Atlantic City Electric Company v. United States

Decision Date28 October 1969
Docket NumberNo. 69 Civ. 800.,69 Civ. 800.
Citation306 F. Supp. 338
PartiesATLANTIC CITY ELECTRIC COMPANY et al., Plaintiffs, and State of New York et al., Intervenors-Plaintiffs, v. UNITED STATES of America and Interstate Commerce Commission, Defendants, and Aberdeen and Rockfish Railroad Company et al., Intervenors-Defendants.
CourtU.S. District Court — Southern District of New York

LeBoeuf, Lamb, Leiby & MacRae, New York City, for plaintiffs; James O'Malley, Jr., New York City, of counsel.

Louis J. Lefkowitz, Atty. Gen. of State of New York, Albany, Walter J. Myskowski, Washington, D. C., for intervenor plaintiff State of New York.

James M. Henderson, Washington, D. C., for intervenor plaintiffs Departments of Agriculture of Ten Northeastern States.

Robert M. Morgenthau, U. S. Atty., New York City, for defendant United States of America; John H. D. Wigger, Attorney, Department of Justice, Washington, D. C., of counsel.

Arthur J. Cerra, Associate General Counsel, Philip W. Getts, Attorney, Washington, D. C., for defendant Interstate Commerce Commission.

Jerome H. Shapiro, New York City, for intervenor defendants Aberdeen and Rockfish R. Co., et al.; Edward A. Kaier, New York City, of counsel.

Before KAUFMAN, Circuit Judge, and BONSAL and McLEAN, District Judges.

McLEAN, District Judge.

Seven public utilities operating in the northeastern section of the United States brought this action to enjoin and set aside an order of the Interstate Commerce Commission made on January 9, 1969, in a proceeding entitled "Ex Parte 259, Increased Freight Rates, 1968." The order permitted the Class I railroads of the United States to put into effect a rate increase on a great number of commodities. Among the rate increases so authorized was an increase of 5 per cent on bituminous steam coal, up to a maximum of 15¢ per ton. Plaintiffs are large users of bituminous steam coal and hence are adversely affected by the order. They claim that the order is unlawful and that the procedures employed by the Commission have deprived them of due process of law.

The State of New York and the Departments of Agriculture of ten other northeastern states have been permitted to intervene as parties plaintiff. They complain of the increase of 6 per cent authorized by the order in freight rates on grain, feed and feed ingredients moving into the northeastern states.

Many Class I railroads have also been permitted to intervene. They support the Commission's order.

The Commission has moved under Rule 12(b) (6) to dismiss the action on the ground that plaintiffs and intervenor plaintiffs have failed to state a claim upon which relief can be granted. In essence, the Commission asserts that the attack upon its order is premature. Decision of this question requires analysis of the Commission's order and consideration of the remedies available to plaintiffs and intervenor plaintiffs under the Interstate Commerce Act. 49 U.S.C. § 1 et seq.

The various steps in the proceeding before the Commission which resulted in the order under attack are set forth in two reports of the Commission, an interim report dated November 25, 1968 (332 I.C.C. 590), and a final report dated January 9, 1969 (332 I.C.C. 714). They may be briefly summarized as follows.

On March 7, 1968, the Class I railroads filed with the Commission a petition for permission to publish increased freight rates. The Commission granted their request. On March 11, 1968, the railroads filed their master tariff X-259 containing schedules of proposed increases, to be effective on May 27, 1968. The effective date was later postponed to June 24, 1968. The proposed increases ranged generally from 3 to 10 per cent, depending upon the commodity involved. By order entered June 19, 1968, the Commission suspended until January 24, 1969 all increases in excess of 3 per cent. This order also directed that an investigation be made of the proposed increases.

The investigation was divided into a number of parts, designated as "sub-numbers." "Sub-No. 2" was concerned with "railroad cost and revenue need." Other sub-numbers pertained to the increases requested on particular commodities. Sub-No. 3 was concerned with coal; Sub-No. 5 with grain. Hearings were held before hearing examiners. Plaintiffs and intervenor plaintiffs appeared and protested the proposed increases.

The Commission's interim report dated November 25, 1968 was devoted to the need of the railroads for increased revenue, i.e., Sub-No. 2 of the proceeding. The Commission concluded that "the proposed rate level, generally speaking, is within the zone of reasonableness." 332 I.C.C. at 608. The Commission went on to find that "the increased freight rates and charges herein authorized will not exceed a maximum just and reasonable level of rates and charges." 332 I.C.C. 609.

It further found:

"Our findings as to justness and reasonableness, which are based upon all of the evidence, before us including typical evidence as to rates and charges in and between all territories, will apply to the general bases of rates and charges, and will not preclude interested parties from bringing any maladjustments to our attention for correction. The increased freight rates and charges authorized herein are not considered as prescribed within the meaning of the decision in Arizona Grocery Co. v. Atchison, T. & S. F. Ry. Co., 284 U.S. 370 52 S.Ct. 183, 76 L.Ed. 348, and will, in all respects, be subject to complaint and investigation as provided by the act." 332 I. C.C. 609.

By order dated November 25, 1968, the Commission vacated its suspension order of June 19, 1968 and permitted the full increases proposed by the railroads to take effect, except as to certain commodities, one of which was grain. As to these, the suspension order was continued.

At the beginning of its final report dated January 9, 1969, the Commission referred to its interim report of November 25, 1968, and stated that the proceeding had been continued thereafter "for the consideration of the lawfulness of the proposed and interim increases as they applied to specific commodities and services, and of the evidence and arguments of all parties with respect thereto." 332 I.C.C. 714.

The Commission then remarked:

"Inherent in a general rate increase proposal is the right of election by specific carriers to make use of the authority in whole, in part, or not at all. Thus, our conclusions herein do not require that any respondent increase its rates by any particular amount nor, except as specifically provided herein, do they preclude variability of application, provided increases do not exceed those allowed." 332 I.C.C. 715.

The Commission went on to say:

"We do not herein purport to determine whether the particular rates which result from the increases are maximum reasonable rates, nor does our order constitute a prescription of rates within the meaning of the decision in Arizona Grocery Co. v. Atchison, T. & S. F. Ry. Co., 284 U.S. 370 52 S.Ct. 183, 76 L.Ed. 348." 332 I. C.C. 715.

The report then discussed at length the contentions of the parties with respect to proposed increases for various commodities or groups of commodities. With respect to a few of them, not including coal or grain or feed moving to the northeast, the Commission denied the full increases requested by the railroads. As to the others, the railroads' request was approved. As far as material here, the Commission's ultimate conclusions and findings were: (1) there is a critical need on the part of the railroads for additional revenue to offset, in part, increased operating costs; (2) the basic freight rates may be increased generally in accordance with master tariff X-259; (3) the increased freight rates will not exceed "a maximum reasonable level"; (4) "Our findings as to justness and reasonableness * * * will apply to the general bases of rates and charges, and will not preclude interested parties from bringing any maladjustments to our attention for correction." 332 I.C.C. 792.

The Commission's order dated January 9, 1969, based upon this report, provided, in a somewhat backhanded fashion, that the railroads were directed to cease and desist from collecting basic rates "increased to a greater extent than found just and reasonable herein * * *." 332 I.C.C. 793.

It is apparent from this recital that the proceeding before the Commission was a general revenue proceeding. The Commission was concerned primarily with the "need, in the public interest, of adequate and efficient railway transportation service" and with the railroads' "need of revenues sufficient to enable the carriers, under honest, economical, and efficient management to provide such service." 49 U.S.C. § 15a(2). The increases in rates were general, even though the percentage of increase varied from commodity to commodity. The new rates were "carrier-made," that is to say, the Commission merely authorized the railroads to put the increases into effect, it did not require or prescribe them. It is true that the Commission found these general increases, on an overall basis, to be just and reasonable. But the Commission did not purport to pass upon individual rates as contrasted with the general level. It neither prescribed nor specifically authorized a particular rate on a particular commodity, say coal or grain, from a specific point of origin to a specific destination.

If plaintiffs wish to complain of the reasonableness of a particular rate on the coal that is transported to them from a particular point of origin, they have the right to apply to the Commission under 49 U.S.C. §§ 13 and 15 to prescribe a different rate. The intervenor plaintiffs have the same right as to the rates on grain and feed with which they are concerned. This is what the Commission referred to in stating that its findings would not preclude interested parties from bringing any maladjustments to the Commission's attention. Neither plaintiffs nor intervenor plaintiffs have instituted such a proceeding. The nub...

To continue reading

Request your trial
17 cases
  • Students Chal. Reg. Agcy. Pro.(SCRAP) v. United States
    • United States
    • U.S. District Court — District of Columbia
    • February 19, 1974
    ...doubt. Two of the most recent, Alabama Power Co. v. United States, D.D. C., 316 F.Supp. 337 (1969), and Atlantic City Electric Co. v. United States, S.D. N.Y., 306 F.Supp. 338 (1969), were affirmed without opinion by only an equally divided Court, 400 U.S. 73, 91 S.Ct. 259, 27 L.Ed.2d 212 (......
  • 45 191 Aberdeen and Rockfish Railroad Company v. Students Challenging Regulatory Agency Procedures United States v. Students Challenging Regulatory Agency Procedures 8212 1966, 73 8212 1971
    • United States
    • U.S. Supreme Court
    • June 24, 1975
    ...noted that this Court had divided evenly in 400 U.S. 73, 91 S.Ct. 259, 27 L.Ed.2d 212 (1970) in affirming, Atlantic City Electric Co. v. United States, 306 F.Supp. 338 (SDNY 1969), and Alabama Power Co. v. United States, 316 F.Supp. 337 (DC 1970), and that the rule against reviewability of ......
  • Nader v. F. C. C.
    • United States
    • U.S. Court of Appeals — District of Columbia Circuit
    • September 29, 1975
    ...tariff revisions designed to increase revenues by $250 million.22 Arizona Grocery and the other ICC cases, Atlantic City Electric Co. v. United States, 306 F.Supp. 338 (S.D.N.Y.1969), aff'd by equally divided Court, 400 U.S. 73, 91 S.Ct. 259, 27 L.Ed.2d 212 (1970); Algoma Coal & Coke Co. v.......
  • Oklahoma Corporation Commission v. United States
    • United States
    • U.S. District Court — Northern District of Oklahoma
    • December 20, 1974
    ...restrictive language than is often the case in such orders. See Examiner's report, 16; and see, e. g., Atlantic City Electric Co. v. United States, 306 F. Supp. 338, 340 (S.D.N.Y.), aff'd by an equally divided Court, 400 U.S. 73, 91 S.Ct. 259, 27 L.Ed.2d 212; but see Florida Citrus Commissi......
  • Request a trial to view additional results

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT