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    ICC v. OREGON PACIFIC INDUSTRIES, INC., 420 U.S. 184 (1975)

    U.S. Supreme Court

    ICC v. OREGON PACIFIC INDUSTRIES, INC., 420 U.S. 184 (1975)

    420 U.S. 184

    INTERSTATE COMMERCE COMMISSION v. OREGON PACIFIC INDUSTRIES, INC., ET AL.
    APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF OREGON.

    No. 73-1210.

    Argued November 20, 1974.
    Decided February 19, 1975.

    Service Order No. 1134, promulgated by the Interstate Commerce Commission (ICC) without notice or hearing pursuant to its emergency powers under 1 (15) of the Interstate Commerce Act, which limited the holding time of lumber cars at reconsignment points to five working days and subjected the shipper holding the car at such points for more than that period to the sum of the rates from origin, to hold point, to destination, held within the ICC's power under 1 (15) to avoid undue detention of freight cars used as places of storage, during an emergency freight car shortage that the ICC, exercising its expertise, found to exist. Pp. 187-191.

    365 F. Supp. 609, reversed.

    DOUGLAS, J., wrote the opinion for a unanimous Court. POWELL, J., filed a concurring opinion, post, p. 191.

    Charles H. White, Jr., argued the cause for appellant. With him on the brief were Fritz R. Kahn and Betty Jo Christian.

    Seymour L. Coblens argued the cause and filed a brief for appellees. *  

    [ Footnote * ] James H. Clarke filed a brief for Western Railroad Traffic Assn. as amicus curiae urging reversal.

    Opinion of the Court by MR. JUSTICE DOUGLAS, announced by MR. CHIEF JUSTICE BURGER.

    This is an appeal from a judgment of a three-judge District Court, 28 U.S.C. 1253, which held invalid an order of the Interstate Commerce Commission promulgating [420 U.S. 184, 185]   a car Service Order 1 under 1 (15) of the Interstate Commerce Act, as amended, 41 Stat. 476, 49 U.S.C. 1 (15). 2 Oregon Pacific Industries v. United States, 365 F. Supp. 609 (Ore. 1973). [420 U.S. 184, 186]  

    Lumber is often moved to market on a wholesalers' sale-in-transit schedule. Cars are sent to hold points, where in time reconsignment orders are received for shipment to customers of wholesalers. The tariffs allow indefinite holding, subject to demurrage charges for detention in excess of 24 hours, but the Commission found that these demurrage charges never discouraged shippers from lengthy holding of cars. In 1973 there was, according to the Commission, a transportation "emergency" which required "immediate action to promote car service in the interest of the public and the commerce of the people." Accordingly, on May 8, 1973, the Commission, sua sponte, without notice and hearing, entered its Service Order No. 1134 which limited the hold time at reconsignment points to five days (120 hours), exclusive of Saturdays, Sundays, and holidays. If the lumber cars were held at reconsignment points longer than five working days, the reconsignment privilege would be lost and the shippers would be subject to local or joint tariff rates from the point of origin to the hold point, and from the hold point to the ultimate destination.

    The District Court held that there were four categories of emergency action which the Commission could take under 1 (15):

    The District Court held that the Commission's authority under (b), (c), or (d) would not support the order in this case and that the order could be sustained, if at all, only under (a). It concluded that (a) was not adequate since the challenged order did not "suspend" any rule or regulation "with respect to car service." It reasoned that the order "condones the practice of sales-in-transit" for an indefinite time but requires shippers employing the practice to pay a higher rate to the carriers than the demurrage rate under the prior order. That was, in its view, a rate order having no place under 1 (15), which gives the Commission power to act sua sponte in an "emergency" in a narrow group of cases. 365 F. Supp., at 612.

    The District Court pointed out that 1 (10) defines "car service" as "the use . . . movement . . . and return of . . . cars . . . used in the transportation of property . . . by any carrier by railroad"; and it emphasized that "`car service' connotes the use to which the vehicles of transportation are put [by a carrier]; not the transportation service rendered by means of them," 365 F. Supp., at 611; Peoria & P. U. R. Co. v. United States, 263 U.S. 528, 533 . We emphasized in United States v. Allegheny-Ludlum Steel Corp., 406 U.S. 742, 743 , that car service rules dealt with the management of "a single common pool" of cars "used by all roads," and that they pertain to railroad use [420 U.S. 184, 188]   of cars. Since "railroad use" involves shippers, we think the District Court read 1 (15) too narrowly.

    We noted in Allegheny-Ludlum that 1 (15) traces back to the Esch Car Service Act of 1917, 40 Stat 101. 3   406 U.S., at 744 . The use of freight cars as ware-houses - the practice which prompted the Commission to act in the present case - was one of the evils at which the original Car Service Act was aimed.

    Mr. Esch, sponsor of the legislation, said: 4  

    And the Reports make clear that one aim of the Act was "to the end that the public may receive the best possible service in transportation." 5 Car shortages, it was found, resulted in short supplies of basic foods in the markets "with attendant high prices." 6 The interests of shippers and consumers - not the carriers alone - were very much in the forefront.

    As we have noted, Peoria & P. U. R. Co., supra, emphasized that the car service authority extends to the "use" of cars and not to a "transportation service," but there the issue was whether one carrier was bound to perform switching services for another carrier. The Court held that it was not; power over the "use" of cars, however, was left undisturbed. In this connection it is obvious that a shipper by rail does not "rent" a vehicle as do shippers by truck. The cars are all "used" under the management of carriers, who naturally receive directions or requests from shippers. The cars cannot be used efficiently to serve the needs of shippers and consumers if they are used not as carriers but as warehouses.

    In Turner Lumber Co. v. Chicago, M. & St. P. R. Co., 271 U.S. 259 , demurrage to prevent "undue detention" of cars "loaded with lumber held for reconsignment" was fixed by the Commission without notice. The Court, speaking through Mr. Justice Brandeis, upheld the charge saying: "All demurrage charges have a double purpose. One is to secure compensation for the use of the car and of the track which it occupies. The other is to promote car efficiency [420 U.S. 184, 190]   by providing a deterrent against undue detention." Id., at 262. In Iversen v. United States, 63 F. Supp. 1001, aff'd per curiam, 327 U.S. 767 , the Commission entered a car Service Order limiting reconsignment privileges to a specific number of days and providing that cars held in excess of that time would be subject to the sum of the local rates from origin to reconsignment point to destination. 7 It was held that the demurrage item was a "rule" respecting "car service" within the meaning of 1 (15). The holding in Iversen was implicit in the holding in Turner. 8  

    The District Court suggested that the Service Order was invalid because its effect was to "fix" rates and charges during an emergency - a power not covered by 1 (15). That precise point was raised in Iversen, 63 F. Supp., at 1006, and the ruling, which we affirmed, was contra. Suspending or changing demurrage charges [420 U.S. 184, 191]   may increase the transportation charges; but, as Turner makes clear, demurrage charges have a dual purpose; and it is enough if one of them is a deterrent against undue detention of cars. As we said in Turner, at times the cause of "undue detention" of freight cars is that they are used "as a place of storage, either at destination or at reconsignment points, for a long period while seeking a market for the goods stored therein." 271 U.S., at 262 . The substitution of tariff rates already fixed and on file for the old demurrage rate is not an unreasonable method of accelerating the movement of freight cars. That was the aim and purpose of the present Service Order; and it was promulgated in an "emergency" 9 which the Commission, using its expertise, found to exist. We cannot say the order was unreasonable on the record before us. Insofar as appellees raise questions of unfairness, they are precluded by the opinions of Mr. Justice Holmes in Avent v. United States, 266 U.S. 127 , and of Mr. Justice Brandeis in Turner Lumber Co. v. Chicago, M. & St. P. R. Co., supra, which disposed of due process questions under 1 (15). We therefore hold that the Commission had the power to promulgate Service Order No. 1134 summarily. 10  

    Footnotes

    [ Footnote 1 ] This Service Order by its original terms was to expire July 31, 1973, unless otherwise modified or changed by the Commission. 38 Fed. Reg. 12606. The Commission twice extended the deadline, id., at 19831, 31681, and on April 11, 1974, made it effective "until further order of the Commission," 39 Fed. Reg. 13971, on each occasion having found "good cause" for the extension. The April 11 amendment also suspended the Service Order indefinitely, effective April 15, 1974.

    The Solicitor General without citation of any authority expressed his view that the District Court's decision was correct and moved that its judgment be affirmed. The Western Railroad Traffic Association has filed an amicus brief taking the opposing view.

    [ Footnote 2 ] Section 1 (15), 49 U.S.C. 1 (15), provides:

    [ Footnote 3 ] See H. R. Rep. No. 18, 65th Cong., 1st Sess.; S. Rep. No. 43, 65th Cong., 1st Sess.

    [ Footnote 4 ] 55 Cong. Rec. 2020-2021.

    [ Footnote 5 ] S. Rep., supra, n. 3, at 2.

    [ Footnote 6 ] H. R. Rep., supra, n. 3, at 1.

    [ Footnote 7 ] Iversen v. United States, involved four Service Orders of the Commission. Service Order No. 396 in that case was on all fours with the one in the instant case. In Iversen, Judge Prettyman, speaking for a three-judge District Court, said:

    [ Footnote 8 ] The District Court distinguished Turner on the ground that it involved a "demurrage tariff duly filed," 271 U.S., at 260 . But it was filed by reason of 1 (15) during an "emergency" and, as in the present case, "without notice." 271 U.S., at 260 .

    [ Footnote 9 ] A car Service Order of the Commission issued July 25, 1922, because of an "emergency" without notice and hearing was sustained in Avent v. United States, 266 U.S. 127 , against the claim that the order violated the Fifth Amendment.

    [ Footnote 10 ] This is the only question we decide today. The Commission's present obligation with respect to the promulgation of car service rules, the issue that concerns our Brother POWELL, has not been raised by counsel here or in the court below, and, accordingly, is a matter we do not address.

    MR. JUSTICE POWELL, concurring.

    I am in agreement with the Court's opinion that the Interstate Commerce Commission had the power under [420 U.S. 184, 192]   1 (15) summarily to take the action which is the subject of this litigation. I believe, however, that in addition to reversing the judgment of the District Court, we should direct that the case be remanded for a prompt proceeding under 1 (14) of the Act.

    The Commission entered Service Order No. 1134 on May 8, 1973, without notice, hearing, or an opportunity by interested parties to submit evidence or grounds of objection. The Commission found, as it had to under 1 (15):

    The Commission's counsel stated at oral argument that while the car shortage problem has a long history, the present order was in response to a particularly sharp but temporary increase in the severity of the problem. Counsel acknowledged, however, that this temporary emergency has subsided and that the order has been maintained in effect largely because of this litigation. 1  

    Summary action is justified by the need to prevent imminent and severe public harm, harm that could not be avoided were action delayed. In authorizing this type of action, Congress implicitly concluded that avoidance of the public harm justifies bypassing normal procedures. [420 U.S. 184, 193]   But the justification for summary action ends with the emergency that called it forth.

    No reason has been given us why the normal procedures with respect to "car service" rules under 1 (14) should not now be followed. 2 Although these do not require a full adversary hearing, due notice must be given all interested parties, with the opportunity to object, submit evidence, and file briefs in support of their position. United States v. Florida East Coast R. Co., 410 U.S. 224 (1973); United States v. Allegheny-Ludlum Steel Corp., 406 U.S. 742 (1972).

    The Court's reversal of the District Court's decision, without more, will result in the vacating of its order of October 18, 1973, restraining enforcement of the Commission's emergency order of May 8, 1973. Absent the restraining order of the District Court, the emergency car service rules apparently will remain in effect. I think it unfortunate to leave the case in this posture. Accordingly, in addition to reversing the judgment of the District Court, I would direct that the case be remanded to the Commission with directions that it proceed promptly in accordance with the requirements of 1 (14) to determine what changes, if any, are required in the car service rules.

    [ Footnote 1 ] Although originally drawn to expire July 31, 1973, the Commission later continued it in effect, while suspending its application, "until further order of the Commission." 39 Fed. Reg. 13971. The order was vacated, however, by the District Court on October 18, 1973, some five and a half months after its promulgation. Presumably, our reversal of the District Court will allow the Commission, in its discretion, to lift the suspension of the order without any renewed finding of emergency.

    [ Footnote 2 ] The procedural safeguards afforded by 1 (14), and which the Commission must follow absent an emergency, not only afford protection to the interests of private parties affected by agency action; they also insure that the agency has before it the information necessary to make a decision reasonably accommodating diverse and often competing public interests. Summary action may result in the imposition of hardships which, upon a more adequate consideration, will prove to have been unnecessary. See Freedman, Summary Action by Administrative Agencies, 40 U. Chi. L. Rev. 1, 27-30 (1972). [420 U.S. 184, 194]  

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