Florida Citrus Commission v. United States

• Decision Date: 07 September 1956
• Docket Number: Civ. No. 565.
• Citation: 144 F. Supp. 517
• Parties: FLORIDA CITRUS COMMISSION, et al., Plaintiffs, and Ezra Taft Benson, Secretary of Agriculture, et al., Intervening Plaintiffs, v. UNITED STATES of America, Interstate Commerce Commission, et al., Defendants, and Atchison, Topeka and Santa Fe Railway Company, Armour and Company, et al., Intervening Defendants.
• Court: U.S. District Court — Northern District of Florida

144 F. Supp. 517

FLORIDA CITRUS COMMISSION, et al., Plaintiffs, and Ezra Taft Benson, Secretary of Agriculture, et al., Intervening Plaintiffs, v. UNITED STATES of America, Interstate Commerce Commission, et al., Defendants, and Atchison, Topeka and Santa Fe Railway Company, Armour and Company, et al., Intervening Defendants.

Civ. No. 565.

United States District Court N. D. Florida, Tallahassee Division.

September 7, 1956.

COPYRIGHT MATERIAL OMITTED

M. W. Wells and Joel R. Wells Jr., Maguire, Voorhis & Wells, Orlando, Fla., Lewis W. Petteway, Gen. Counsel, R. Y. Patterson, Jr., Asst. Gen. Counsel, Florida R. R. & Public Commission, Tallahassee, Fla., for plaintiffs.

Robert L. Farrington, Gen. Counsel, Paul E. Blanchard, Sp. Asst. to Gen. Counsel, Walter D. Matson, Atty., Office of Gen. Counsel, U. S. Dept. of Agriculture, Washington, D. C., for intervening plaintiffs.

Frank C. Brooks, Hugh T. Matthews, Jr., Callaway, Reed, Kidwell & Brooks, Dallas, Tex., M. W. Wells, Orlando, Fla., for Western Growers Assn.

M. W. Wells, Orlando, Fla., Karl D. Loos, Dickson R. Loos, Pope, Ballard & Loos, Washington, D. C., for California Citrus League.

G. Harrold Carswell, U. S. Atty., Tallahassee, Fla., Isaac K. Hay, C. H. Johns, Asst. Gen. Counsel, Washington, D. C., Willard R. Memler, Asst. Atty. Gen., John W. Henderson, Tallahassee, Fla., Harold B. Wahl, Jacksonville, Fla., Ausley & Ausley, D. F. McMullen, Tallahassee, Fla., for defendants United States and others.

Robert H. Bierma, Chicago, Ill., J. T. Clark, Cleveland, Ohio, Alfred S. Knowlton, New York City, Roland J. Lehman, Chicago, Ill., E. R. Leigh, Louisville, Ky., Ausley & Ausley, D. F. McMullen, Tallahassee, Fla., Harold B. Wahl, Jacksonville, Fla., John Ward Henderson, Tallahassee, Fla., for intervening defendants Atchison, T. & S. F. R. Co. and others.

Warren H. Wagner, Washington, D. C., Nuel D. Belnap, Chicago, Ill., D. Fred McMullen, Ausley & Ausley, Tallahassee, Fla., for defendants Armour & Co. and others.

Before JONES, Circuit Judge, BARKER, District Judge, and DE VANE, Chief Judge.

JONES, Circuit Judge.

The Interstate Commerce Commission entered its order dated January 9, 1956, on the petition of substantially all of the rail carriers of the country, permitting increases in refrigeration charges to the extent authorized in the Commission's report of the same date. 297 I.C.C. 505. This action is brought to enjoin, annul and set aside the Commission's order under the provisions of the Judicial Code, 28 U.S.C.A. §§ 1336, 1337, 1398, 2284, 2321, 2322 and 2325, and by the Administrative Procedure Act, 5 U.S.C.A. § 1009. The action was brought by shippers and representatives of shippers of fresh fruits and vegetables in and from Florida and two agencies of the State of Florida, the Florida Citrus Commission, a body corporate, Florida Statutes 1955, § 595.01 et seq.¹ and Florida Railroad and Public Utilities Commission, an unincorporated regulatory agency exercising quasi-judicial powers. Florida Statutes 1955, § 350.01 et seq. F.S.A. By intervention, Western Growers Association, a trade association of growers and shippers of melons and vegetables in and from Arizona and California, California Citrus League, a trade association of growers and shippers of citrus fruits in and from Arizona and California, and Ezra Taft Benson, Secretary of Agriculture, became parties plaintiff.

The charges made by rail carriers for refrigeration services are separate from the so-called line-haul rates. 49 U.S.C.A. § 6(1). The charges for refrigeration services are prescribed by the Interstate Commerce Commission or established by the rail lines. They are set forth in the published tariffs of W. T. Jamison, agent for the railroads. The refrigeration charges, for the most part, are of two basic groups, one known as Section 2 charges and the other being Section 4 charges. The designations come from the numbering of the sections of Agent Jamison's tariffs where the charges are scheduled. Generally speaking, Section 2 charges apply in the transportation by rail of fresh fruits, vegetables, melons, berries and processed foods. The commodities to which Section 4 charges are applicable include fresh meats and packing house products, fish, dairy products, bananas, coconuts and beer. Section 2 charges are based, or intended to be based, upon cost of ice in bunkers, supervision, switching to and from icing stations, damage to bunkers and cars, ice haulage in bunkers, accounting, hazard, taxes, and a return on investment. Section 4 charges are intended to include only cost of ice, salt and switching. Shippers using Section 4 services have urged that the carriers are compensated for the Section 2 costs not included in Section 4 charges in the line-haul rates on Section 4 commodities. A number of types of refrigeration services are available in order to provide for the different needs of shippers of various commodities from and to diverse points of origin and destination.

During the period of 1946 to 1951, inclusive, the Interstate Commerce Commission authorized increases in refrigeration charges aggregating 32.25 per cent. Ex Parte No. 162, Increased Railway Rates, Fares and Charges, 1946, 266 I.C. C. 537; Ex Parte No. 166, Increased Freight Rates, 1947, 270 I.C.C. 403. During the same period the Commission, in "general revenue" proceedings, authorized increases of interstate freight rates to the extent of 78.9 per cent. Ex Parte No. 162, Increased Railway Rates, Fares and Charges, 1946, supra; Ex Parte No. 166, Increased Freight Rates, 1947, supra; Ex Parte No. 168, Increased Freight Rates, 1948, 276 I.C.C. 9; Ex Parte No. 175, Increased Freight Rates, 1951, 281 I.C.C. 557. A recent order allows a further freight rate increase of 6 per cent. Ex Parte No. 196, Increased Freight Rates, 1956, ___ I.C.C. ___. In Ex Parte No. 168, and again in Ex Parte No. 175, the Commission found the evidence inadequate to show that existing charges did not compensate the carriers for their costs in furnishing refrigerating services. In 1951 the rail carriers decided to conduct a survey to ascertain the costs of refrigeration services as a basis for determining whether an increase in charges could be justified. The method of making the survey and the results obtained from it need not be here recited beyond the extent required for our determination of the questions before us. They are fully detailed in the report of the Commission. The rail lines, basing their conclusion on a report of the survey, estimated that Section 2 refrigeration costs exceeded revenues by 29.8 per cent.

The rail carriers, by their petition filed with the Interstate Commerce Commission, sought increases of 30 per cent, with some exceptions, of the Section 2 charges, and specific increases for the charges for ice, salt and switching in the Section 4 charges. In their petition the carriers asserted that their cost studies showed that on the basis of 1951 figures, the cost of refrigeration services was more than $12,000,000 in excess of the revenues from such services. All of the interests before the Court were represented in the proceedings before the Commission. The Commission held numerous hearings at various places, built up a large record of testimony and exhibits, a report was proposed by the Examiner, exceptions to the proposed report were filed, briefs were submitted, and oral argument was heard by the full Commission on three different days.

In its report the Commission found that the carriers were sustaining a deficit of 23 per cent of their refrigeration charge revenue from Section 2 traffic, and an ice cost of approximately 17 per cent in excess of revenue on Section 4 shipments. But, finding that a substantial portion of the affected traffic could not bear increases to the extent required to fully cover costs of service, the Commission authorized increases of 15 per cent in the basic refrigeration charges. Petitions for Reconsideration were filed with the Commission, and while these petitions were pending this suit was instituted. The Commission denied the Petitions for Reconsideration on April 16, 1956, and, this Court meanwhile having declined a stay, the increases became effective April 17, 1956.

At the outset we are met with the contention that no order was issued under Section 15(1) of the Interstate Commerce Act, 49 U.S.C.A. § 15(1), and that no notice was given under Section 4(a) of the Administrative Procedure Act, 5 U.S.C.A. § 1003(a), which relates to rule making by administrative agencies. More nearly pertinent, we think, is Section 5(a) of the Administrative Procedure Act, 5 U.S.C.A. § 1004(a), providing for notice of agency hearings. Wherever it appears that the absence of notice has resulted in prejudice to a complaining party the action of the administrative agency will be set aside. Pinkett v. United States, D.C.Md.1952, 105 F.Supp. 67. But no prejudice is shown where, as in this case, the party complaining had actual knowledge of and participated in the administrative proceedings and he will not be heard to complain of the failure to give formal notice. W. J. Dillner Transfer Co. v. United States, D.C.W.D. Pa.1951, 101 F.Supp. 506; C. E. Hall & Sons, Inc., v. United States, D.C.Mass. 1950, 88 F.Supp. 596. We think it doubtful that the hearings of the Commission in the proceeding we here consider were of the kind contemplated by the section of the Interstate Commerce Act requiring notice, but the absence of any showing of prejudice relieves us of the necessity to decide the point.

By the enactment of the Emergency Transportation Act, 1933, 48 Stat. 211, 49 U.S.C.A. § 15a(2), the Congress gave to the Interstate Commerce Commission the power and imposed the duty to adjust rates so that carriers as a whole, or in each of such rate groups or territories as the Commission might designate, will earn an aggregate net operating income equal to a fair return upon the aggregate value of the railway...