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Baltimore and Ohio Chicago Terminal Railroad Co. v. United States

UNITED STATES COURT OF APPEALS, THIRD CIRCUIT


decided: September 6, 1978.

BALTIMORE AND OHIO CHICAGO TERMINAL RAILROAD COMPANY; BALTIMORE AND OHIO RAILROAD COMPANY; BELT RAILWAY COMPANY OF CHICAGO; BESSEMER & LAKE ERIE RAILROAD COMPANY; BOSTON & MAINE CORPORATION; CHESAPEAKE & OHIO RAILWAY COMPANY; CHICAGO AND NORTH WESTERN TRANSPORTATION COMPANY; CHICAGO, MILWAUKEE, ST. PAUL & PACIFIC RAILROAD; CHICAGO, ROCK ISLAND & PACIFIC RAILROAD COMPANY; CHICAGO, SOUTH SHORE AND SOUTH BEND RAILROAD; CONSOLIDATED RAIL CORPORATION; DELAWARE & HUDSON RAILWAY COMPANY; DETROIT TERMINAL RAILROAD COMPANY; DETROIT, TOLEDO & IRONTON RAILROAD COMPANY, DULUTH, MISSABE AND IRON RANGE RAILWAY COMPANY; ELGIN, JOLIET AND EASTERN RAILWAY COMPANY; FLORIDA EAST COAST RAILWAY COMPANY; GRAND TRUNK WESTERN RAILROAD COMPANY; ILLINOIS CENTRAL GULF RAILROAD; INDIANA HARBOR BELT RAILROAD COMPANY; KENTUCKY & INDIANA TERMINAL RAILROAD COMPANY; LOUISVILLE AND NASHVILLE RAILROAD COMPANY; MISSOURI PACIFIC RAILROAD COMPANY; NORFOLK & WESTERN RAILWAY COMPANY; ST. LOUIS-SAN FRANCISCO RAILWAY COMPANY; ST. LOUIS SOUTHWESTERN RAILWAY COMPANY; SEABOARD COAST LINE RAILROAD; SOO LINE RAILROAD COMPANY; SOUTHERN PACIFIC TRANSPORTATION COMPANY; SOUTHERN RAILWAY COMPANY; STATEN ISLAND RAILROAD CORPORATION; TERMINAL RAILROAD ASSOCIATION OF ST. LOUIS; WESTERN MARYLAND RAILWAY, PETITIONERS
v.
UNITED STATES OF AMERICA AND INTERSTATE COMMERCE COMMISSION, RESPONDENTS CENTRAL VERMONT RAILWAY, INC.; DULUTH, WINNIPEG AND PACIFIC RAILWAY; AND THE DETROIT AND TOLEDO SHORE LINE RAILROAD COMPANY, INTERVENORS. BURLINGTON NORTHERN INC. AND UNION PACIFIC RAILROAD COMPANY, INTERVENORS. DUVAL SALES CORPORATION, INTERNATIONAL MINERALS & CHEMICAL CORPORATION, EVANS PRODUCTS COMPANY AND PULLMAN LEASING COMPANY, INTERVENORS. THE TEXAS MEXICAN RAILWAY COMPANY, INTERVENOR. ALIQUIPPA AND SOUTHERN RAILROAD COMPANY; CHESTNUT RIDGE RAILWAY COMPANY; EAST ERIE COMMERCIAL RAILROAD; EAST JERSEY RAILROAD AND TERMINAL COMPANY; GETTYSBURG RAILROAD COMPANY; LAKE ERIE, FRANKLIN & CLARION RAILROAD COMPANY; MCKEESPORT CONNECTING RAILROAD COMPANY; MONONGAHELA CONNECTING RAILROAD COMPANY (THE); MORRISTOWN AND ERIE RAILROAD COMPANY; NORTHAMPTON AND BATH RAILROAD COMPANY; PHILADELPHIA, BETHLEHEM AND NEW ENGLAND RAILROAD COMPANY; PITTSBURGH AND OHIO VALLEY RAILWAY COMPANY; PORT JERSEY RAILROAD; RAHWAY VALLEY RAILROAD; UNION RAILROAD COMPANY; UPPER MERION AND PLYMOUTH RAILROAD COMPANY; AMERICAN SHORT LINE RAILROAD ASSOCIATION; ABERDEEN AND ROCKFISH RAILROAD COMPANY; ALEXANDER RAILROAD COMPANY; APACHE RAILWAY COMPANY (THE); ARCATA AND MAD RIVER RAILROAD COMPANY (THE); ARKANSAS & LOUISIANA MISSOURI RAILWAY COMPANY; ASHLEY, DREW & NORTHERN RAILWAY COMPANY; BELFAST & MOOSEHEAD LAKE RAILROAD COMPANY; BELTON RAILROAD COMPANY; BERLIN MILLS RAILWAY COMPANY; BIRMINGHAM SOUTHERN RAILROAD COMPANY; BROOKLYN EASTERN DISTRICT TERMINAL RAILROAD; BUTTE, ANACONDA & PACIFIC RAILWAY COMPANY; CANTON RAILROAD COMPANY; CARBON COUNTY RAILWAY COMPANY; CEDAR RAPIDS AND IOWA CITY RAILWAY COMPANY; CENTRAL NEW YORK RAILROAD CORPORATION; CHATTAHOOCHEE INDUSTRIAL RAILROAD; CHATTAHOOCHEE VALLEY RAILWAY COMPANY; CHICAGO SHORT LINE RAILWAY COMPANY; CHICAGO, WEST PULLMAN AND SOUTHERN RAILROAD COMPANY; CITY OF PRINEVILLE RAILWAY; CLAREMONT AND CONCORD RAILWAY COMPANY; COLORADO & WYOMING RAILWAY COMPANY; COOPERSTOWN & CHARLOTTE VALLEY RAILWAY CORPORATION; CUYAHOGA VALLEY RAILWAY COMPANY (THE); DANSVILLE AND MOUNT MORRIS RAILROAD COMPANY; DARDANELLE & RUSSELLVILLE RAILROAD COMPANY DELRAY CONNECTING RAILROAD COMPANY; DEQUEEN AND EASTERN RAILROAD COMPANY; DULUTH & NORTHEASTERN RAILROAD COMPANY; EAST CAMDEN & HIGHLAND RAILROAD COMPANY; ESCANABA AND LAKE SUPERIOR RAILROAD COMPANY; FAIRPORT, PAINESVILLE AND EASTERN RAILWAY COMPANY; FONDA, JOHNSTOWN AND GLOVERSVILLE RAILROAD COMPANY; FORE RIVER RAILROAD CORPORATION; FRANKFORT AND CINCINNATI RAILROAD COMPANY; GREAT SOUTHWEST RAILROAD INCORPORATED; GREEN MOUNTAIN RAILROAD CORPORATION; GREENVILLE AND NORTHERN RAILWAY COMPANY; IOWA TERMINAL RAILROAD COMPANY; JOHNSTOWN AND STONY CREEK RAILROAD COMPANY; KENTUCKY AND TENNESSEE RAILWAY; LACKAWAXEN AND STOURBRIDGE RAILROAD CORPORATION; LAKE SUPERIOR & ISHPEMING RAILROAD COMPANY; LAKE TERMINAL RAILROAD COMPANY (THE); LAONA & NORTHERN RAILWAY COMPANY; LASALLE AND BUREAU COUNTY RAILROAD COMPANY (THE); LAURINBURG AND SOUTHERN RAILROAD COMPANY; LONG ISLAND RAIL ROAD COMPANY (THE); LONGVIEW PORTLAND & NORTHERN RAILWAY COMPANY; MANUFACTURERS' JUNCTION RAILWAY COMPANY; MARINETTE, TOMAHAWK AND WESTERN RAILROAD COMPANY; MERIDIAN & BIGBEE RAILROAD COMPANY; MICHIGAN NORTHERN RAILWAY COMPANY, INC.; MIDDLETOWN AND NEW JERSEY RAILWAY COMPANY INCORPORATED; MINNEAPOLIS, NORTHFIELD AND SOUTHERN RAILWAY; MINNESOTA TRANSFER RAILWAY COMPANY; MISSISSIPPI EXPORT RAILROAD COMPANY; MODESTO AND EMPIRE TRANCTION COMPANY; MONTPELIER & BARRE RAILROAD COMPANY; NEVADA NORTHERN RAILWAY COMPANY; NEWBURGH AND SOUTH SHORE RAILWAY COMPANY (THE); NORTH LOUISIANA & GULF RAILROAD COMPANY; OREGON & NORTHWESTERN RAILROAD COMPANY; PEARL RIVER VALLEY RAILROAD COMPANY; PECOS VALLEY SOUTHERN RAILWAY COMPANY (THE); PORT HURON AND DETROIT RAILROAD COMPANY; PRESCOTT AND NORTHWESTERN RAILROAD COMPANY (THE); PROVIDENCE AND WORCESTER COMPANY; RIVER TERMINAL RAILWAY COMPANY (THE); SABINE RIVER & NORTHERN RAILROAD COMPANY; SALT LAKE, GARFIELD AND WESTERN RAILWAY COMPANY; SAND SPRINGS RAILWAY COMPANY; SANDERSVILLE RAILROAD COM IN NORMAN V. UNITED STATES, 368 F.2D 645, 647 N.8 (3DINAL AND EASTERN RAILROAD; TERMINAL RAILWAY ALABAMA STATE DOCKS; TEXAS & NORTHERN RAILWAY COMPANY; TEXAS, OKLAHOMA & EASTERN RAILROAD COMPANY; TEXAS SOUTH-EASTERN RAILROAD COMPANY; TRONA RAILWAY COMPANY; VALDOSTA SOUTHERN RAILROAD; VENTURA COUNTY RAILWAY COMPANY; WARREN & SALINE RIVER RAILROAD COMPANY; WYANDOTTE SOUTHERN RAILROAD COMPANY; WYANDOTTE TERMINAL RAILROAD COMPANY; YOUNGSTOWN AND NORTHERN RAILROAD COMPANY (THE) PETITIONERS V. UNITED STATES OF AMERICA AND THE INTERSTATE COMMERCE COMMISSION, RESPONDENTS DUVAL SALES CORPORATION, INTERNATIONAL MINERALS & CHEMICAL CORPORATION, EVANS PRODUCTS COMPANY AND PULLMAN LEASING COMPANY, INTERVENORS THE TEXAS MEXICAN RAILWAY COMPANY, INTERVENOR

ON PETITION FOR REVIEW OF AN ORDER OF THE INTERSTATE COMMERCE COMMISSION (Ex Parte No. 289)

Before Adams, Weis and Higginbotham, Circuit Judges.

Author: Adams

Opinion OF THE COURT

Petitioners in these consolidated cases*fn1 request us to set aside an order of the Interstate Commerce Commission (ICC) entered on April 7, 1977, in Ex Parte No. 289, "Remittance of Demurrage Charges by Common Carriers of Property by Rail."*fn2 By its order, the ICC adopted a regulation requiring the remittance to freight car owners of all demurrage charges collected by the delivering carrier that are in excess of ten dollars per day per car.*fn3 Specifically, petitioners maintain that the order exceeds the statutory power of the agency; that it is arbitrary, capricious, and without rational basis; and that it fails to comply with the Administrative Procedure Act (APA)*fn4 and the Interstate Commerce Act (ICA).*fn5

For the reasons set forth below, we deny petitioners' request.

I.

The regulation at issue is a recent attempt by the ICC to deal with the longstanding shortage in this country of railroad freight cars.*fn6 The car shortage, resulting from both an insufficient supply and an inefficient utilization of freight cars, is an outgrowth of the present national carpool system. Under the system, the freight cars that are owned by Individual Railroads constitute a single, common pool, used by All rail carriers. Thus, the same loaded freight car is transported over the lines of different connecting carriers to the ultimate destination point. While more efficient than the earlier practice of shifting freight from the car of one carrier to the car of another, the pool system has at the same time made it more advantageous economically for railroads to utilize the freight cars of the originating carriers than to purchase and maintain their own. The national freight car shortage is the acknowledged result.*fn7

During the past several years, the ICC has taken a number of major actions in an attempt to ease the car shortage: (1) it has adopted various "car service" rules to regulate the placement and movement of freight cars;*fn8 (2) it has established a uniform schedule of "per diem" charges, which are those incurred daily by one railroad for the use of another's cars;*fn9 (3) it has added an "incentive" element to the basic per diem rate;*fn10 and (4) it has imposed an increase in demurrage charges.*fn11

Ex Parte No. 289, the proceeding in question here, was instituted in October 1972, to determine whether remittance of the penalty portion*fn12 of the demurrage charges to the carriers owning the cars would create an added incentive for such carriers to acquire additional cars. Following notice in the Federal Register*fn13 and submission of written statements by a number of the ninety-seven participating parties, the ICC, on April 25, 1975, issued its Interim Report.*fn14 The Report adopted the principle of the proposed remittance rule and reopened the proceeding for receipt of additional evidence regarding the plan's feasibility and costs. Following notice of the proposed further rulemaking,*fn15 one hundred-eighteen parties submitted additional information to the ICC.

On April 7, 1977, the ICC issued its Report and Order in Ex Parte No. 289.*fn16 It concluded that adoption of the proposed remittance rule would be beneficial to the public and the rail industry, as well as administratively feasible. Consequently, the agency directed that the rule become effective on July 6, 1977. However, the effective date was subsequently stayed by the ICC pending judicial review.

II.

A.

The principal argument made in support of the petition to set aside the order in question is that the ICC lacks a statutory base to promulgate the demurrage remittance rule. The ICC, in turn, contends that it does have the requisite authority under 49 U.S.C.A. § 1(6) (Supp.1978), as amended by the Rail Revitalization and Regulatory Reform Act of 1976 (4R Act).*fn17

The 4R Act added a provision to § 1(6) which states that "demurrage charges shall be computed, and rules and regulations relating to such charges shall be established, in such a manner as to fulfill the national needs with respect to (a) freight car utilization and distribution, and (b) maintenance of an adequate freight car supply available for transportation of property."*fn18 Petitioners assert that the statutory directive that "demurrage charges shall be computed" cannot properly be interpreted to authorize the ICC to "divide" demurrage revenues between the delivering carrier and the owner of the car.

In analyzing a question of statutory construction, the Supreme Court has said that it accords deference to the interpretation given the statute by the officers or agency charged with its administration. Udall v. Tallman.*fn19 While the agency's interpretation is by no means controlling,*fn20 to sustain the ICC it is necessary only that we find its interpretation to be a reasonable one.*fn21 As Tallman recognized, "we need not find that (an agency's) construction is the only reasonable one or even that it is the result we would have reached had the question arisen in the first instance in judicial proceedings."*fn22

Petitioners in the present situation argue that the plain meaning of the phrase "demurrage charges shall be computed" should control, that previous use of the term by the ICC does not indicate an understanding that it confers upon the agency the power to divide demurrage revenues, and that the division of revenues is such a substantial change from prior practice that an express authorization by Congress to divide demurrage charges is required.

While the language of § 1(6) does not specifically authorize remittance to car owners, it is equally clear that the statute does not prohibit such an arrangement. By focusing solely upon the phrase "shall be computed", petitioners tend to restrict what appears to be the rather broad authorization granted to the ICC by the 1976 amendments to § 1(6).*fn23 Indeed, the provision not only directs the ICC to compute demurrage charges with the purpose of enhancing freight car supply, utilization, and distribution but also mandates the agency to establish "rules and regulations relating to such charges."

The legislative history of the 4R Act further indicates the appropriateness of a broad reading of the amendment to § 1(6). The statute encompassing the provision was enacted by Congress for the general purpose of revitalizing a sagging railroad industry.*fn24 It was the declared policy of Congress, among other things, to balance the needs of carriers, shippers, and the public; to help place the nation's railroads in a position competitive with that of other modes of transportation, so as to promote more adequate and efficient transportation services; and to increase the attractiveness of investing in railroads and rail-service-related enterprises.*fn25

One of the means of fulfilling these aims was the amendment pertaining to demurrage charges. That provision, comprising only eight lines in the 120-page statute, understandably did not attract much congressional comment.*fn26 The few portions of the legislative history that deal with the demurrage provision, however, lend support to the ICC's broad interpretation of § 1(6).

During the initial review of the railroad reform legislation in the House of Representatives, the Committee on Interstate and Foreign Commerce was informed of the ICC's pending consideration of the demurrage remittance rule in Ex Parte No. 289, and it gave no indication of its disapproval.*fn27 This is of special significance in light of the Supreme Court's holding in Zuber v. Allen*fn28 that an agency's interpretation of the statute it is charged with implementing "carries most weight when the administrators participated in drafting and directly made known their views to Congress in Committee hearings. . . . In such circumstances, absent any indication that Congress differed with the responsible department, a court should resolve any ambiguity in favor of the administrative construction, if such construction enhances the general purposes and policies underlying the legislation."*fn29 In addition, we find substantial support for the ICC's interpretation of the demurrage provision in the Joint Explanatory Statements of the Conference Committee. It declared with regard to the section: "Other amendment made by this title: . . . Requires the Commission to establish rules and regulations for the computation of demurrage charges so that freight car utilization is maximized and Car owners receive adequate compensation . . .."*fn30

In light of this statutory history, and the goals of the legislation, we are unable to say that the ICC's view that § 1(6) authorizes it to promulgate the present demurrage remittance rule is an unreasonable one.

B.

Petitioners also contend that the order in Ex Parte No. 289, even if within the ICC's power, must be set aside as arbitrary and capricious and as unsupported by substantial evidence. In this regard, petitioners assert that the applicable standard of review is the one established by the APA 5 U.S.C.A. § 706 (1977), and that the ICC determination, by failing to demonstrate a sufficient nexus between demurrage remittance and improved freight car utilization and supply, cannot survive such review.

Section 706(2) requires, Inter alia, that the reviewing court hold unlawful and set aside agency action, findings, and conclusions found to be (A) arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law; . . . (or) (E) unsupported by substantial evidence in a case subject to sections 556 and 557 of this title or otherwise reviewed on the record of an agency hearing provided by statute . . . ."*fn31 Since the present proceeding involves notice and comment rulemaking under 5 U.S.C.A. § 553 (1977),*fn32 and is not one "reviewed on the record of an agency hearing provided by statute,"*fn33 the "substantial evidence" test of § 706(2)(E) would not appear to be applicable.*fn34 As we recently stated in Ford Motor Co. v. United States,*fn35 the basic standard of review in proceedings such as this one is the "arbitrary and capricious" standard of § 706(2)(A).*fn36

It is generally settled that the scope of review of agency actions under § 706(2)(A) is narrow.*fn37 A unanimous Supreme Court noted in United States v. Allegheny-Ludlum Steel*fn38 that "(w)e do not weigh the evidence introduced before the Commission; we do not inquire into the wisdom of the regulations that the Commission promulgates, and we inquire into the soundness of the reasoning by which the Commission reaches its conclusions only to ascertain that the latter are rationally supported."*fn39 Accordingly, we examine the evidence and arguments offered by the ICC in order to determine whether the demurrage remittance rule is "rationally supported."

In its Interim Report and final Report and Order, the ICC extensively discussed the arguments of both proponents and opponents of the remittance rule, and concluded that the rule would likely achieve its intended purpose of increasing freight car supply and utilization. Its reasoning was forthright, relying upon "the fundamental economic proposition that a greater return on an investment will provide an increased incentive to invest in that item, whether it be stocks, cars, or as in this case, freight cars."*fn40 While admitting that return on investment would be only one of several factors affecting a decision whether to purchase freight cars, the ICC claimed that the rule would at least tend to encourage such decision. Moreover, the agency concluded that the remittance rule would have an affirmative effect upon the supply of cars. Pointing to evidence adduced in earlier proceedings that large sums of demurrage charges remained uncollected by the carriers, the ICC reasoned that the requirement of the remittance rule, which is based on billed rather than collected demurrage charges, would likely encourage carriers to be more rigorous in Their collection of the charges. This, the agency maintained, would enhance the general regulatory effect of the demurrage system.*fn41

Further, the ICC carefully weighed the benefits of the proposed rule against the claims of its opponents that demurrage remittance, by reducing railroad revenues and requiring additional administrative expenses, would place undue economic burdens upon many carriers.*fn42 The ICC found that many of the projections set forth by the objecting carriers were based on short-term start-up expenses, and therefore were subject to question. Thus, the agency concluded that the benefits of the proposed rule outweighed the burdens.*fn43 Having reviewed the ICC's reasoning, we are unable to say that the agency's solution is not "rationally supported."*fn44

C.

Petitioners further contend that the ICC's order in Ex Parte No. 289 must be set aside for failure to comply with certain procedural requirements of the APA, 5 U.S.C.A. § 553(c) (1977), and of the ICA, 49 U.S.C.A. § 17(14)(b) (Supp.1978).

1.

Section 553(c) provides in pertinent part that "after consideration of the relevant matter presented, the agency shall incorporate in the rules adopted a concise and general statement of their basis and purpose." It is the petitioners' position that this section requires that the statement by the agency be supported by more than conclusory assertions, and that the ICC remittance rule is invalid because of the agency's failure to comply with this requirement.

Those courts which have considered the issue agree that § 553(c) is designed to facilitate meaningful judicial review of agency action.*fn45 When engaging in such review, courts have expressed their intention to limit their scrutiny to the actual reasoning set forth by the agency.*fn46 Thus, Post hoc rationalizations advanced in the course of judicial review have been considered insufficient bases for sustaining an administrative action.*fn47

However, in recognition of the limited purpose of the statement requirement of § 553(c), the provision has not been seen as a vehicle for searching judicial oversight of agency decision-making.*fn48 As the District of Columbia Court of Appeals made clear in Tabor v. Joint Board for Enrollment of Actuaries, the mere failure to publish the statement of the rule's basis and purpose at the same moment as the regulations are published does not constitute a violation of § 553(c).*fn49 Rather, "(t)he enquiry must be whether the rules and statement are published close enough together in time so that there is no doubt that the statement accompanies, rather than rationalizes the rules."*fn50

In the present situation, the ICC's notices in the Federal Register of the proposed further rulemaking and of the final rule themselves satisfy the requirement of § 553(c).*fn51 In addition, there can be little doubt that the ICC Interim Report as well as its final Report and Order more than fulfill the statutory purpose of facilitating judicial review.*fn52

2.

The contention of petitioners regarding the time requirements set forth in the ICA, 49 U.S.C.A. § 17(14)(b) (Supp.1978), presents a more difficult problem. That section provides: "Within one year after February 5, 1976, (the date of the enactment of this subdivision) the Commission shall conclude or terminate, with administrative finality, any Formal investigative proceeding with respect to a common carrier by railroad which was instituted by the Commission on its own initiative and which has been Pending before the Commission for a period of three or more years following the date of the order which instituted such proceeding."*fn53

Petitioners argue that the proceeding here was a "formal investigative proceeding", that it was pending before the ICC for a period of more than three years subsequent to the initiation of the proceeding, and that it continued for more than one year after the enactment of § 17(14)(b). They maintain that the appropriate sanction for such a violation of the section is the setting aside or dismissal of the proceeding. Respondents, on the other hand, answer that the proceeding here was an informal one; that the ICC's Notice of Proposed Further and Amended Rulemaking and Order initiated a proceeding that was separate from that instituted in 1972 by the ICC's initial notice in Ex Parte No. 289; and thus that the time limitations were not transgressed. In any event, they insist that dismissal is neither required nor appropriate.

Recent opinions of several courts of appeals have consistently distinguished between "informal rulemaking" under the APA, 5 U.S.C.A. § 553 (1977), which need not be conducted with the procedural formalities of a trial, and "formal rulemaking" under 5 U.S.C.A. §§ 556 and 557 (1977), which is required to have an evidentiary hearing.*fn54 There is no disagreement among the parties here that Ex Parte No. 289 comes within the former category, that of "informal rulemaking." Respondents seek to establish that, because the proceeding in question is "informal" for purposes of the APA, it is also "informal" for purposes of the ICA, 49 U.S.C.A. § 17(14)(b) (Supp.1978).

We disagree. The ICC offers no evidence or reasoning to support the assertion that Congress, when drafting § 303 of the 4R Act, which amended the procedural requirements of the ICA, had in mind the characterization that several courts have given to notice and comment rulemaking under the APA, 5 U.S.C.A. § 553. In the absence of any evidence, such a congruence seems to us implausible. While the purpose of the APA is to establish general procedural guidelines for a broad range of administrative agencies,*fn55 the ICA applies to a much narrower set of circumstances. Thus, it is reasonable to believe that Congress, when drafting the 4R Act amendments to the ICA, was thinking in terms of the particular problems of the ICC and the railroad industry.*fn56

Indeed, such an interpretation of congressional intent is affirmatively supported by the available legislative history of § 17(14)(b). Paragraph (14) (b) was added to § 17 of the ICA in 1976, as part of Congress' broad attempt in the 4R Act to expedite ICC procedures. Congress was particularly concerned with the lengthy delays traditionally accompanying railroad-related matters. Thus, in § 303(a) of the 4R Act, 49 U.S.C.A. § 17 (Supp.1978), deadlines were established by Congress for the completion of evidentiary proceedings by ICC sub-units, the submission of initial reports to the full ICC, and the consideration and final disposition of administrative appeals. Furthermore, in § 303(b) of the 4R Act, Congress established deadlines for the disposition of "any formal investigative proceeding with respect to a common carrier by railroad." We are unable to find any indication, either on the face of the 4R Act or in the legislative history, that Congress intended proceedings such as Ex Parte No. 289 to be exempt from a statutory time requirement.*fn57

It is not without significance that the ICC, in its annual reports to Congress, has consistently designated notice and comment rulemaking proceedings such as the present one as "formal proceedings".*fn58 In contrast, informal proceedings have included such ICC activities as applications for temporary authority to operate a motor vehicle, applications to deviate from regular routes, and applications for temporary authority to lease or control. It is most likely that it was this categorization of proceedings that Congress had in mind when drafting § 17(14)(b).

Consequently, we hold that Ex Parte No. 289 constituted a "formal investigative proceeding" under the ICA, 49 U.S.C.A. § 17(14)(b), and that the statute's time requirements are therefore applicable.*fn59

Nevertheless, we do not believe that the ICC's failure in this case to comply with the statutory deadline requires us to dismiss the proceedings. Section 17(14)(b), applying to proceedings initiated prior to the enactment of that section, contains no express sanction for noncompliance as does § 17(14)(a), which pertains to ICC investigations begun since the provision's enactment.*fn60 This distinction in the language of the two sections indicates a desire on the part of Congress not to place ongoing proceedings under the same absolute time limit as proceedings instituted subsequent to the enactment of the 4R Act.

Furthermore, we are unconvinced that, as an equitable matter, injunctive relief barring enforcement of the ICC's order would be at all appropriate in this instance. While § 17(14)(b) evidences a congressional desire to eliminate delay in ongoing ICC proceedings, this purpose is but one of several that animated the 4R Act. Accordingly, it is necessary to balance the congressional aim of eliminating delay against the equally strong goals of revitalizing the nation's railroad system and alleviating the boxcar shortage. In light of these competing purposes, and of the vast resources that have obviously been expended in the course of Ex Parte No. 289, to enjoin the proceeding at this juncture would appear to be inappropriate. Furthermore, petitioners have failed to offer any evidence that they have been unduly prejudiced by the additional delay of two months beyond the statutory limit.*fn61

We therefore hold that, while the ICC has exceeded the time limitations established by § 17(14)(b), dismissal here is neither required nor warranted.

D.

Petitioners' final claim is that the ICC rule, by including private car owners in the demurrage remittance scheme,*fn62 permits the payment of unlawful rebates in violation of 49 U.S.C. §§ 15(15)*fn63 and 41(1).*fn64 It is contended that these sections will be violated by the order, since the payment by a railroad for the use of a private freight car will exceed the owner-shipper's cost of furnishing the car, and since the receiving carrier will in effect be paying an allowance which will not be published in its tariffs for the use of a car.

We have given careful consideration to these arguments and conclude that petitioners have misconstrued the purposes of § 15(15) and § 41(1), as well as the concept of demurrage. Sections 15(15) and 41(1) were designed to ensure reasonable and nondiscriminatory rates and charges, and to prevent any type of departure from published transportation rates.*fn65 In contrast, the essential nature of demurrage is that of a car service regulation.*fn66 Consequently, we do not believe that a demurrage charge can properly be understood as a "rate" under § 41(1), or as a "charge" as that term is used in § 15(15). Unlike the use of the terms in those provisions,*fn67 demurrage remittance relates not to rail carriers' property, but to excessive delay caused by the shipper or receiver in the loading or unloading of freight cars. Furthermore, it is neither a "charge and allowance" paid by the railroads for use of freight cars nor a reduction of the railroads' rates for owner-shippers. Rather, demurrage is a cost imposed upon the receiver, the penalty portion of which will be transmitted to the owner by the delivering carrier.

As Judge Prettyman observed in his oft-quoted opinion in Iversen v. United States :*fn68

Demurrage charges are in part compensation and in part penalty; . . . in full character they are neither, Not being rates as that term is used in connection with rate-making, nor penalties as that term is used in respect to penal impositions. They are Sui generis. Historically, textually, in purpose and in content, they are an integral part of the established rules and regulations relating to the use and movement of cars. From the beginning they have been sustained as rules and regulations. They Could not have been sustained as carrier charges or as penalties.*fn69

As a result, we are unable to say that the inclusion of private car owners in the ICC's demurrage remittance order is a violation of the ICA.

III.

For the reasons herein set forth, the petition to set aside the order of the ICC in Ex Parte No. 289 will be denied.


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