Association of American R. R. v. U.S.
| Decision Date | 17 September 1979 |
| Docket Number | 75-2061,75-2168,75-2169,COOPER-JARRET,INC,76-1087 and 76-1215,75-2108,75-2065,75-2033,ARKANSAS-BEST,Nos. 75-2011,s. 75-2011 |
| Citation | 603 F.2d 953 |
| Parties | ASSOCIATION OF AMERICAN RAILROADS, Petitioner, v. UNITED STATES of America and the Interstate Commerce Commission, Respondents. McLEAN TRUCKING COMPANY, Ryder System, Inc., and Smith's Transfer Corporation, Petitioners, v. UNITED STATES of America and the Interstate Commerce Commission, Respondents. The GREYHOUND CORPORATION and Greyhound Lines, Inc., Petitioner, v. UNITED STATES of America and the Interstate Commerce Commission, Respondents. NATIONAL ASSOCIATION OF MOTOR BUS OWNERS, Petitioner, v. UNITED STATES of America and the Interstate Commerce Commission, Respondents.FREIGHT SYSTEM, INC. and Arkansas Best Corporation, Petitioners, v. The UNITED STATES of America and the Interstate Commerce Commission, Respondents, Merchants, Inc., et al., Intervenor. TCO INDUSTRIES, INC., and Continental Trailways, Inc., Petitioners, v. INTERSTATE COMMERCE COMMISSION and United States of America, Respondents. AMERICAN TRUCKING ASSOCIATIONS, INC., Petitioner, v. INTERSTATE COMMERCE COMMISSION and United States of America, Respondents. OVERNITE TRANSPORTATION COMPANY, Petitioner, v. The UNITED STATES of America and the Interstate Commerce Commission, Respondents., Petitioner, v. The UNITED STATES of America and the Interstate Commerce Commission, Respondents. |
| Court | U.S. Court of Appeals — District of Columbia Circuit |
Richard J. Flynn, Washington, D. C., for petitioner Ass'n of American Railroads in No. 75-2011.
E. Barrett Prettyman, Washington, D. C., with whom Jack McKay, Washington, D. C., and W. L. McCracken, Phoenix, Ariz., were on the brief, for petitioners The Greyhound Corp. and Greyhound Lines, Inc. in No. 75-2061. Also present argument for all other carriers.
David G. MacDonald and John Guandolo, Washington, D. C., were on the brief, for petitioner McLean Trucking Co., et al., in No. 75-2033.
Drew Carraway, John S. Fessenden and Richard A. Ward, Arlington, Va., were on the brief for petitioner National Ass'n of Motor Bus Owners in No. 75-2065.
Everett Hutchinson, Washington, D. C., and Don A. Smith, Fort Smith, Ark., were on the brief for petitioner Arkansas-Best Freight System Inc., et al., in No. 75-2108 and intervenor in No. 75-2108.
Mark Andrews, Eugene T. Liipfert and James C. Schultz, Washington, D. C., were on the brief, for petitioner TCO Industries, Inc., et al., in No. 75-2168.
Nelson J. Cooney and Robert L. James, Washington, D. C., were on the brief, for petitioner American Trucking Associations, Inc. in No. 75-2169.
William M. Blackwell and William M. Amrhein, Richmond, Va., were on the brief, for petitioner Overnite Transp. Co. in No. 76-1087.
William Biederman, Chicago, Ill., was on the brief for petitioner Cooper-Jarrett, Inc. in No. 76-1215.
Henry F. Rush, Atty., I. C. C., Washington, D. C., for respondents. Mark L. Evans, Gen. Counsel, Kenneth G. Caplan, Deputy Associate Gen. Counsel, I. C. C., Barry Grossman and Robert Lewis Thompson, Attys., Dept. of Justice, Washington, D. C., were on the brief for respondents.
Charles H. White, Jr., Atty., I. C. C., Washington, D. C., entered an appearance for respondent I. C. C.
John H. D. Wigger and Robert B. Nicholson, Attys., Dept. of Justice, Washington, D. C., entered appearances for respondent U. S.
Before MacKINNON and WILKEY, Circuit Judges, and RICHEY *, District Judge.
Opinion for the Court filed by District Judge CHARLES R. RICHEY.
In this case, the Association of American Railroads and numerous non-rail petitioners and intervenors seek review of two orders of the Interstate Commerce Commission ("ICC" or "the Commission") in ICC Docket No. Ex Parte 275, Expanded Definition of Term "Securities". 1 The original ICC order was entered on September 5, 1975 ("the 1975 Order"), 348 I.C.C. 288 (1975), and it was modified by an order of May 13, 1977 ("the 1977 Order"), 354 I.C.C. 10 (1977). Together, these orders decreed broadened definitions of the statutory terms found in section 20a of the Interstate Commerce Act, 49 U.S.C. § 11301 (formerly 49 U.S.C. § 20a); these new definitions greatly increase the number and variety of financial transactions requiring ICC approval. 2
Petitioners assert that the 1975 Order should be set aside for two reasons. First, they submit that, as a result of inadequate notice of the proposed rulemaking, the ICC failed to comply with the requirements of the Administrative Procedure Act, 5 U.S.C. §§ 551-706. Second, they contend that the 1975 Order promulgated a definition of the statutory phrase "securities" 3 which was beyond the scope of section 20a of the Interstate Commerce Act, ("section 20a"), 49 U.S.C. § 11301(a)(2) (formerly 49 U.S.C. § 20a). 4 After an analysis of the language and background of section 20a, the Court finds that the 1975 Order exceeds the scope of the Commission's statutory authority. It finds further that, without the 1975 Order, the 1977 Order lacks a rational basis and must also be set aside. Because the Court sets aside these orders for exceeding ICC authority, it need not reach the issues raised by petitioners regarding the Commission's compliance with the procedural requirements of the Administrative Procedure Act.
Before discussing the history and construction of section 20a, we summarize both the statutory scheme and the lengthy history of the ICC's attempts to promulgate the provisions which are at issue.
Section 20a establishes ICC approval as a prerequisite to a carrier's 5 issuance of "securities;" 6 securities are defined as "any share of capital stock or any bond or other evidence of interest in or indebtedness of the carrier . . .." 7 49 U.S.C. § 20a(2) (1976) (current version at 49 U.S.C. § 11301(a)(2)). Subsection 2 of 20a is the focal point of this petition for review; this provision 8 states:
(2) It shall be unlawful for any carrier to issue any share of capital stock or any bond or other evidence of interest in or indebtedness of the carrier (hereinafter in this section collectively termed "securities") or to assume any obligation or liability as lessor, lessee, guarantor, indorser, surety, or otherwise, in respect of the securities of any other person, natural or artificial, even though permitted by the authority creating the carrier corporation, unless and until, and then only to the extent that, upon application by the carrier, and after investigation by the commission of the purposes and uses of the proposed issue and the proceeds thereof, or of the proposed assumption of obligation or liability in respect of the securities of any other person, natural or artificial, the commission by order authorizes such issue or assumption. The commission shall make such order only if it finds that such issue or assumption: (a) is for some lawful object within its corporate purposes, and compatible with the public interest, which is necessary or appropriate for or consistent with the proper performance by the carrier of service to the public as a common carrier, and which will not impair its ability to perform that service, and (b) is reasonably necessary and appropriate for such purpose: Provided, That nothing in this section is to be construed as applying to securities issued or obligations or liabilities assumed by the United States or any instrumentality thereof, or by the District of Columbia or any instrumentality thereof, or by any State of the United States, or by any political subdivision or municipal corporation of any State, or by any instrumentality of one or more States, political subdivision thereof, or municipal corporations.
Subsection 4 of section 20a establishes the procedural mechanism by which a carrier may obtain ICC approval of its securities. Under subsection 4, the ICC is authorized to prescribe the "form" of the application for approval as well as the "matters" which the application must contain. Id. § 20a(4). 9 The Commission, of course, also has the power to grant or deny, in whole or in part, the carrier's application.
Subsection 9 of the statute, however, exempts from the approval requirement notes which mature within two years of the date of issuance and which, together with all other such notes, comprise less than five percent of the par value of the carrier's outstanding securities. Id. § 20a(9). 10 Yet, even when exempt notes are issued, the carrier must still file a notification similar to the regular application for approval. Id. 11
The Commission's review of carrier applications is supplemented by the mandate of subsection 6 of section 20a. This provision requires the ICC to file a copy of the carrier's application with the governor of each state in which the carrier operates and to allow the "appropriate State authorities" to comment upon the application. Id. S 20a(6). 12 This subsection expressly authorizes the Commission to hold hearings to assist its review of the matter. Id. 13
Finally, subsection 11 establishes sanctions for non-compliance. Securities issued, or obligations assumed, without ICC authorization or without compliance with the conditions of such authorization are void; in addition, civil liabilities, as well as criminal penalties, may be imposed on the directors, officers, and agents responsible for the improper issuance. Id. § 20a(11). 14 Thus, section 20a enacts a comprehensive scheme for the regulation of the issuance of a carrier's securities. 15
In Ex Parte 275, Expanded Definition of Term "Securities," 348 I.C.C. 288 (1975), the Commission greatly expanded the definition of the term "securities," as employed in section 20a(2) (current version at 49 U.S.C. § 11301(a)(2)). Under this new standard, it was decreed that the statutory language, "evidence of interest in or...
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