Therefore, we will attempt to supply the solution by requiring mandatory observance of the rules.

335 I.C.C. at 308.

To find support for the Commission's action, we turn to what is described as the report's "Findings." We are puzzled that a seven-year study by that Commission, which included a 50-day hearing before an examiner with a record amounting to 6,000 pages, was climaxed by a spartan, one-sentence finding: "Upon further study, we find that respondents as a group the American railroad industry lack an adequate freight car supply and fail to furnish adequate freight car service." Paucity of words in an agency's finding does not, of course, render it defective. It does require a reviewing court, however, to subject the report to careful examination in order to decide whether the decision met the appropriate tests. Our examination becomes even more important where, as here, the Commission rejected the detailed report of its examiner with a minimum of explanation. We have previously said:

The United States Court of Appeals for this circuit has pointed out that as a general rule a Commission's findings should be given much weight in cases in which they have specialized and intimate knowledge of the whole proceedings. However, they point out that a slightly different rule is applicable when a final determination by the Administrative Agency rejects the findings of a hearing examiner. It would appear that an examiner's report is not as unassailable as a master and can be reversed by the Commission. The reviewing court while it need not give a trial examiner's findings more weight than they deserve in the light of reason and judicial experience, they should be accorded the relevance that they reasonably command in answering the over-all question whether the evidence supporting the Commission's order is substantial. See In re United Corporation, 3 Cir., 249 F.2d 168.

W. J. Dillner Transfer Co. v. I. C. C., supra, 193 F.Supp. at 827-828. Moreover, in the leading case of Universal Camera Corp. v. N. L. R. B., 340 U.S. 474, 493, 496, 71 S.Ct. 456, 468, 95 L.Ed. 456 (1951), setting forth the "substantial evidence" test, the Supreme Court stated:

The plain language of the statutes Administrative Procedure Act directs a reviewing court to determine the substantiality of evidence on the record including the examiner's report. * * *

* * * * * *

We do not require that the examiner's findings be given more weight than in reason and in the light of judicial experience they deserve. The "substantial evidence" standard is not modified in any way when the Board and its examiner disagree. We intend only to recognize that evidence supporting a conclusion may be less substantial when an impartial, experienced examiner who has observed the witnesses and lived with the case has drawn conclusions different from the Board's. * * *

Although it found a freight car shortage that was "all pervasive" throughout the United States, ostensibly on both owner and non-owner lines, the Commission did not find that the shortage was more acute on the owner lines. Indeed, it is the very hypothesis of the I.C.C.'s conclusion that the shortage extends throughout the industry. The report contained numerous charts and tables relating to car shortages showing a decrease in serviceable cars, a decline of freight car ownership, the incidence of cars off line, and an increase in turn around time (the time required for a consigned car to be unloaded and reshipped, loaded or unloaded). This may constitute substantial evidence of a general car shortage, but it does not support a specific finding of special car shortages on the owner lines. The requirement that an agency make appropriate findings is not imposed "to insist on formalities and to burden the administrative process with ritualistic requirements," City of Yonkers v. United States, 320 U.S. 685, 692, 64 S.Ct. 327, 331, 88 L.Ed. 400 (1944); rather, it rests upon a recognition that

the courts cannot exercise their duty of review unless they are advised of

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