New England Power Co. v. U.S.
| Decision Date | 24 November 1982 |
| Docket Number | No. 82-1317,82-1317 |
| Citation | 693 F.2d 239 |
| Parties | NEW ENGLAND POWER COMPANY, Petitioner, v. UNITED STATES of America and Interstate Commerce Commission, Respondents. Baltimore and Ohio Railroad Company, et al., Intervenors. |
| Court | U.S. Court of Appeals — First Circuit |
Thomas Robinson, Providence, R.I., with whom Pasco Gasbarro, Jr., Westborough, Mass., Thomas P. Peters, Fritz R. Kahn, Washington, D.C., Robert R. Brinker, Washington, D.C., David A.K. Harland were on brief, for petitioner.
John F. Donelan, and Frederic L. Wood, Washington, D.C., on brief, for intervenor Carolina Power & Light Co.
Charles J. McCarthy, and McCarthy, Sweeney & Harkway, Washington, D.C., on brief, for intervenors Commonwealth Edison Co., et al.
Timm L. Abendroth, with whom William F. Baxter, Asst. Atty. Gen., John Broadley, Gen. Counsel, Kathleen M. Dollar, Associate Gen. Counsel, John J. Powers, III and Kenneth Kolson, Attys., Dept. of Justice, Washington, D.C., were on brief, for respondents.
Michael Boudin, with whom Catherine W. Brown, J. Peter Byrne, Robert Batchelder, Washington, D.C., John A. Daily, Philadelphia, Pa., Samuel R. Freeman, Denver, Colo., Stuart F. Gassner, Chicago, Ill., James L. Howe, Richmond, Va., Richard W. Kienle, Roanoke, Va., Howard Koontz, Chicago, Ill., Thormund A. Miller, Carol A. Harris, San Francisco, Cal., Stuart Vaughn, Milton E. Nelson, Jr., Chicago, Ill., Hanford O'Hara, Washington, D.C., C. Harold Peterson, Minneapolis, Minn., Alan R. Post, Cottage Grove, Minn., Charles C. Rettberg, Jr., Cleveland, Ohio, Albert B. Russ, Jr., Jacksonville, Fla., and Michael Thompson, were on brief, for intervenor Railroads.
Before COFFIN, Chief Judge, TIMBERS, * Senior Circuit Judge, and BOWNES, Circuit Judge.
This case involves the implementation by the Interstate Commerce Commission ("the Commission") of Sec. 229 of the Staggers Rail Act of 1980. 1 We review the Commission's decision in Ex Parte No. 411, Complaints Filed Under Section 229 of the Staggers Rail Act of 1980, 365 I.C.C. 507 (1982), that its most recently promulgated market dominance standards shall apply to savings clause cases under that section. We affirm.
Prior to the Railroad Revitalization and Reform Act of 1976 ("the Reform Act"), 2 all rail rates were subject to regulation by the Commission under the "just and reasonable" standard. The Reform Act, taking a major step towards deregulation of rail rates, required the Commission, before applying the just and reasonable standard, to find that the carrier whose rates were challenged had "market dominance" over the service to which the rate applied.
The Commission in late 1976, pursuant to Sec. 202(b) of the Reform Act, established standards and procedures for determining whether a railroad possessed market dominance. Ex Parte No. 320, Special Procedure for Making Findings of Market Dominance, 353 I.C.C. 874 (1976), modified, 355 I.C.C. 12 (1976). The Commission set forth three conditions which, if proved by the party challenging a railroad's rates, would create a presumption of market dominance: (1) a market share presumption--the railroad carried 70 percent or more of the involved traffic in the preceding year; (2) a cost presumption--the railroad's rate exceeded its variable cost of providing service by 60 percent or more; and (3) a substantial investment presumption--the affected shipper had made a substantial investment in rail-related equipment or facilities that prevented or made impractical the use of another carrier or mode. Those presumptions could be rebutted by any relevant evidence except that relating to product or geographic competition. The Commission indicated that it would revise its rules "in light of actual experience." 355 I.C.C. at 13.
The Commission's regulations were upheld in major part on judicial review but remanded for a clarification of the cost presumption. Atchison, T. & S.F. Ry. v. ICC, 580 F.2d 623 (D.C.Cir.1978). The Atchison court, acknowledging criticism of the regulations from all sides, 3 noted that those regulations were only the "initial phase in the Interstate Commerce Commission's implementation of a new regulatory concept", id. at 639, and emphasized the need to reevaluate those regulations in the light of experience.
On remand for clarification, the Commission noted that it was undertaking a further analysis of its market dominance regulations and that in the meantime it would consider all pertinent rebuttal evidence, including that concerning product and geographic competition. 359 I.C.C. 735 (1979).
In a January 1980 rulemaking the Commission proposed abolition of the market share and substantial investment presumptions and substantial revision of the cost presumption. Ex Parte No. 320 (Sub-No. 1), Rail Market Dominance and Related Considerations, 45 Fed.Reg. 3353 (1980). While the Commission was considering comments on that proposal, Congress passed the Staggers Act, which significantly furthered the deregulation of rail rates that had begun with the Reform Act of 1976.
Section 202 of the Staggers Act directly superseded the Commission's cost presumption. It required a finding of no market dominance when a rail carrier established that its challenged rate would yield less than a given percent of variable cost, 49 U.S.C. Sec. 10709(d)(2), and further provided that a finding that a rate is equal to or greater than the statutory variable cost percentage "does not establish a presumption" of market dominance, 49 U.S.C. Sec. 10709(d)(4).
In December of 1980 the Commission withdrew its revised market dominance regulations, proposed in Ex Parte No. 320 (Sub-No. 1), and initiated Ex Parte No. 320 (Sub-No. 2) to reconsider the revision in light of the Staggers Act. Market Dominance Determinations and Considerations of Product Competition, 45 Fed.Reg. 83342 (1980). After a period for comments and review, the Commission, on July 8, 1981, revoked its market dominance presumptions and substituted a new set of market dominance guidelines. Ex Parte No. 320 (Sub-No. 2), 365 I.C.C. 118. Concluding that the presumptions did not necessarily reflect the degree of railroad market power and therefore yielded inaccurate market dominance determinations, the Commission created broad new guidelines that focus on four forms of competition: intermodal, intramodal, product, and geographic. 4 Id. at 120. The burden remained on complainants to prove a lack of effective competition. Id. at 132.
The question before us in this case is what market dominance standards should be applied in proceedings under Sec. 229 of the Staggers Act. Section 229 established that any rail rate in effect on the effective date of the Act "shall be deemed to be lawful and may not thereafter be challenged", but with the "savings provision" that "any interested party alleging that the rail carrier has market dominance over the transportation to which the rate applies ... and that the rate is not reasonable" could file a complaint with the ICC within 180 days of the effective date of the Act. 5
Almost 800 complaints, including that of petitioner New England Power Company, were filed before the cutoff date, March 30, 1982. 46 Fed.Reg. 24740 (1981). By July 1981, when the Commission's new market dominance guidelines were announced, hundreds of those complaints were pending before the Commission but few if any had proceeded to hearing. Approximately 300 complaints are still pending. 6
In order to manage these Sec. 229 cases and resolve common issues, the Commission initiated a proceeding, Ex Parte No. 411, Complaints Filed Under Section 229 of the Staggers Rail Act, to respond to various petitions and motions filed in those cases. Among those motions was that of petitioner New England Power, joined by other parties and filed on November 24, 1981, asking for a declaratory order that the new market dominance standards promulgated in Ex Parte No. 320 (Sub-No. 2) would not be used in pending Sec. 229 cases. The Commission issued a decision on February 5, 1982, finding, inter alia, that the new market dominance standards shall apply. 365 I.C.C. 507.
Petitioner challenges that decision on two bases: (1) Congress intended that the previously promulgated market dominance standards apply to Sec. 229 cases; (2) "retroactive" application of the new market dominance standards would create a manifest injustice towards shippers.
Nothing in the Staggers Act speaks directly to the standards which the Commission should apply in determining market dominance in savings clause cases. Section 229 itself indicates only that market dominance shall be "determined under section 10709 of [title 49]." Section 202 of the Act amends Sec. 10709 in a way that directly supersedes the cost presumption in the Commission's Ex Parte No. 320 (Sub-No. 1) market dominance guidelines, which were in effect at the time of the Act's passage. The final conference report indicates that such newly adopted jurisdictional standards shall apply to Sec. 229 cases.
Petitioner argues that, except for the modification embodied in Sec. 202, Congress intended that this last opportunity to challenge the reasonableness of existing rates should be subject to the Commission's then existing market dominance standards. Petitioner reasons by negative inference: because Congress explicitly modified one of the market dominance presumptions but was silent with respect to the others, it ratified the others by implication.
But this reasoning by negative inference from Congressional silence is as applicable to the validity of the new...
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