Atchison, Topeka Santa Fe Railway Company v. Wichita Board of Trade Interstate Commerce Commission v. Wichita Board of Trade 8212 214, 72 8212 433, Nos. 72

CourtUnited States Supreme Court
Writing for the CourtMr. Justice MARSHALL, in an opinion joined by THE CHIEF JUSTICE; DOUGLAS; Mr. Justice MARSHALL announced the judgment of the Court, and an opinion in which THE CHIEF JUSTICE; POWELL; DOUGLAS; WHITE
Citation93 S.Ct. 2367,412 U.S. 800,37 L.Ed.2d 350
Docket NumberNos. 72
Decision Date18 June 1973
PartiesThe ATCHISON, TOPEKA & SANTA FE RAILWAY COMPANY et al., Appellants, v. The WICHITA BOARD OF TRADE et al. INTERSTATE COMMERCE COMMISSION, Appellant, v. WICHITA BOARD OF TRADE. —214, 72—433

412 U.S. 800
93 S.Ct. 2367
37 L.Ed.2d 350
The ATCHISON, TOPEKA & SANTA FE RAILWAY COMPANY et al., Appellants,

v.

The WICHITA BOARD OF TRADE et al. INTERSTATE COMMERCE COMMISSION, Appellant, v. WICHITA BOARD OF TRADE.

Nos. 72—214, 72—433.
Argued Feb. 28, 1973.
Decided June 18, 1973.

Syllabus

The Interstate Commerce Commission (ICC), after hearings, approved imposition by appellant railroads of separate charges for inspection of grain while in transit, a service that had previously been provided under the line-haul rates. Appellees thereupon brought this action in District Court contesting the validity of the ICC order. That court found that the ICC had not adequately justified departure from its longstanding rule that such separate charges are unlawful unless the carriers can satisfy the burden that rests upon them of proving that their line-haul rates are insufficient to cover the total transportation service including the portion thereof for which separate charges are proposed. The court ordered suspension of the in-transit charges unless otherwise ordered by the court and remanded the case to the ICC. Held: The action of the District Court is affirmed as to the remand to the ICC and is reversed as to the injunction suspending the proposed charges. P. 2374—2384. D.C. 352 F.Supp. 365, affirmed in part and reversed in part.

Mr. Justice MARSHALL, in an opinion joined by THE CHIEF JUSTICE, Mr. Justice STEWART, and Mr. Justice BLACKMUN, concluded that:

1. The ICC, which justified its departure from its prior cases on the ground that the many rates involved rendered the previous requirement impractical and the new charges when added to the line-haul rates would not exceed the ICC-prescribed maximum rate level, has not stated its reasons with sufficient clarity to facilitate proper judicial review of its approval of the intransit inspection charges. Pp. 806—817.

2. Equitable considerations, including the doctrine of primary jurisdiction as applied to the facts of this case, required that the District Court refrain from expressing a view upon what it

Page 801

believed was permitted by national transportation policy before the ICC on remand could balance the conflicting interests of shippers, railroads, producers and consumers in the proposed rate changes, cf. Arrow Transportation Co. v. Southern R. Co., 372 U.S. 658, 83 S.Ct. 984, 10 L.Ed.2d 52; hence, it was improper for the District Court to enjoin implementation of the proposed new charges. Pp. 817—825.

Mr. Justice DOUGLAS concurred in the affirmance of the remand to the ICC.

Mr. Justice WHITE, joined by Mr. Justice BRENNAN and Mr. Justice REHNQUIST, concurring in the reversal of the injunction, concluded that only the ICC was granted the statutory authority to suspend new freight rates for seven months and the District Court has no power to extend that period. Pp. 828—829.

Earl E. Pollock, Washington, D.C., for Atchison, Topeka and Santa Fe Railway Co. and others.

Betty Jo Christian, Washington, D.C., for I.C.C.

Daniel J. Sweeney, Chicago, Ill., for Wichita Board of Trade and others.

William A. Imhof, Washington, D.C., for Secretary of Agriculture.

Page 802

Mr. Justice MARSHALL announced the judgment of the Court, and an opinion in which THE CHIEF JUSTICE, Mr. Justice STEWART, and Mr. Justice BLACKMUN join.

We noted probable jurisdiction in these cases to resolve two important questions relating to the proper role of courts in reviewing approval by the Interstate Commerce Commission of proposed rate increases by railroads. 409 U.S. 1005, 93 S.Ct. 432, 34 L.Ed.2d 298 (1972). First, under what circumstances may a reviewing court find that the Commission has failed adequately to explain its apparent departure from settled Commission precedent? Because the problem of determining what policies an agency is following, as a prelude to determining whether the agency is acting in accordance with Congress' will, is a recurring one, this issue raises general problems of judicial review of agency action. The second question in these cases is a more limited one: in order to enjoin a proposed rate increase after a final order by the Interstate Commerce Commission, what sort of error must a District Court find in the proceedings of the Commission? We hold that in these cases the Commission did not explain its apparent departure from precedent in a manner sufficient to permit judicial review of its policies, but that, nevertheless, that kind of error does not justify the District Court in entering an injunction against imposition of the rates pending review of the Commission's action on remand. We therefore vacate the judgment of the District Court and remand for the entry of a proper order.1

Page 803

I

In these cases, the railroads proposed to establish a separate charge for inspection of grain while in transit.2 In order to inspect the grain, the railroad cars loaded with it are stopped and placed on track facilities. A sample of the grain is taken, and the official grade is determined. Once the grade is known and the commercial value of the grain established, the shipper orders the car to proceed to the appropriate market. Intransit inspections have substantial advantages to shippers over inspection at the destination. If the grain were to be found to be of a different grade than expected only after arrival at the destination, sending it to another market might be quite expensive. The advantages of in-transit inspections to purchasers, instead of inspection at the source that might satisfy shippers, are less marked but are nonetheless significant. The grain might deteriorate while in transit, thus leaving the purchaser with grain of a lower quality than he expected. And the possibility of bias of the inspector is greater if the inspection is made at the source.

The Commission found that 'the orderly marketing of grain under present practices requires that a substantial portion of the commodity moving in commercial

Page 804

channels must be subjected to some form of sampling and inspection to determine grade or quality.' 339 I.C.C. 364, 385 (1971).3 However, it also found that this sampling need not take place while the grain is in transit. The practice of in-transit inspections developed when federal law required inspections for the purpose of grading. 39 Stat. 483. But the diversion of grain from railroads to motor trucks made it difficult to enforce the inspection requirements. When trucks are used, in-transit inspections are not generally made. Thus, in order to simplify the movement of grain, Congress abolished the requirement of inspections. Pub.L. 90—487, 82 Stat. 761. In addition, the convenience of sampling at the source of the grain has increased with the widening reliance on low-cost mechanical samplers installed at grain elevators. The Commission therefore concluded that in-transit inspections were not necessary for the orderly marketing of grain.

It also concluded that in-transit inspections resulted in a substantial decrease in the number of freight cars available for general use.4 Relying on a variety of studies conducted by the railroads, the Commission found that each inspection kept a freight car out of use for roughly three days, and that the cumulative impact of the delays due to intransit inspection was to reduce the available freight car fleet by several thousand cars.

Finally, the Commission considered whether the proposed separate charge for each in-transit inspection fairly reflected the cost to the railroad of such an inspection. Again, it relied on quite detailed studies that established

Page 805

the cost of detaining a car, the cost of switching it on and off the main line, and the clerical costs of conducting inspections. The Commission concluded that the proposed charges were 'not excessive in amount . . . on the basis of the convincing evidence of record showing the costs sustained by the railroads in performing the in-transit inspection service.' 340 I.C.C., at 71 72.

Shippers who had objected to the proposed new charges before the Commission sought review of the Commission's order, and a statutory three-judge District Court was convened. The District Court found that these conclusions were supported by substantial evidence, and they are not challenged here. But the District Court held that the Commission had not adequately justified its failure to follow 'its long established rule that it will not allow a separate charge for an accessorial service previously performed as part of the line-haul rates without substantial evidence that such an additional charge is justified measured against the overall services rendered and the overall reasonableness of the increased line-haul rate resulting therefrom.' 352 F.Supp. 365, 368. The Commission, although it analyzed the cost of each in-transit inspection, had made no attempt to consider the reasonableness of continuing the existing line-haul rate, which included some charge for in-transit inspections. Instead, the Commission had attempted to distinguish this case from prior cases in which the rule was invoked, but the District Court, relying on Secretary of Agriculture v. United States, 347 U.S. 645, 74 S.Ct. 826, 98 L.Ed. 1015 (1954), was 'not convinced that the instant proceeding can be 'distinguished' as the Commission has indicated.' 352 F.Supp., at 369.

Although the Commission must be given some leeway to re-examine and reinterpret its prior holdings, it is not sufficiently clear from its opinion that it has done so in this case. A reviewing court must be able to discern in the Commission's actions the policy it is now pur-

Page 806

suing, so that it may complete the task of judicial review—in this regard, to determine whether the Commission's policies are consistent with its mandate from Congress. Since we cannot tell from the Commission's opinions what those policies are, we therefore agree with the District Court that the...

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