Indiana Harbor Belt R. Co. v. General American Transp. Corp.

• Decision Date: 25 May 1978
• Docket Number: No. 77-1676,77-1676
• Citation: 577 F.2d 394
• Parties: INDIANA HARBOR BELT RAILROAD COMPANY, Petitioner, United States of America and Interstate Commerce Commission, Respondents, v. GENERAL AMERICAN TRANSPORTATION CORPORATION, Union Tank Car Company, North American Car Corporation, U. S. Railway Manufacturing Company, Manufacturing Chemists Association, Pullman Leasing Company, and U. S. Railway Equipment Company, Intervenors.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 394

577 F.2d 394

INDIANA HARBOR BELT RAILROAD COMPANY, Petitioner United States of America and Interstate Commerce Commission Respondents, v. GENERAL AMERICAN TRANSPORTATION CORPORATION, Union Tank Car Company, North American Car Corporation, U. S. Railway Manufacturing Company, Manufacturing Chemists Association Pullman Leasing Company, and U. S. Railway Equipment Company, Intervenors.

No. 77-1676.

United States Court of Appeals Seventh Circuit.

Argued Feb. 13, 1978.

Decided May 25, 1978.

Anna M. Kelly, Chicago, Ill., for petitioner.

Henri F. Rush, I. C. C., Washington, D. C., Martin Lucente, Robert R. Tepper, Chicago, Ill., for respondents.

Before FAIRCHILD, Chief Judge, TONE, Circuit Judge, and SHARP, District Judge. ^*

ALLEN SHARP, District Judge.

This is an appeal from a determination by the Interstate Commerce Commission (the "Commission") that the Indiana Harbor Belt Railroad Company ("IHB") may not assess additional charges for the empty movement of privately-owned freight cars for ordinary repairs once they have entered The Commission's determination was made in a decision served on June 15, 1977 encompassing four separate Commission proceedings. They had been consolidated for disposition because all "deal with the issue of the lawfulness of any separate charge for the switching of empty privately-owned cars for ordinary repairs."

the national car fleet and must participate in an excess empty mileage "equalization" rule published by the nation's railroads. It was initiated by a petition for judicial review filed with this Court by IHB on July 5, 1977.

General American Transportation Corporation, Union Tank Car Company, and North American Car Corporation v. Indiana Harbor Belt Railroad Company, No. 35404, U. S. Railway Mfg. Co. v. Indiana Harbor Belt Railroad Company, No. 36269, Charges for Moving Empty Private Tank Cars on Own Wheels, No. 36379, and Charges for Movement of Empty Cars, East Camden and Highland Railroad Company, No. 36116, are the four cases embraced by the Commissioner's decision. The last of these is not before the Court because it did not involve IHB's charges, IHB was not a party to it and neither IHB nor anyone else has sought review of the Commissioner's decision as it applies to that case.

Dockets Nos. 35404 and 36269 were complaints by freight car manufacturing companies against IHB's assessment of switching charges pursuant to a claim that its existing tariffs applied to the empty movement of privately-owned cars to and from repair shops owned by those companies and located on IHB's tracks. Complainants argued that the tariff items under which the charges were assessed were inapplicable by their own terms and unlawful in any event because once freight cars have entered the national car fleet they become "instrumentalities of transportation", rather than "articles of commerce", and are then no longer subject to charges applicable to the transportation of property.

Docket No. 36379 was an investigation into the lawfulness of new tariff items published by IHB to overcome the objection that the charges it had been assessing on movements of empty privately-owned cars to and from repair shops were inapplicable by their own terms. The investigation also included the general issue of the lawfulness of any such tariff publication. The car manufacturer complainants in Dockets Nos. 35404 and 36369 were protestants in Docket No. 36379. Manufacturing Chemists Association ("MCA"), a non-profit trade association whose members account for more than half the total dollar investment in the privately-owned tank car fleet and a substantial portion of the total dollar investment in privately-owned covered hopper cars, was an intervening protestant in Docket No. 36379.

The Commission and the United States of America are Respondents to IHB's Petition here. Complainants, protestants and intervening protestant MCA have intervened in this judicial review proceeding in opposition to the relief sought by IHB.

JURISDICTION OF THE COURT

Our jurisdiction to review the order is derived from 28 U.S.C. §§ 2342 and 2321.

The petitioner's right to appeal the decision and order of the Interstate Commerce Commission is grounded on Title 5, U.S.C.A., §§ 701-706, commonly known as the Administrative Procedure Act. Section 702 provides:

"A person suffering legal wrong because of agency action, or adversely affected or aggrieved by agency action within the meaning of a relevant statute, is entitled to judicial review thereof . . . "

This petition seeks to have the order of the Commission reversed and set aside as being in excess of the Commission's power, without a rational basis, not supported by substantial evidence in the record, and arbitrary and capricious in some respects.

ISSUE

Is the Commission's determination that any railroad, including the IHB, which participates substantially in the revenue generated by loaded movements of the privately-

owned freight cars may not assess additional charges for the empty movement of such cars for ordinary repairs once they have entered the national car fleet and must participate in a nationwide "equalization" rule designed to allocate the responsibility for empty car mileage proportionally among those railroads which participate in loaded privately-owned car movements, rational and within the Interstate Commerce Commission's statutory powers?

ICC HOLDINGS

Specifically, the Commission determined: 1. IHB lawfully may not assess separate additional charges for switching empty privately-owned cars (tanks and other rail cars) for ordinary repairs and thus it must cancel its published exceptions to certain master tariff provisions published on behalf of all of the nation's railroads; 2. certain other tariff provisions published by IHB purporting to establish local switching charges for such repair movements are inapplicable, but if applicable, would be unlawful, thereby necessitating a refund of amounts already collected; and 3. IHB must participate in a uniform "equalization" rule published on behalf of all of the nation's other railroads, as the means by which the railroad industry is compensated for the cost of excess empty movements of tank cars.

STANDARDS OF REVIEW

The responsibility of the court in reviewing a decision and order of the Commission properly before it consists in deciding 1. whether the Commission has acted within the power delegated to it by law; 2. whether the Commission's decision is supported by facts or substantial evidence; 3. whether the order is based on specific findings of fact from the record; 4. whether the Commission's conclusions have a rational basis.

This Court reminds the Commission that our task requires a review of the whole record. Following the admonition of the Supreme Court in Universal Camera Corp. v. National Labor Relations Board, 340 U.S. 474, 71 S.Ct. 456, 95 L.Ed. 456 (1951), the Court held in Chicago Rock Island and Pacific Railroad Company v. United States and the Interstate Commerce Commission, 205 F.Supp. 378 (N.D.Ill.1962), that the scope of judicial review of an order of the Interstate Commerce Commission is not limited merely to an examination of the evidence supporting findings reached by the Commission, but is based upon a review of the whole record. This scope of review is the result of the enactment of the Administrative Procedure Act, 5 U.S.C. § 706. That statute contains an express direction to reviewing courts to consider the "whole" record in determining whether administrative findings have the required evidentiary support.

As the Supreme Court observed with respect to the same requirement in the Labor Management Relations Act of 1947 in Universal Camera Corporation v. National Labor Relations Board, 340 U.S. 474, 488, 71 S.Ct. 456, 464 (1951):

"Whether or not it was ever permissible for courts to determine the substantiality of evidence supporting a Labor Board decision merely on the basis of evidence which in and of itself justified it, without taking into account contradictory evidence or evidence from which conflicting inferences could be drawn, the new legislation definitively precludes such a theory of review and bars its practice. The substantiality of evidence must take into account whatever in the record fairly detracts from its weight. This is clearly the significance of the requirement in both statutes that courts consider the whole record."

Of the same purport was the decision in National Labor Relations Board v. Pittsburgh S.S. Co., 340 U.S. 489, 71 S.Ct. 453, 95 L.Ed. 479 (1951). See also, Schwartz, A Decade of Administrative Law, 51 Mich.L.Rev. 775 (1953), as well as such recent decisions as National Labor Relations Board v. Isis Plumbing & Heating Co., 322 F.2d 913 (9th Cir. 1963); National Labor Relations Board v. Walton Mfg. Co., 322 F.2d 187 (5th In determining whether there is substantial evidence of public convenience and necessity to support the Commission's findings and decision here, we must carefully examine all of the evidence presented to the Commission.

Cir. 1963); and Lawson Milk Co. v. National Labor Relations Board, 317 F.2d 756 (6th Cir. 1963).

This Court will now turn to the issues raised in Dockets 35404, 36269, 36379, the order requiring IHB to participate in the recently established excess mileage equalization rule applicable to privately-owned tank cars and the Commission's statutory authority to regulate the railroad industry.

DOCKETS 35404; 36269

Docket No. 35404 was initiated by a complaint filed on April 14, 1971. It raised two distinct issues, i. e., was the switching charge published by IHB applicable to movements of empty privately-owned freight cars to and from repair shops, once such cars had entered the national car fleet, and would the assessment of such charges, by a railroad which participates substantially in revenues from loaded privately-owned car movements, if applicable, otherwise be lawful under the Interstate Commerce A...