Williams v. Washington Metropolitan Area Transit Com'n
Decision Date | 08 October 1968 |
Docket Number | 20202.,20201,No. 20200,20200 |
Citation | 415 F.2d 922,134 US App. DC 342 |
Parties | Richard A. WILLIAMS and Alfred S. Trask, Petitioners, v. WASHINGTON METROPOLITAN AREA TRANSIT COMMISSION, Respondent, D. C. Transit System, Inc., Intervenor. DEMOCRATIC CENTRAL COMMITTEE OF the DISTRICT OF COLUMBIA, Leonard N. Bebchick and Daniel W. Gottlieb, Petitioners, v. WASHINGTON METROPOLITAN AREA TRANSIT COMMISSION, Respondent, D. C. Transit System, Inc., Intervenor. D. C. TRANSIT SYSTEM, INC., Petitioner, v. WASHINGTON METROPOLITAN AREA TRANSIT COMMISSION, Respondent. |
Court | U.S. Court of Appeals — District of Columbia Circuit |
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Mr. Leonard N. Bebchick, Washington, D. C., with whom Mr. Stanley O. Sher, Washington, D. C., was on the brief, for petitioners in Nos. 20,200 and 20,201.
Mr. Harvey M. Spear, New York City, with whom Mr. Edmund L. Jones, Washington, D. C., was on the brief, for petitioner in No. 20,202 and intervenor in Nos. 20,200 and 20,201.
Mr. Russell W. Cunningham, Arlington, Va., for respondent.
Before BAZELON, Chief Judge, FAHY*, DANAHER, BURGER, WRIGHT, McGOWAN, TAMM and ROBINSON, Circuit Judges, sitting en banc.
Certiorari Denied February 24, 1969. See 89 S.Ct. 860.
In D. C. Transit System, Inc. v. Washington Metropolitan Area Transit Commission (Transit I),1 we reviewed the Commission's Order No. 245,2 promulgated after a public hearing in 1963, by which Transit was authorized to raise its token fare for passenger transportation within the District of Columbia and between the District and points in Maryland.3 We then resolved several subsidiary issues germinated by that order, but were unable to pass judgment as to the legal propriety of the fare increase. The order in that aspect was predicated upon the Commission's finding that a margin of return of $1,480,746, representing a 4.87% rate of return on Transit's operating revenues, was just and reasonable.4 Upon examination of the record, however, we discovered that we had "no intelligible basis for disposing of the competing claims before us that the return allowed by the Commission is, on the one hand, too high, and, on the other, too low."5 Accordingly, we remanded the case to the Commission "for further proceedings * * * to determine the margin of return over and above operating expenses that Transit should be allowed."6
On September 17, 1965, shortly before our remanding order was certified to the Commission, Transit filed a new tariff making numerous fare changes for 1966,7 including elevations in the District cash fare from 25 to 30 cents, and in the District token fare from 21.25 to 25 cents.8 Exerting a power conferred by the Washington Metropolitan Area Transit Regulation Compact (Compact),9 the Commission promptly suspended the new tariff pending a determination as to its reasonableness, and thereafter conducted a public hearing on the proposals it contained.
On January 26, 1966, in purported response to our remand, and without prior notice or further hearing for the purpose, the Commission entered Order No. 563,10 in supplementation of Order No. 245, reaffirming the return for 1963 the latter had previously allowed.11 It simultaneously issued Order No. 564,12 in which it found that a margin of return for 1966 of about $2,000,000 above operating revenues, symbolizing a return rate of 6.03%, would be fair and reasonable,13 but that the existing fare scale would generate net earnings estimated at only $648,357.14 The Commission nonetheless felt that a fare increase, save in a minor respect not questioned here, was unnecessary because of the availability of $2,166,933 in a special reserve which had been created in consequence of our decision in Bebchick v. Public Utilities Commission.15 In lieu of an increase, the Commission permitted Transit to draw upon the reserve for approximately $1,350,000 to accommodate the anticipated deficit in its earnings.16
Timely petitions for rehearing,17 denied by the Commission, ripened for our present review18 various issues stemming from these orders.19 No. 20,200 brings contentions that Order No. 563 is invalid for lack of notice and hearing, and is erroneous on the merits. No. 20,201 presents importantly the claim that the margin of return awarded by Order No. 564 is unreasonable, and it, like No. 20,202, includes attacks upon other Commission findings and conclusions. We proceed now to a consideration of the problems thus engendered, in the sequence20 we deem best suited to exposition of the reasons for which we set each of the Commission's orders aside.
Following our remand, the Commission promulgated in Order No. 563 its supplemental findings to Order No. 245, and "affirmed" its earlier finding that a margin of return representing a rate of 4.87% on operating revenues "was fair and reasonable."21 Petitioners in No. 20,200 attack Order No. 563 on the ground that it does not comply with our instructions governing the Commission's task on remand.22 The disclosures made by the record, now to be delineated, lead us to agree.
Despite these explicit guidelines, we search in vain the Commission's supplemental opinion for the vital findings, or for any manifestation that the Commission has made the inquiries referred to.
The bulk of Order No. 563 is devoted to a summary of the testimony of various witnesses given during the 1963 hearing. The summary covers such matters as Transit's rate base; the capital structures of Transit and other utilities; Transit's cost of capital and that of other utilities; the degree of risk borne by Transit shareholders, as compared with other regulated utilities; dividends and earnings of Transit and its parent,26 and those of other utilities; Transit's estimated debt expense for the future annual period; actual and authorized operating ratios of Transit and other utilities; and the average market prices of the stock of Transit's parent. Having thus reviewed the record in somewhat greater detail than in its original order, the Commission then simply reaffirmed its earlier conclusion on the rate of return in language strikingly reminiscent of that which when remanding we had characterized as "stock generalizations which serve only to frustrate, rather than illuminate, judicial review:"27
The Commission's opinion is almost wholly devoid of any indication of the method by which it calculated that a margin of return of $1,480,000 was fair and reasonable. The Commission did account for a portion of that sum by finding that a dividend payout of $500,000 would be reasonable — apparently in response to our observation that "Transit's annual dividend pay-out of about $500,000 appears to have been treated as if it were a cost of operation, like the annual expenditure for gas and oil, with no examination of, or conclusion about, its appropriateness."29 Our concern, however, is hardly alleviated by the Commission's treatment of this point on remand:
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