Harborlite Corp. v. I. C. C.
| Decision Date | 15 December 1979 |
| Docket Number | No. 78-1443,78-1443 |
| Citation | 613 F.2d 1088 |
| Parties | HARBORLITE CORPORATION, Petitioner, v. INTERSTATE COMMERCE COMMISSION and United States of America, Respondents, Southern Pacific Transportation Co., Intervenor. |
| Court | U.S. Court of Appeals — District of Columbia Circuit |
Daniel J. Sweeney, Washington, D. C., with whom John M. Cutler, Jr., Washington, D. C., was on brief, for petitioner.
David Papowski, Atty., I. C. C., Washington, D. C., with whom Mark L. Evans, Gen. Counsel, Christine N. Kohl, Deputy Associate Gen. Counsel, Washington, D. C., at the time the brief was filed, and Robert D. Jones, Atty., I. C. C., Washington, D. C., were on brief, for respondents.
John MacDonald Smith, San Francisco, Cal., a member of the bar of the Supreme Court of the United States, pro hac vice, by special leave of court, with whom James H. Pipkin, Jr., Washington, D. C., was on brief, for intervenor.
John J. Powers, III and Andrea Limmer, Attys., U. S. Dept. of Justice, Washington, D. C., also entered appearances for respondent United States of America.
Before WRIGHT, Chief Judge, BAZELON, Senior Circuit Judge, and TAMM, Circuit Judge.
Opinion for the court filed by Circuit Judge TAMM.
In this case, we review a decision of the Interstate Commerce Commission dismissing a complaint that alleged unlawful rate discrimination in violation of section 3(1) of the Interstate Commerce Act, 49 U.S.C.A. § 10741(b) (West Spec.Pamph.1979). Because the Commission has not articulated a reasoned basis for its decision and has not adequately addressed the evidence and arguments presented by the complainant, we remand for further proceedings.
Harborlite Corporation is a small, family-owned company that mines perlite rock, a volcanic substance with various industrial uses, for shipment from its mine in Superior, Arizona, to eastern processing facilities. Harborlite's three major competitors, United States Gypsum Company, General Refractories Corporation, and Johns-Manville Corporation, also have perlite mines in the West, 1 but their mines are 300-400 miles closer to the East than is Harborlite's mine at Superior. These three competitors dominate the market for perlite, supplying the East with approximately 250,000 tons annually. Harborlite's annual shipments, on the other hand, have been limited to about 5000 tons, some two percent of the amount shipped by its competitors.
Freight charges constitute the primary component in the price of perlite rock for eastern buyers. Because the cost of other types of transportation is prohibitively high, shipment is invariably by rail. Even by rail, however, the cost of shipment substantially exceeds the preshipment selling price of crude perlite.
Having suffered net losses for six of the last eight years, Harborlite, on October 5, 1976, filed a complaint with the ICC against over 400 railroad defendants. It blamed its intolerable economic position on an alleged railroad rate disparity of some twenty-five percent, distance considered, between the rates charged to Harborlite and those charged to its competitors. The company contended that this rate disparity constituted "undue or unreasonable" rate discrimination in violation of section 3(1) of the Interstate Commerce Act, 49 U.S.C.A. § 10741(b) (West Spec.Pamph.1979), 2 and sought financial reparations and newly designated rates. Harborlite's three major competitors intervened in the proceeding before the ICC, taking the side of the railroad defendants.
The Commission, operating under its "modified procedure," See 49 C.F.R. §§ 1100.43-.52 (1978), considered the case solely on the basis of affidavits and written arguments submitted by the parties. On August 30, 1977, Review Board No. 4, with Board Member Shaw dissenting on the section 3(1) question, issued a report and order dismissing Harborlite's complaint. Harborlite appealed this ruling without success to Division 1 of the ICC. In its decision and order of March 20, 1978, the Division briefly stated its own reasons for dismissing Harborlite's complaint, but also adopted the findings and conclusions of the Review Board. Harborlite then sought review by the entire Commission, but this was summarily denied on April 28, 1978. Having exhausted its administrative remedies, Harborlite petitioned this court for a review of the ICC's actions. 3
As the Supreme Court has noted, "(t)he principal evil at which the Interstate Commerce Act was aimed was discrimination in its various manifestations," New York v. United States, 331 U.S. 284, 296, 67 S.Ct. 1207, 1213, 91 L.Ed. 1492 (1947), "and language of the broadest scope has been used to accomplish (this purpose)," United States v. Baltimore & Ohio Railroad, 333 U.S. 169, 175, 68 S.Ct. 494, 497, 92 L.Ed. 618 (1948). Section 3(1) of the Act embodies this strong congressional policy:
It shall be unlawful for any common carrier subject to the provisions of this chapter to make, give, or cause any undue or unreasonable preference or advantage to any particular person, company, firm, corporation, association, locality, port, port district, gateway, transit point, region, district, territory, or any particular description of traffic, in any respect whatsoever; or to subject any particular person, company, firm, corporation, association, locality, port, port district, gateway, transit point, region, district, territory, or any particular description of traffic to any undue or unreasonable prejudice or disadvantage in any respect whatsoever: Provided, however, That this paragraph shall not be construed to apply to discrimination, prejudice, or disadvantage to the traffic of any other carrier of whatever description.
49 U.S.C. § 3(1) (1976) (current version at 49 U.S.C.A. § 10741 (West Spec.Pamph.1979)). 4 Because of the legislative concern about discrimination as such, a rate "may be perfectly reasonable . . . and yet may create an unjust discrimination or an unreasonable preference (in violation of the Act)." ICC v. Baltimore & Ohio Railroad, 145 U.S. 263, 277, 12 S.Ct. 844, 848, 36 L.Ed. 699 (1892).
The law under section 3(1) is relatively well established, and the parties agree on the basic nature of an action under this section for relief from discriminatory rates. In the leading case of Chicago & Eastern Illinois Railroad v. United States, 384 F.Supp. 298 (N.D.Ill.1974) (three-judge court) (per curiam), Aff'd mem. 421 U.S. 956, 95 S.Ct. 1943, 44 L.Ed.2d 445 (1975), the court stated the four elements of a section 3(1) action and the burden of proof on these elements:
To support a finding of a violation of section 3(1), it must be shown (1) that there is a disparity in rates, (2) that the complaining party is competitively injured, actually or potentially, (3) that the carriers are the common source of both the allegedly prejudicial and preferential treatment, and (4) that the disparity in rates is not justified by transportation conditions. The complaining party has the burden of proving the presence of the first three factors and the carriers have the burden of justifying the disparity, if possible, in connection with the fourth factor.
384 F.Supp. at 300-01. Accord, New York v. United States, 568 F.2d 887, 898 (2d Cir. 1977); A. Lindberg & Sons, Inc. v. United States, 408 F.Supp. 1032, 1037 (W.D.Mich.1976) (three-judge court); Baltimore & Ohio Railroad v. United States, 391 F.Supp. 249, 259 (E.D.Pa.1975) (three-judge court).
In a section 3(1) controversy, the Commission adjudicates a legal dispute in a manner similar to that of a court of law. See ICC v. Louisville & Nashville Railroad, 227 U.S. 88, 33 S.Ct. 185, 57 L.Ed. 431 (1913), Discussed in United States v. Florida East Coast Railway, 410 U.S. 224, 244-45, 93 S.Ct. 810, 35 L.Ed.2d 223 (1973). 5 The paramount strength of administrative adjudication is its efficient processing of massive amounts of complex and specialized litigation. Because of the need to protect this efficiency, administrative adjudicators cannot invariably be held to the procedural safeguards applicable in Judicial adjudication. Nonetheless, administrative agencies must adhere to certain safeguards to ensure that litigants have the equivalent of their "day in court," even though the tribunal is an administrative agency. 6
One basic procedural safeguard requires the administrative adjudicator, by written opinion, to state findings of fact and reasons that support its decision. These findings and reasons must be sufficient to reflect a considered response to the evidence and contentions of the losing party 7 and to allow for a thoughtful judicial review if one is sought. See Secretary of Agriculture v. United States, 347 U.S. 645, 652-54, 74 S.Ct. 826, 98 L.Ed. 1015 (1954). The requirement of findings and reasons in a section 3(1) proceeding is well established. See, e. g., ASG Industries, Inc. v. United States, 548 F.2d 147, 154-55 (6th Cir. 1977); Atchison, Topeka & Santa Fe Railway v. United States, 218 F.Supp. 359, 363-66 (N.D.Ill.1963) (three-judge court); Stanislaus County v. United States, 193 F.Supp. 145, 147 (N.D.Cal.1960) (three-judge court) (per curiam).
Perhaps the most essential purpose served by the requirement of an articulated decision is the facilitation of judicial review. "(T)he orderly functioning of the process of review requires that the grounds upon which the administrative agency acted be clearly disclosed and adequately sustained." SEC v. Chenery Corp., 318 U.S. 80, 94, 63 S.Ct. 454, 462, 87 L.Ed. 626 (1943). Moreover, a court "cannot 'accept appellate counsel's Post hoc rationalizations for agency action'; for an agency's order must be upheld, if at all, 'on the same basis articulated in the order by the agency itself.' " FPC v. Texaco, Inc., 417 U.S. 380, 397, 94 S.Ct. 2315, 2326, 41...
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