Nueces County Nav. Dist. No. 1 v. I. C. C., Nos. 78-1348

CourtUnited States Courts of Appeals. United States Court of Appeals (5th Circuit)
Writing for the CourtBefore CLARK, Chief Judge, RUBIN, and TATE; TATE
Citation674 F.2d 1055
Decision Date06 May 1982
Docket Number79-1816,Nos. 78-1348,80-1842 and 80-1843
PartiesNUECES COUNTY NAVIGATION DISTRICT NO. 1, et al., Petitioners, v. INTERSTATE COMMERCE COMMISSION, et al., Respondents. PRODUCERS GRAIN CORPORATION, et al., Petitioners, v. INTERSTATE COMMERCE COMMISSION, et al., Respondents. NUECES COUNTY NAVIGATION DISTRICT NO. 1, et al., Petitioners, v. INTERSTATE COMMERCE COMMISSION, et al., Respondents. PRODUCERS GRAIN CORPORATION, et al., Petitioners, v. INTERSTATE COMMERCE COMMISSION, et al., Respondents.

Page 1055

674 F.2d 1055
NUECES COUNTY NAVIGATION DISTRICT NO. 1, et al., Petitioners,
v.
INTERSTATE COMMERCE COMMISSION, et al., Respondents.
PRODUCERS GRAIN CORPORATION, et al., Petitioners,
v.
INTERSTATE COMMERCE COMMISSION, et al., Respondents.
NUECES COUNTY NAVIGATION DISTRICT NO. 1, et al., Petitioners,
v.
INTERSTATE COMMERCE COMMISSION, et al., Respondents.
PRODUCERS GRAIN CORPORATION, et al., Petitioners,
v.
INTERSTATE COMMERCE COMMISSION, et al., Respondents.
Nos. 78-1348, 79-1816, 80-1842 and 80-1843.
United States Court of Appeals,
Fifth Circuit.
May 6, 1982.

Page 1056

Brooks & Brooks, Frank C. Brooks, Barry J. Brooks, Dallas, Tex., for petitioners.

Robert L. Thompson, Barry Grossman, Daniel J. Conway, Dept. of Justice, Christine N. Kohl, Evelyn G. Kitay, I. C. C., Washington, D. C., for respondents.

F. William Colburn, Houston, Tex., for Houston Port Bureau, Inc.

Michael R. O'Keefe, III, New Orleans, La., Andrew P. Goldstein, Washington, D. C., for Louis Dreyfus Corp.

Donal L. Turkal, Asst. Gen. Counsel, St. Paul, Minn., for Burlington Northern, Inc.

Hugh L. McCulley, Houston, Tex., Richard E. Weicher, Chicago, Ill., Robert H. Stahlheber, St. Louis, Mo., John P. Legendre, Dallas, Tex., for Southern Pac. Transp. Co.

Petitions for Review of Orders of the Interstate Commerce Commission.

Before CLARK, Chief Judge, RUBIN, and TATE, Circuit Judges.

TATE, Circuit Judge:

The petitioners, who represent port and shipper interests in Corpus Christi, Texas, seek review of an adjudication of the Interstate Commerce Commission that a rail rate of a carrier was not discriminatory to Corpus Christi, and of an order of the Interstate Commerce Commission that, inter alia, adopted a new standard of "common control" to be used in carrier rate discrimination cases under 49 U.S.C. § 10741(b), and that reopened and vacated two earlier Commission decisions. We affirm the Commission's rule-making and vacation orders, but we find that review of the Commission's discriminatory-rate adjudication is now moot.

Page 1057

The underlying central issue concerns the substantive and procedural propriety of the Commission's actions in adopting a new standard or rule of a narrow nature. The narrow area of the rule focuses on the determination of whether a common carrier has under 49 U.S.C. § 10741(b) subjected a port to rates that are unreasonably discriminatory with regard to those to other ports, in instances where that carrier does not itself provide direct service but must do so by joint rates issued in conjunction with a connecting carrier. The new standard requires a finding that the originating carrier has actually contributed to or controlled the rate insofar as it is discriminatory. Under the prior or replaced standard, the originating and connecting carriers were conclusively presumed to have "common control" of the joint rates-that, acting in conjunction as a network, they directly and effectively controlled the rates between the preferred port and the prejudiced port. For reasons to be stated, we find the Commission's adoption of a new rule of decision to be non-arbitrary and within its administrative discretion and the statutory limits for that discretion set by Congress.

We should further note that the Staggers Rail Act of 1980, Pub.L.No.96-448, 94 Stat. 1895 (1980), was not signed by the President into law until October 14, 1980. Without intimating that our rationale would necessarily be affected otherwise, we note that the Act does not apply to our review of the present decisions of the Commission, which were docketed (and decided) prior to the effective date of the Act. Id. § 706.

Introductory Summary

In the attached appendix, we have set forth the full citation and nomenclature of the proceedings and parties to whom we will refer herein. As shown by these proceedings, the context in which the present issues arise is as follows:

In 1977, Frisco (a rail carrier) published reduced carload rates on wheat from origins in Oklahoma and Kansas to various Texas ports (Houston, Galveston, etc.-"other Texas ports"), but not to Corpus Christi. Prior to this publication, the rates had been equal to all Texas ports; the reduced rates for the other Texas ports were about 31/2 cents per hundred pounds less than those for Corpus Christi. Various Corpus Christi port and shipping interests protested, including Nueces County (a Texas port district), Producers (a regional grain marketing cooperative with a large-volume grain elevator at Corpus Christi), and Dreyfus (a large-scale shipper of grain that used the Producers elevator at Corpus Christi). The basis of their protest was that the rates were unduly preferential of the other Texas ports, and prejudicial to the Corpus Christi port, in violation of former Section 3(1) of the Interstate Commerce Act, now (in the 1978 recodification) 49 U.S.C. § 10741(b).

Frisco had lowered the rates to the other Texas ports to meet rail and truck rate-competition. The reason it had not done so for Corpus Christi was that Frisco had no direct line into that port, and the other connecting rail carriers to that port (MoPac and Southern Pacific) had refused to concur in a lowered joint rate equivalent to that published for the other ports.

In its 1977 decision in Wheat I (see appendix for this and other citations herein) rejecting these protests, the Commission held that Frisco was not in control of and did not participate in the disparate rates for Corpus Christi, because Frisco had made a good faith offer of division of the joint rates (to divide the lower rates fairly between the connecting carriers and itself), but these carriers had rejected this offer. Due inter alia to the protestant's contention that Frisco's reduced rates to other Texas ports violated outstanding Commission orders in 1954 and 1961 decisions in Corpus Christi I, the Commission reopened Wheat I. In Wheat II (1979), it then reinstated its holding that the Frisco rates to Corpus Christi were not unreasonably discriminatory (for the same reason of Frisco's lack of control thereof), but it also ordered the Corpus Christi I cases to be reopened to determine whether those decisions were consistent with Wheat II.

In Corpus Christi I (1954 and 1961), the Commission had concluded that the joint

Page 1058

rates of various carriers transporting grain from the Midwest were unduly prejudicial to Corpus Christi and unduly preferential of the other ports. In so finding, the Commission relied upon a presumed network "common control" of joint rates, so that-if the joint rate was discriminatory-each of the carriers joining in it was held to participate in the discriminatory rate. Accordingly, the Commission entered "alternative orders," which were still in effect at the time of Wheat I (1977) and Wheat II (1979). (By an alternative order issued to correct discriminatory rates, the offending carrier(s) are ordered to abate the discrimination by raising one rate, lowering the other, or altering both. See, e.g., Texas & Pacific Ry. Co. v. United States, 289 U.S. 627, 650, 53 S.Ct. 768, 776, 77 L.Ed. 1410 (1933).)

Pursuant to Wheat II, after service, notice was published in the Federal Register reopening the Corpus Christi I cases (1954 and 1961). Wheat II, then before this court on petition for review, was on motion remanded to the Commission for its further consideration. In the resulting Corpus Christi II, decided in 1980, the Commission expressly abandoned its former presumed "common control" of joint rates and held that, in the determination of discriminatory rate issues under § 10741(b), it would in the future utilize an analysis of actual control by the originating carrier (applying the good faith order of divisions test enunciated in the Wheat cases). 1 It therefore vacated the decisions in Corpus Christi I and reaffirmed its holdings in Wheat I and Wheat II. 2

Wheat Adjudications Moot

Before discussing the viable issues under review, we note of our own motion that the Wheat adjudications (that Frisco's grain rates to Corpus Christi are not shown to be unreasonably discriminatory under

Page 1059

§ 10741(b)) are moot. Following Wheat I, MoPac concurred in a reduced joint rate to Corpus Christi equivalent to the reduction published for the other Texas ports. As a result, it is not contested that Corpus Christi is no longer prejudiced by the Frisco rates initially complained of. Accordingly, the three petitions for review that raise issues directed solely to the invalidity of the Wheat determinations 3 are dismissed 4 as moot.

No suggestion of mootness is made with regard to the Corpus Christi II issues presented by the remaining petition for review. See note 3. That decision's vacation of the continuing rate-equalization orders in Corpus Christi I deprived Corpus Christi interests of a former remedy by which to attack rail rate disparities; and its adoption by way of rule-making of a new rule (actual control, rather than the formerly presumed common control of joint rates) has obvious continuing effects.

The Issues

The remaining issues presented to us for review may be summarized as follows:

I. A substantive attack upon the Commission's replacement of the former presumed "common control" rule by the new "actual control" test as an unjustified abrogation by the Commission of its previously settled interpretation designed to advance the anti-discriminatory purposes of the Interstate Commerce Act.

II. A primarily procedural attack upon the Commission's vacation by Corpus Christi II in 1980 of its 1954 and 1961 Corpus Christi I decisions.

I. The Commission's Replacement of the Presumed "Common Control" Rule by an "Actual Control" Test

In the context of the scheme of the Interstate Commerce Act ("the Act"), where carriers are permitted to establish rates for their services, the Act provides that no common carrier may "subject a person, place, port, or type of traffic to unreasonable discrimination." 49 U.S.C. §...

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6 practice notes
  • Thomas v. Johnston, Civ. A. No. A-82-CA-251.
    • United States
    • United States District Courts. 5th Circuit. Western District of Texas
    • 21 Enero 1983
    ...91 S.Ct. 814, 28 L.Ed.2d 136 (1971); City of Houston v. FAA, 679 F.2d 1184, 1190 (5th Cir.1982); Nueces County Nav. Dist. No. 1 v. ICC, 674 F.2d 1055, 1062 (5th Cir.1982); Suntex Dairy v. Block, 666 F.2d 158, 162 (5th Cir.1982). On the other hand, the Court is obliged "to engage in a substa......
  • State of La., ex rel. Guste v. Verity, No. 88-3185
    • United States
    • United States Courts of Appeals. United States Court of Appeals (5th Circuit)
    • 15 Agosto 1988
    ...was a clear error of judgment." Motor Vehicle Mfrs. Ass'n, 463 U.S. at 43, 103 S.Ct. at 2866-67; Nueces County Nav. Dist. No. 1 v. ICC, 674 F.2d 1055, 1062-63 (5th Cir.), cert. denied, 459 U.S. 1035, 103 S.Ct. 446, 74 L.Ed.2d 601 Thus, if the agency considers the factors and articulates a r......
  • Dresser Industries, Inc. v. I.C.C., Nos. 82-4066
    • United States
    • United States Courts of Appeals. United States Court of Appeals (5th Circuit)
    • 16 Septiembre 1983
    ...and capricious-substantial evidence standard in our review of its action. Nueces County Navigation District No. 1 v. Page 593 ICC, 674 F.2d 1055, 1062 (5th Cir.), cert. denied, --- U.S. ----, 103 S.Ct. 446, 74 L.Ed.2d 601 (1982). The Supreme Court in Bowman set out the limits of appellate r......
  • Pulido v. Heckler, Civ. A. No. 82-M-1143.
    • United States
    • United States District Courts. 10th Circuit. United States District Court of Colorado
    • 2 Agosto 1983
    ...of the administrative agency." SEC v. Chenery Corp., supra, at 203, 67 S.Ct. at 1580. See also Nueces County Nav. Dist. No. 1 v. ICC, 674 F.2d 1055, 1065 (5th Cir.1982), cert. denied, ___ U.S. ___, 103 S.Ct. 446, 74 L.Ed.2d 601 (1982); NLRB v. American Can Co., 658 F.2d 746, 758 (10th Secti......
  • Request a trial to view additional results
6 cases
  • Thomas v. Johnston, Civ. A. No. A-82-CA-251.
    • United States
    • United States District Courts. 5th Circuit. Western District of Texas
    • 21 Enero 1983
    ...91 S.Ct. 814, 28 L.Ed.2d 136 (1971); City of Houston v. FAA, 679 F.2d 1184, 1190 (5th Cir.1982); Nueces County Nav. Dist. No. 1 v. ICC, 674 F.2d 1055, 1062 (5th Cir.1982); Suntex Dairy v. Block, 666 F.2d 158, 162 (5th Cir.1982). On the other hand, the Court is obliged "to engage in a substa......
  • State of La., ex rel. Guste v. Verity, No. 88-3185
    • United States
    • United States Courts of Appeals. United States Court of Appeals (5th Circuit)
    • 15 Agosto 1988
    ...was a clear error of judgment." Motor Vehicle Mfrs. Ass'n, 463 U.S. at 43, 103 S.Ct. at 2866-67; Nueces County Nav. Dist. No. 1 v. ICC, 674 F.2d 1055, 1062-63 (5th Cir.), cert. denied, 459 U.S. 1035, 103 S.Ct. 446, 74 L.Ed.2d 601 Thus, if the agency considers the factors and articulates a r......
  • Dresser Industries, Inc. v. I.C.C., Nos. 82-4066
    • United States
    • United States Courts of Appeals. United States Court of Appeals (5th Circuit)
    • 16 Septiembre 1983
    ...and capricious-substantial evidence standard in our review of its action. Nueces County Navigation District No. 1 v. Page 593 ICC, 674 F.2d 1055, 1062 (5th Cir.), cert. denied, --- U.S. ----, 103 S.Ct. 446, 74 L.Ed.2d 601 (1982). The Supreme Court in Bowman set out the limits of appellate r......
  • Pulido v. Heckler, Civ. A. No. 82-M-1143.
    • United States
    • United States District Courts. 10th Circuit. United States District Court of Colorado
    • 2 Agosto 1983
    ...of the administrative agency." SEC v. Chenery Corp., supra, at 203, 67 S.Ct. at 1580. See also Nueces County Nav. Dist. No. 1 v. ICC, 674 F.2d 1055, 1065 (5th Cir.1982), cert. denied, ___ U.S. ___, 103 S.Ct. 446, 74 L.Ed.2d 601 (1982); NLRB v. American Can Co., 658 F.2d 746, 758 (10th Secti......
  • Request a trial to view additional results

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