968 F.2d 75 | D.C. Cir. | 1992
Opinion for the Court filed by Circuit Judge SENTELLE.
Petitioner Shippers Committee OT-5 (“SCOT-5”), an organization of private railroad car owners, petitions for review of two decisions by the Interstate Commerce Commission (“ICC” or “the Commission”) overturning an Administrative Law Judge’s (“AU”) decision ordering railroads to provide unrestricted rail access to private covered hopper cars, regardless of the availability of railroad-owned cars. Concluding that the “sweeping” relief sought by SCOT-5 was “not warranted,” the ICC restored, but limited, the railroads’ discretion over the access of SCOT-5’s cars to railroad lines. SCOT-5 argued that the ICC decision contravenes the Staggers Rail Act (“the Act”), Pub.L. No. 96-448, 94 Stat. 1895 (1980), and seeks the right to use private covered hopper cars without railroad veto. As we find that the ICC decisions do not contravene the relevant provisions of the Act, we affirm the ICC decisions and deny SCOT-5’s request for relief.
I. Background
A. The OT-5 Process
While a common carrier obligation binds the railroads of this country to furnish “transportation or service on reasonable request,” 49 U.S.C. § 11101(a), railroads need not own all cars used on their rail lines. Chicago & N. W. Transp. Co. v. Kalo Brick & Tile Co., 450 U.S. 311, 325, 101 S.Ct. 1124, 1134, 67 L.Ed.2d 258 (1981); General American Tank Car Corp. v. El Dorado Term. Co., 308 U.S. 422, 428, 60 S.Ct. 325, 329, 84 L.Ed. 361 (1940). See also Semple v. AT & SE Ry., 139 I.C.C. 324 (1928); Cleveland Provision Co. v. AARR Co., 50 I.C.C. 293 (1918). At times, the shipper may provide its own (or a leased) railroad car, and receive compensation through “allowances” based on the number of miles travelled by the private car. Losac v. ICC, 857 F.2d 802, 803 (D.C.Cir.1988). The current petitions seek review of ICC determinations governing the use of privately owned covered hopper cars. Covered hopper cars are the primary railroad car for the transport of dry bulk commodities such as grain and fertilizer.
The basic framework governing the access of privately owned railroad cars to America’s railroads is the “OT-5” process. The term “OT” stands for “Operating-Transportation” Division, a component of the Association of American Railroads, which has transmitted circulars explaining the procedures governing assignment of “reporting marks” since 1939. Reporting marks are the nomenclature by which railroads keep track of every car' operating in the extensive American railroad network. In 1962, the Operating-Transportation Division began publishing OT-5 circulars in a tariff on file with the ICC. Section II of the OT-5 circular governing, among other things, private covered hopper cars, has since 1962 included a proviso explicitly stating that “[t]he use of private cars other than tank cars is optional and railroads are not obligated to use such cars if they are in a position to furnish suitable cars.” It is this control of the situation on the part of the railroads that gives rise to the present controversy.
SCOT-5 members invested in private hopper cars during a period of car shortages during the 1970s, and the railroads accepted these noncarrier or privately owned cars into service through OT-5
Before private cars can be used under the OT-5 process, the carrier and the private car owner must sign an agreement which identifies the accepted cars with assigned reporting marks and specifies the method of compensation for use of the cars. Once the agreement is signed, the cars are certified for use, but the railroads retain the discretion to determine when to use private cars and when to use their own.
In 1981, SCOT-5 filed with the Commission a petition for rulemaking, alleging that the OT-5 process allowed railroads to exclude private cars unfairly, and requesting that the agency either abolish the OT-5 process or require railroads to use shipper-owned cars under a “sharing formula” during the periods of surplus. The Commission rejected SCOT-5’s broad claims concerning the practices of the nation’s railroads, and concluded that a complaint proceeding would provide a more appropriate remedy if SCOT-5 sought relief for particular car use problems.
B. The Present Proceeding
In 1983, SCOT-5 filed a complaint not seeking to pursue specific car service problems, but instead broadly alleging that the carriers had used the OT-5 certification process to improperly manipulate the market for private hopper cars. SCOT-5 contended that carriers first induced shippers to build up private fleets of hopper cars, and then arbitrarily refused or threatened to refuse to certify cars, or withdrew that certification, thereby creating an artificial car scarcity and undermining the incentive for adequate private car investment.
The ALT who heard the complaint did not identify any particular violations of the Act by the railroad defendants, and found that the carriers had met their common carrier obligations, and thus had the right to use their own cars and to exclude private cars. Nonetheless, he issued an initial decision ordering the railroads to provide “open, free, and unrestricted access” for private cars on their lines if shippers agreed to accept compensation at the “prevailing market rates.”
On administrative appeal, the Commission, like the AU, found no violations of the common carrier obligation, and no improper inducements to buy cars, but rejected the AU’s policy decision that the public interest in inducing private shippers to buy enough cars to meet extraordinary, peak period demands required an end to the railroads’ right to favor their own cars. The Commission, in contrast, found that a fleet adequate to meet peak demands could be ensured through less dramatic measures. It concluded that the AU’s notion of the public interest would contravene the objec- ■ tives of 49 U.S.C. § 11122, which directs the Commission in regulating car service, to encourage the purchase, acquisition, and efficient use of freight cars. Accordingly, the agency eschewed the AU’s award of broad, open-ended relief in favor of narrower remedies directed toward SCOT-5’s specific complaint. Shippers Committee OT-5 v. Ann Arbor RR Co., 5 I.C.C.2d 856 (1989).
The Commission refused, however, to go beyond adopting a specific remedy to address a specific concern. Unlike the AU, the Commission found that the relief that SCOT-5 sought — the right of shippers to use private cars whenever they see fit, id. at 865 — would not promote appropriate levels of car acquisition as mandated by § 11122. SCOT-5 filed a petition for review of the Commission’s decision.
In 1990, SCOT-5 petitioned the Commission to reopen and clarify its prior decision. In Shippers Committee OT-5 v. Ann Arbor RR Co., corrected decision No. 39169 served Dec. 26, 1990, the Commission addressed certain carrier-specific complaints of SCOT-5, but again rejected the prayer for a broad remedial reordering of car use priority.
We now review the two ICC decisions.
III. Analysis
A. The Statutory Basis
In the decisions here under review the Commission applied portions of the Staggers Rail Act, Pub.L. No. 96-448; 94 Stat. 1895 (1980) (codified at 49 U.S.C. §§ 10701-10786). That Act generally reorganized regulation of the rail industry by the ICC and governs that body of regulation today. While we will analyze specific sections as they become relevant, we note that in enacting the statute, Congress found that “most transportation within the United States is competitive; ... many of the Government regulations affecting railroads have become unnecessary and inefficient;” and that “modernization of economic regulation for the railroad industry with a greater reliance on the marketplace is essential in order to achieve maximum utilization of railroads to save energy and combat inflation.” 94 Stat. 1896, Sec. 2(3), (4), and (9); 49 U.S.C. § 10101a note. Congress also set certain goals to be achieved by the Act, including “to assist the rail system to remain viable in the private sector of the economy.” 94 Stat. 1897, Sec. 3; 49 U.S.C. § 10101a note. It is through the prism of that statutory scheme, entrusted to the administration of the ICC, that we view the orders before us.
B. The Problem and Its Remedy
Petitioner, on the one hand, and the ICC and intervening railroads, on the other, seem at times to argue past each other. SCOT-5 argues vehemently that the Commission failed to provide a remedy rationally related to the problem before the Commission. The difficulty is that the Commission does not recognize the problem as being the same one identified by SCOT-5. Petitioner identified the problem requiring correction to be:
termination of “needless uncertainty for private car owners [concerning the use of their covered hopper cars] that discourages capital investment in private cars that may be useful in meeting the nation’s transportation needs,” and a termination of those railroad “practices which have discouraged, or could discourage, appropriate private car acquisitions that the shippers desire to make to assure themselves of transportation in times of greatest need,” investments that “make an important contribution to the statutory goal in § 11122 of an adequate car fleet.”
Brief of Petitioner at 21-22 (quoting 5 I.C.C.2d 857, 865). The Commission views the problem a bit more broadly. We agree with the Commission.
Granted, the Commission in its 1989 decision did use the words excerpted in petitioner’s brief. However, in determin
Here we perceive no abuse in discretion. Under the Commission’s 1989 order, the railroads may not deny OT-5 approval for private hopper cars “for reasons other than safety, mechanical factors, or inadequate track storage space____” 5 I.C.C.2d at 864. It is hardly irrational that the Commission would leave the railroads with these bases for refusal. The connection between the first two and the overall purposes of the ICC would seem to warrant no discussion. The third warrants little. The carriers have an obligation to provide efficient shipping service to the entire public, not simply private car owners. 49 U.S.C. § 11101(a). Track capacity obviously is finite. While petitioner expresses the fear that carriers could use this provision to unreasonably bar private cars from their rails, this is not a proper basis for invalidation of the order or the OT-5 process. If this rule, or any other, is abused by the regulated industry, then the victim can be heard in complaint proceedings.
By way of example, in the 1990 proceeding before us in this very case, SCOT-5 raised an abusive practice by one carrier. The Commission remedied it. Shippers Committee OT-5 v. Ann Arbor RR Co. (corrected decision No. 39169, served Dec. 26, 1990). But at the same time, the Commission clearly stated the basis of the track availability exception:
This requirement seems to us quite reasonable and innocuous. Carriers have a responsibility to provide service, and they must have some way to assure that their switching facilities are not so congested with idle privately owned cars that nor,mal operations are impossible. Indeed, this is why we included this element as an exception to the carriers’ requirement to accept private cars in the first place. There is no evidence that any cars have been refused registration for reasons of inadequate track capacity, much less that this reason has been used as a pretext for an improper refusal to use private cars.
Id. at 2-3 (footnote omitted).
SCOT-5’s continuing objections to the Commission’s decision to confront persisting denials on an ad hoc basis rather than by rulemaking goes nowhere. True, as petitioner argues, “any complaint procedure ... inherently involves uncertainty and delay.” Brief of Petitioner at 27. Not only does that argument not win, it proves too much on its face. If that were sufficient to invalidate an agency’s decision to proceed by adjudication rather than rule-making, no agency would ever be able to proceed by adjudication. Instead, the “choice made between proceeding by a general rule or by individual, ad hoc litigation is one that lies primarily in the informed discretion of the administrative agency.” SEC v. Chenery Corp., 332 U.S. 194, 203, 67 S.Ct. 1575, 1580, 91 L.Ed. 1995 (1947). We cannot fault the agency’s choice here.
C. The Rejection of the ALJ’s Remedy
Petitioner’s remaining objection to the ICC’s decisionmaking focuses on the
Petitioner’s formulation of its second argument does not, however, stop with its unusual empowerment of the AU. Petitioner goes on to argue that “the ICC ... has disregarded the intent of Congress that competition and market forces govern the resolution of issues arising under § 11122.” The Commission did not disregard the congressional mandate. The mandate of the law to be obedient to market forces is not a mandate to protect the interests of shippers who own hopper cars, but the market as a whole. As we noted earlier, § 11122 requires the Commission to “encourage the purchase, acquisition, and efficient use of freight cars.” The statute does not say “by shippers.” Indeed, its primary thrust is toward the purchase, acquisition, and use by railroads, since, as we and the Commission have previously noted, railroads have been the historical primary source of rolling stock, a fact presumably known by Congress.
As the Commission’s decisions here explained, Commission action under the Staggers Act, and specifically § 11122, must balance various competing interests including competition, efficiency, and the supply of a sufficient number of cars to meet the needs of all shippers. The Commission made a policy choice that these goals are best served by providing the incentives at a primary level for car acquisition by the carrier and at a secondary level for acquisition by shippers. As the Commission observed, “arguably, if shippers can require use of their own cars when demand for their products is low and cars are in surplus, their incentive to acquire cars would be even greater.” 5 I.C.C.2d at 870. The Commission rationally concluded, as did the AU, that encouraging this level of private investment was inappropriate. As the Commission explained, “increased car acquisition by shippers would be offset by decreased car acquisition by the railroads.” Id. Thus, fewer cars would be available for other shippers and other industries at their peak loads. Further, idling carrier cars could render unproductive much of the massive investment the railroads have previously made in covered hopper cars. As a result, “the entire rail system would suffer increased costs that would ultimately have to be made up in increased rail rates to shippers,” id. at 870-71, including those who unlike petitioners do not own their own cars. Third, the Commission explained that private cars operate at a lesser efficiency level than railroad owned cars, since a greater portion of their useful life is spent returning home empty. Id. at 872-74.
The Commission was interpreting and applying a statute entrusted to it by Congress. Under the familiar Chevron standard, we review that process with great deference. Chevron U.S.A. Inc. v. NRDC, Inc., 467 U.S. 837, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984). In fact, where, as here, Congress has explicitly left gaps to be filled by the agency’s legislative regula
Especially where, as here, the Commission has faced a statutory question “involvpng] reconciling conflicting policies,” in the “construction of a statutory scheme it is entrusted to administer,” we afford it considerable deference. Chevron, 467 U.S. at 844, 104 S.Ct. at 2782. The Commission’s actions here fit all those criteria.
IV. Conclusion
We conclude that the ICC did not act unreasonably or abuse its discretion under 49 U.S.C. § 11122(a) when it determined that the railroads may not restrict the access of private covered hopper cars to railroad lines except under exceptional circumstances, including, but not limited to those mentioned in its decisions. On the contrary, the two decisions under review are grounded in a reasonable interpretation of 49 U.S.C. § 11122(a), in the ICC’s previous relevant decisions, and in this Court’s prior review of ICC authority under § 11122(a); they are responsive to the parties’ requests and supported by the record. The orders of the ICC denying petitioner relief are
Affirmed.