National Ass'n of Recycling Industries, Inc. v. I. C. C.
| Decision Date | 15 August 1980 |
| Docket Number | 79-1839,79-1583,79-1838,79-1611,79-1620,79-1860,79-1970 and 79-1984,79-1395,79-1582,79-1590,Nos. 79-1393,s. 79-1393 |
| Citation | 627 F.2d 1328,201 U.S.App.D.C. 342 |
| Parties | NATIONAL ASSOCIATION OF RECYCLING INDUSTRIES, INC., Petitioner, v. INTERSTATE COMMERCE COMMISSION and the United States of America, Respondents, Atchison, Topeka and Santa Fe Railway Co., et al., Institute of Scrap Iron and Steel, Inc., National Steel Corporation (79-1582), American Paper Institute, Inc. (79-1590), Intervenors. INSTITUTE OF SCRAP IRON AND STEEL, INC., Petitioner, v. INTERSTATE COMMERCE COMMISSION and the United States of America, Respondents, Atchison, Topeka and Santa Fe Railway Co., et al., Intervenors. ARMCO, INC., et al., Petitioners, v. INTERSTATE COMMERCE COMMISSION and the United States of America, Respondents, Bethlehem Steel Corporation, Intervenor. AMERICAN PAPER INSTITUTE, INC., Petitioner, v. INTERSTATE COMMERCE COMMISSION and the United States of America, Respondents, National Association of Recycling Industries, Inc., Intervenors. ATCHISON, TOPEKA AND SANTA FE RAILWAY COMPANY, et al., Petitioners, v. INTERSTATE COMMERCE COMMISSION and the United States of America, Respondents, National Association of Recycling Industries, Inc., Intervenors. The ALUMINUM ASSOCIATION, INC., Petitioner, v. INTERSTATE COMMERCE COMMISSION and the United States of America, Respondents, National Association of Recycling Industries, Inc., Intervenors. FORT HOWARD PAPER COMPANY, Petitioner, v. The UNITED STATES of America and Interstate Commerce Commission, Respondents. SOUTHERN PAPER TRAFFIC CONFERENCE, Petitioner, v. INTERSTATE COMMERCE COMMISSION and the United States of America, Respondents. SOUTHWESTERN PAPER TRAFFIC CONFERENCE, Petitioner, v. INTERSTATE COMMERCE COMMISSION and the United States of America, Respondents. WISCONSIN PAPER AND PULP MANUFACTURERS TRAFFIC ASSOCIATION, Petitioner, v. INTERSTATE COMMERCE COMMISSION and the United States of America, Respondents. WESTERN PAPER TRAFFIC CONFERENCE, Petitioner, v. INTERSTATE COMMERCE COMMISSION and the United States of America, Respondents. GLASS PACKAGING INSTITUTE, Petitioner, v. INTERSTATE COMMERCE |
| Court | U.S. Court of Appeals — District of Columbia Circuit |
Petition for Review of an Order of the Interstate Commerce commission.
Edward L. Merrigan, Washington, D.C., for petitioner National Ass'n of Recycling Industries, in No. 79-1393.
David Reichert, Cincinnati, Ohio, with whom Howard Gould and Stephen D. Strauss, Cincinnati, Ohio, were on the brief, for petitioner Institute of Scrap Iron and Steel, Inc., in No. 79-1395.
John F. Donelan, Washington, D.C., with whom John K. Maser, III, Eugene T. Liipfert, Fritz R. Kahn and L. John Osborn, Washington, D.C., Paul V. Miller, Bethlehem, Pa., were on the joint opening brief for Armco, Inc., Inland Steel Co., Republic Steel Corp., and Youngstown Sheet and Tube Co. (petitioners in No. 79-1582), and Bethlehem Steel Corp. and National Steel Corp. (intervenors in No. 79-1582).
John F. Donelan, Washington, D.C., with whom John K. Maser, III, and Renee D. Rysdahl, Washington, D.C., were on the brief, for petitioner American Paper Institute, Inc., in No. 79-1583.
Michael Boudin, Washington, D.C., with whom Timothy A. Harr, Washington, D.C., Richard W. Kienle, Roanoke, Va., and John A. Daily, Philadelphia, Pa., were on the brief, for petitioner Railroads in No. 79-1590.
Dickson R. Loos, Washington, D.C., for petitioner Aluminum Association, Inc., in No. 79-1611.
C. Michael Loftus, Washington, D.C., with whom William L. Slover and Donald G. Avery, Washington, D.C., were on the brief, for petitioner Fort Howard Paper Co. in No. 79-1620.
Robert N. Kharasch, Washington, D.C., with whom Edward D. Greenberg, Chicago Ill., was on the brief, for petitioner Southern Paper Traffic Conference in No. 79-1838, petitioner Southwestern Paper Traffic Conference in No. 79-1839, petitioner Wisconsin Paper and Pulp Manufacturers Traffic Ass'n, in No. 79-1860, and petitioner Western Paper Traffic Conference in No. 79-1970.
Michael M. Briley, Toledo, Ohio, with whom Louis E. Tosi and Stephen B. Mosier, Toledo, Ohio, were on the brief, for petitioner Glass Packaging Institute in No. 79-1984.
David Popowski, Washington, D.C., Atty., I. C. C., with whom Robert S. Burk, Acting Gen. Counsel, Washington, D.C., was on the brief, for respondent I. C. C.
Barry Grossman, Atty., Dept. of Justice, Washington, D.C., with whom Robert Lewis Thompson, Atty., Dept. of Justice, Washington, D.C., was on the brief for respondent Department of Justice.
Before WILKEY and MIKVA, Circuit Judges, and FLANNERY, * United States District Judge for the District of Columbia.
Opinion for the Court filed by Circuit Judge WILKEY.
These consolidated cases mark the second time this court has been called upon to review a final report and order of the Interstate Commerce Commission (ICC) in its congressionally mandated investigation of the railroad rate structure for recyclable commodities in relation to virgin or raw materials. In our review of the first Commission report and order in this proceeding, National Association of Recycling Industries, Inc. v. Interstate Commerce Commission (hereafter NARI I ), 1 we vacated the order and remanded for expedited proceedings. The Commission has now completed its renewed investigation into recyclable rates, and its new decision has come under multiple challenge from petitioners of varying interests: railroads, shippers and users of recyclable commodities, and shippers and users of virgin materials. For reasons elaborated below we uphold the Commission's finding of competition between various recyclable and virgin commodities and its finding of discrimination in some railroad rates for recyclables; but we find certain aspects of the Commission's remedy, including its standard for reasonableness and its remedy for discrimination, to be beyond its authority or without support in the record. We accordingly vacate and remand on these specific issues.
The Commission's investigation into recyclable rates had its origin in section 204 of the Railroad Revitalization and Regulatory Reform Act of 1976. 2 That statutory provision required the ICC to conduct an investigation within a one-year period to determine whether the rate structure for rail transportation of recyclable and competing virgin natural resource materials was unjustly discriminatory or unreasonable, and to remove any such defects from the rate structure. The Commission commenced its investigation in February 1976, and upon its completion issued an order in February 1977 finding no discrimination in the rate structure and finding unreasonably high rates for a small number of recyclable products; the proceeding was designated Ex Parte No. 319, Investigation of Freight Rates for the Transportation of Recyclable or Recycled Materials and resulted in a decision on 16 April 1979. 3
It was this order that we reviewed in our earlier NARI I decision. Our opinion in that case dealt in considerable detail with the various congressional actions leading up to the enactment of section 204, and presented a thorough account of Commission actions pursuant to that provision. 4 We will not repeat this account of factual and procedural background except as specifically relevant to the case now before us.
In its Ex Parte No. 319 decision the Commission had arrived at a finding of no discrimination for each group of recyclable and virgin commodities by concluding either that the commodities did not compete with each other or that shippers were not competitively injured by rate disparities, since an allegedly low elasticity of demand for recyclables minimized the effect of rate increases. 5 Our decision held that the Commission had applied too narrow a definition of competition, inconsistent with the congressional mandate of section 204, by not looking at the potential for competition between recyclable and virgin commodities. 6 The result of the ICC's approach in its initial investigation was to uphold the existing rate structure without requiring any justification of rate disparities in terms of differing costs and other transportation characteristics. Section 204 had specified that the burden of proof to justify the existing rate structure should be upon the railroads; the Commission's initial order, we concluded in NARI I, had erred in shifting this statutory burden of proof. 7 The NARI I court remanded for a new investigation, and by separate order on 16 October 1978 imposed a six-month time limit on the Commission's issuance of a new order in the proceeding.
The Commission reopened the proceeding, designating it Ex Parte No. 319 (Sub-No. 1), Further Investigation of Freight Rates for the Transportation of Recyclables or Recycled Materials. 8 It was not until 18 December 1978, however, that the Commission reopened the record for parties to submit new evidence in Ex Parte No. 319 (Sub-No. 1). In orders reopening the proceeding, the Commission requested new cost data from the railroads. But with less than seven weeks to submit new evidence, the railroads contributed little new data. Finding the new data inadequate, the Commission chose to rely instead on the old data from its original Ex Parte No. 319 investigation, and to update that data to provide estimates of current revenue-cost ratios. Revenues were accordingly revised to the level of the Ex Parte No. 357 general rate proceeding of December 1978, and costs were brought to the October 1978 level. 9
The revenue-variable cost ratios used by the Commission do not pertain to specific rates for individual shipments of commodities. Rather they are weighted averages for each commodity by region. The averages for revenue and cost are weighted according to annual tonnage for each commodity in 19...
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