Iowa Power and Light Co. v. U.S.

• Decision Date: 03 August 1983
• Docket Number: No. 82-2550,82-2550
• Citation: 712 F.2d 1292
• Parties: IOWA POWER AND LIGHT COMPANY, Petitioner, v. UNITED STATES of America and Interstate Commerce Commission, Respondents.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 1292

712 F.2d 1292

IOWA POWER AND LIGHT COMPANY, Petitioner, v. UNITED STATES of America and Interstate Commerce Commission Respondents.

No. 82-2550.

United States Court of Appeals,

Eighth Circuit.

Submitted April 14, 1983.

Decided Aug. 3, 1983.

Lynn K. Vorbrich, Iowa Power & Light Co., Des Moines, Iowa, Curtis L. Ritland, Bradshaw, Fowler, Procter & Fairgrave, Des Moines, Iowa, John M. Cleary, Frederic L. Wood, Nicholas J. DiMichael, Donelan, Cleary, Wood & Maser, P.C., Washington, D.C., for petitioner.

William F. Baxter, Asst. Atty. Gen., John J. Powers, III, John P. Fonte, Attys. Dept. of Justice, Washington, D.C., John Broadley, Gen. Counsel, Ellen D. Hanson, Associate Gen. Counsel, Cecelia E. Higgins, I.C.C., Washington, D.C., for I.C.C.

Donald E. Engle, Vice President, Law, Nicholas P. Moros, Gen. Counsel, Commerce, Burlington Northern Railroad Co., St. Paul, Minn., Betty Jo Christian, Edward R. Leahy, Charles G. Cole, Steptoe & Johnson, Chartered, Washington, D.C., for Burlington Northern Railroad Co.

Before ARNOLD, Circuit Judge, HENLEY, Senior Circuit Judge, and JOHN R. GIBSON, Circuit Judge.

HENLEY, Senior Circuit Judge.

The major issue to be decided in this appeal is whether the Interstate Commerce Commission, consistent with its enabling legislation, can allow an incorrectly rejected tariff to take effect as of the date it would have been implemented but for the agency's prior erroneous rejection. Concluding that the Commission's action in the present case did not impermissibly conflict with the Interstate Commerce Act, and was not arbitrary or capricious, we affirm.

I

This appeal represents the latest chapter in an ongoing dispute between petitioner Iowa Power and Light Company (IPL), a public utility, and Burlington Northern Railroad Company (BN) concerning the shipment of coal from a Wyoming mine to the utility's generating plant at Council Bluffs, Iowa. Central to the controversy is a "letter of understanding" signed by the parties in connection with the coal shipments. This letter included, among other items, a base rate and rate escalation formula for rail transportation of coal from the Wyoming mine to Council Bluffs. Since February of 1978, when shipments began, IPL has received coal transported by BN; the utility is the only shipper involved in this particular transaction.

In the same year the coal shipments started, BN submitted a tariff to the ICC specifying a rate higher than that initially agreed upon by the parties in the letter of understanding. Following the filing of a petition and complaint by IPL, see 49 U.S.C. § 10707, the Commission determined that the rate specified in the letter of understanding was a just and reasonable maximum rate. Its prescription order, dated October 1, 1980, directed BN to file tariffs consistent with the parties' prior agreement. This court subsequently denied the railroad's petition for review, upholding the Commission's action. ¹ Iowa Power & Light Co. v. Burlington Northern, Inc., 647 F.2d 796 (8th Cir.1981), cert. denied, 455 U.S. 907, 102 S.Ct. 1253, 71 L.Ed.2d 445 (1982).

Thereafter, in October of 1981, BN submitted Supplement 4 to the tariff it had filed following entry of the Commission's prescription order. This supplement proposed an increase to $10.95 from the agreed-upon rate, which at that time was $7.62. Acting in response to a letter of protest filed by IPL, the ICC on October 30, 1981 rejected Supplement 4 on the ground that it constituted a violation of the agency's previously issued prescription order. During this period, IPL initiated a breach of contract action against BN, seeking a declaratory judgment, injunctive relief and damages. Iowa Power & Light Co. v. Burlington Northern Railroad Co., Civil No. 81-526-B (S.D.Iowa filed Oct. 27, 1981). That action remains pending.

After the Commission's adverse decision with respect to Supplement 4, BN filed a petition for review with the District of Columbia Circuit. That court vacated the agency's order, holding that "when a rate increase is tendered to the ICC after the effective date of the Staggers Act and the tendered rate is allegedly below the Section 202 market dominance threshold, the Commission may not reject the rate simply because it is above the level specified in an outstanding prescription order or pre-Act rate agreement." Burlington Northern Railroad Co. v. ICC, 679 F.2d 934, 942 (D.C.Cir.1982). The case was remanded to the Commission, and BN thereafter submitted Supplement 8, which again proposed a rate of $10.95 for the coal transportation at issue. In addition, this supplement provided that the proposed rate was to be effective as of November 1, 1981, the date Supplement 4 would have taken effect absent the Commission's prior rejection.

In a decision dated December 9, 1982, the ICC approved Supplement 8 and authorized the retroactive application of the $10.95 rate. The Commission reasoned that because its legal error alone had prevented the railroad from collecting the higher rate since November 1, 1981, it was compelled to use its equitable powers "to make BN whole." The agency further ruled, however, that IPL would not be required to immediately repay the back amount due; rather, the parties were directed to apprise the Commission of the amount owed by the utility under Supplement 8 and suggest a reasonable payment schedule, which would thereafter be determined by the agency. ² This order is now before us on IPL's petition for review.

II

In contesting the Commission's decision, IPL initially challenges the agency's authority to allow retroactive application of the previously rejected rate. Specifically, the utility urges that the ICC's action contravenes both the Interstate Commerce Act and the "filed rate doctrine" and that the Commission does not possess the general equitable powers necessary to permit the action taken.

The framework for our review of the Commission's decision is supplied by the Administrative Procedure Act. Pursuant to that statute, agency action may be set aside if found to be, inter alia, "in excess of statutory jurisdiction, authority, or limitations, or short of statutory right." 5 U.S.C. § 706(2)(C). To the extent necessary, all relevant questions of law, including the interpretation of statutory provisions, are to be resolved by the reviewing court. 5 U.S.C. § 706. In addition, we observe that the interpretation "of a statute by those charged with its execution should be followed unless there are compelling indications that it is wrong...." Red Lion Broadcasting Co. v. FCC, 395 U.S. 367, 381, 89 S.Ct. 1794, 1801, 23 L.Ed.2d 371 (1969).

A

The focus of IPL's primary contention concerning the Commission's authority to allow retroactive implementation of the previously rejected rate is 49 U.S.C. § 10761(a), which provides in pertinent part:

Except as provided in this subtitle, a carrier providing transportation or service subject to the jurisdiction of the Interstate Commerce Commission ... shall provide that transportation or service only if the rate for the transportation or service is contained in a tariff that is in effect under this subchapter. That carrier may not charge or receive a different compensation for that transportation or service than the rate specified in the tariff whether by returning a part of that rate to a person, giving a person a privilege, allowing the use of a facility that affects the value of that transportation or service, or another device.

The utility argues that the Commission's action in the present case contravenes both this provision and the "filed rate doctrine," and that it therefore must be rescinded. We cannot agree.

Although the initial sentence of section 10761(a) seemingly supports the contention advanced by IPL, we believe a reading of the provision as a whole demonstrates that it was not designed to prevent action such as that taken by the Commission in this case. The final sentence of the provision indicates that through this section Congress primarily intended to prevent carriers from discriminating among shippers, see Lowden v. Simonds-Shields-Lonsdale Grain Co., 306 U.S. 516, 520-21, 59 S.Ct. 612, 614, 83 L.Ed. 953 (1939) (predecessor of section 10761(a) "forbids [a] carrier from giving a voluntary rebate in any shape or form"); Louisville & Nashville Railroad Co. v. Maxwell, 237 U.S. 94, 97, 35 S.Ct. 494, 495, 59 L.Ed. 853 (1915) (prohibition against deviation from carrier's filed rate "embodies the policy which has been adopted by Congress in the regulation of interstate commerce in order to prevent unjust discrimination"), and it is clear that the Commission's action in the present circumstances does not conflict with that underlying purpose. IPL is admittedly the only shipper involved with BN in the disputed transaction, and clearly there is no danger of rate discrimination as a result of the ICC's order. Applying section 10761(a) to bar the action taken by the Commission in this case would do nothing to advance the major purpose upon which that provision is premised--the prevention of rate discrimination among shippers by a carrier. Cf. Johnson Machine Works, Inc. v. Chicago, Burlington & Quincy Railroad Co., 297 F.2d 793, 798 (8th Cir.1962) (no opportunity for discrimination apparent in misrouting situation). In these circumstances, we cannot agree that the Commission's correction of its prior error through the retroactive application of the previously rejected tariff conflicts with section 10761(a) and must therefore be overturned.

Moreover, the Commission's order does not conflict with the general mandate of the Revised Interstate Commerce Act. Nothing in the Act expressly prohibits the ICC from allowing the retroactive application of a tariff in the limited circumstances of this case; more significantly, the challenged action is consistent with the role contemplated for the ICC under the Act. Several statutory provisions authorize the Commission, in certain...