ICC v. OREGON PACIFIC INDUSTRIES, INC.
Legal provision: Interstate Commerce, as amended
Argument of Charles H. White, Jr.
Chief Justice Warren E. Burger: We'll hear arguments first this morning in 73-1210, Interstate Commerce Commission against Oregon Pacific Industries.
Mr. White, you may proceed whenever you’re ready.
Mr. Charles H. White, Jr.: Mr. Chief Justice, may it please the Court.
This is a direct appeal from a final judgment of a three-judge District Court setting aside a Commission’s car Service Order rendered pursuant to 1(15) of the Interstate Commerce Act.
Although the case is couched in technical terms, the issue before this Court is quite simple.
The issue was whether the lower court erred in finding that the order of the Commission was a rate order fixed without due process considerations or instead was it an order directed at the use to which the boxcars were put.
We submit that Service Order 1134 is a temporary order aimed at the extended use of the scarce boxcar resources as mobile lumber warehouses during a period of unquestioned transportation emergency and as such well within the reach of 1(15).
This Court is well aware given the light of the Allegheny-Ludlum case in Florida East Coast of the chronic boxcar shortage facing the country today.
There's no need to believe on that point.
However, the order that we are considering here today arises out of an emergency over and above the chronic shortage.
In 1972 and early 1973, the country was enjoying a tremendous economic boom, record crops were being harvested and moved to the country elevators and a completely unexpected event happened to create a transportation emergency.
The unprecedented and unexpected Russian grain deal completely strained and place unsustainable strain on the boxcar fleet.
The Commission moved on many fronts to make sure that the cars moved in the public interest during this time of transportation emergency.
Justice Potter Stewart: When was that, in the summer of 1973?
Mr. Charles H. White, Jr.: No Your Honor.
This was in the fall harvest of 1972 going into the early spring of 1973.
This was the time of the crisis that hit the nation.
The Commission orchestrated a series of car Service Orders to move the cars expeditiously.
For instance, in Service Order 1120, it limited the number of jumbo covered hopper cars that were available to any unit train shippers so that all grain shippers would have a fair share of the -- of this transportation resource to move the grain.
In 1121, the Commission was faced with the situation of growing congestion of the ports and it cut back on the free time available to the shippers of grain.
In 1117, perhaps the most important of the car Service Order in that series; the Commission diverted coal cars, the open top hopper cars from the coal industry to the movement of grain and as pertinent here, the Commission decided in the face of the emergency that unrestrained, unlimited reconsignment by the lumber shippers was exacerbating the transportation emergency and car Service Order number 1134 temporaril limited the reconsignment privileges of the lumber shippers.
Reconsignment that the issue before the Court today is markedly different from the transit privileges that this Court considered in the Wichita case briefly a transit privilege allows the shipper to stop his movement for the physical activity of something like inspecting the grain or creosoting lumber and to continue on with the movement and still enjoy the benefits of the true rate.
Reconsignment on the other hand allows a stopping in movement simply to change the billing or the destination but preserves to the shipper the through rate.
Justice Potter Stewart: The stop -- just an arbitrate place or other or what, how is that?
Mr. Charles H. White, Jr.: In the specific instance of lumber shipping of the --
Justice Potter Stewart: They moved from west to east basically?
Mr. Charles H. White, Jr.: Yes Your Honor.
And there are various points that have the truckage facilities which the lumber wholesalers used to stop the cars, to let the cars sit out as lumber warehouses while a market develops.
Justice Potter Stewart: Were there half a dozen or dozen places that have these facilities?
Mr. Charles H. White, Jr.: Yes Mr. Justice Stewart, in that order.
It's a physical -- there must be physical facilities to set out strings of boxcars in its -- in the order of a couple of dozen.
Justice Potter Stewart: And these are the Midwest somewhere?
Mr. Charles H. White, Jr.: Primarily in the Midwest, but in a far west possibly in Wyoming, Washington State but generally the movement is correctly pointed from the northwest towards the east and the reconsignment points might conceivably be in any place in that quadrant of the country.
And in fact, that leads to an interesting point reconsignment of its very nature must involve some degree of security because a certain percentage of the lumber that's reconsigned is reconsigned backwards or perhaps not in the most expeditious route to the final destination.
The lumber wholesalers are the primary users of the reconsignment technique.
A lumber is sold -- a lumber is marketed in two ways.
Primarily, there are large mills, lumber mills that have their own storage capacity and their own sales force.
There are also small mills which collectively provide the bulk of the lumber that comes eastward.
The small mills typically have no storage facilities nor that they have a sales force.
They looked to the lumber wholesalers off to market the lumber and to provide the -- where withhold for storage.
But the lumber wholesalers themselves have no storage capacity.
They simply purchase the lumber and immediately cost it to be loaded on to the boxcars and set the boxcars in motion eastward and the boxcars are held that the reconsignment point until a market is made.
The boxcars, while they're at a reconsignment point, are subject only to the external stimulus of demurrage.
Under the tariffs they're pertaining, there is no limit to the time that the boxcars can sit idle.
Demurrage is the only incentive to get the cars moving.
But in a case of a rising market, a case of an inflationary time, the demurrage incentive has typically been found not to excite fast release of the scarce boxcars.
Chief Justice Warren E. Burger: The shippers sometimes in effect use the demurrage as storage cost, in fact, do they not?
Mr. Charles H. White, Jr.: Yes, Mr. Chief Justice, I believe they do.
Justice William J. Brennan: Mr. White, what are the problems have been had the Commission elected to increase the demurrage sufficiently to bring back the same result?
Mr. Charles H. White, Jr.: Well, Your Honor if the demurrage was increased sufficiently as you put it, the exact -- the limitation of the storage time would still be uncertain.
Demurrage as you know has a gradual increase.
The overriding need that the Commission felt was to get the cars back into motion quickly and within a time period that was reasonably determined to be five working days.
An increase in the demurrage rate would provide an incentive, you're correct in asking that question getting the cars back but it's not certain when it would become economically feasible, economically sufficient in magnitude to get the cars rolling.
The Commission in this case felt a need to get the cars back in at least five days.
And as the Commission stated in its Service Order itself, demurrage hadn't been working in this particular segment of the economy.
It hadn't been providing a significant incentive to get the cars back on motion.
Justice Potter Stewart: Demurrage that goes progressively, doesn't it?
Mr. Charles H. White, Jr.: Yes, Your Honor, it does.
Justice Potter Stewart: It's not so much a day, it's so much --
Mr. Charles H. White, Jr.: Well, it can be structured of any where the Commission chooses I believe but it's --
Justice Potter Stewart: But it gets greater per day as the --
Mr. Charles H. White, Jr.: Yes, in step --
Justice Potter Stewart: And has the number of days increase?
Mr. Charles H. White, Jr.: Yes Mr. Justice Stewart.
During the emergency period, the Commission looked very carefully at the statistics of just what distortions in the transportation system were being provided by the reconsignment technique.
And I have found that by early 1973, the supply of the 40-foot wide door boxcars was averaging in a daily basis over 600.
The 50-foot cars were over 2,200 scarce.
And of all boxcars, we were experiencing a scarcity of something in the order of 13,000 cars.
Meanwhile, the Commission's studies show that the average whole time of reconsignment point was 10 days and holding experiences of 20 to 30 days were not uncommon.
In this light, a Commission determined that the emergency was being exacerbated by the reconsignment technique and issued car Service Order number 1134.
In the face of the Order itself, the Commission's rationale was completely outlined.
The Commission found that the shortage of boxcars was impeding the movement of many commodities that the cars were being held for excessive periods of reconsignment points, that the practice was immobilizing cars needed by shippers of other commodities and perhaps most important that demurrage technique was not a sufficient incentive to get the cars moving.
So, the Commission suspended as it can under 1(15) (a) the car service rule which is embodied in open-ended reconsignment.
It limited reconsignment to five days, it did not eliminate reconsignment.
The Commission went one step further and explained in gratuitous language what the legal effect was of suspending the car service rule.
It explained the purpose of the car Service Order, it explained the result that after the fifth day, after the reconsignment privilege has terminated the shipper must bear as he would anyways some of the local rates.
Those words are not words of rate prescription, they are a merely description of what the legal affect of the order is.
Justice William J. Brennan: Went to a lot of money, doesn't it?
Mr. Charles H. White, Jr.: Yes indeed, it does, Your Honor.
Justice William J. Brennan: Had there been any precedent for this sort of thing?
Mr. Charles H. White, Jr.: I'm sorry sir?
Justice William J. Brennan: Any precedent for this sort of thing?
Mr. Charles H. White, Jr.: Yes sir.
There's a case exactly in point that upholds a car Service Order of this --
Justice Potter Stewart: It was a little bit of bind in answering that question of My brother Brennan, didn't you stipulate --
Mr. Charles H. White, Jr.: Yes indeed.
They were in a bind.
Precisely, in a bind and I explained candidly in the footnote, I did not locate those car Service Orders until after the Court had rendered --
Justice Potter Stewart: But there is a stipulation that there's no precedent?
Mr. Charles H. White, Jr.: There is a stipulation.
Justice Potter Stewart: Well, in fact, is that there is at least one or maybe two precedent, right?
Mr. Charles H. White, Jr.: Yes, indeed, that's the case.
Justice Byron R. White: And in any event there is no list that the rate -- the rate -- the basis, changes on the fifth day?
Mr. Charles H. White, Jr.: No Your Honor, I'd like to --
Justice Byron R. White: Are you charge -- you charge some of the individual rates rather than the joint rate?
Mr. Charles H. White, Jr.: I'd like to --
Justice Byron R. White: Or the true rate?
Mr. Charles H. White, Jr.: Mr. Justice White, I'd like to try and answer your question this way: the Commission suspendeit as it can under 1(15)(a) the car service rule which allows through rate privileges with reconsignment.
It look --
Justice Byron R. White: Well, what was in the tariff?
Mr. Charles H. White, Jr.: That was in the tariff.
The fact that was in the tariff does not limit the Commission's ability to suspend it under 1(15) (a), the Commission has given extremely broad powers to suspend any and all practices or rules during a transportation emergency.
Justice Byron R. White: Rates too?
Mr. Charles H. White, Jr.: This must, yes Your Honor.
This must the car service rule must embrace tolls that are imbedded in tariffs.
The Commission did not set rates, it only limited the use of boxcars as warehouses for five days and I submit, Your Honor, that on the face of the statute, the face of 1(15), it has the power to do that.
1(15) (a) gives the Commission power in an emergency to suspend any rule, any and all rules in effect with respect to car service.
Car service, in turn, is defined by 1(10) as to embrace the use to which cars are put.
Reading 1(10) and reading 1(15) together, the Commission must have under 1(15) and we submit it does have the ability to suspend car service rules embedded in tariffs.
Justice Harry A. Blackmun: Do you say that the other side of Mr. Justice White's question is that if the car moves within the designated time, the rate isn't change at all?
Mr. Charles H. White, Jr.: Precisely that, Mr. Justice Blackmun.
Justice Harry A. Blackmun: So, it depends on how we look at it?
Mr. Charles H. White, Jr.: The rate -- exactly, that the option is left with the shipper.
As long as the shipper seeks only transportation and reasonable reconsignment, there's absolutely no change in the rate he must pay.
And in effect, car Service Order number 1134 reached precisely that goal.
The average detention time was driven down to five days.
There has been very -- I have not received any information that there has been much of any additional charges paid.
The average whole time was brought down within the reach of the car Service Order and the cars moved in the public interest during the crisis the order worked.
Justice William H. Rehnquist: Mr. White, before the Commission entered its order that's on appeal here supposing that you put lumber in a boxcar in Portland and consign it to Chicago and then exercise your reconsignment privilege as the shipper to say it goes back to Denver and it's all them at least sold in Denver, now, what rate would the shipper pay?
Mr. Charles H. White, Jr.: The shipper would pay ,Mr. Justice Rehnquist the through rate from Portland to Denver.
Justice William H. Rehnquist: You mean he could ship it --
Mr. Charles H. White, Jr.: Even with that built-in security that I eluded to earlier, that the security is a -- it's a part of the practice that is necessary if reconsignment is fully a part --
Justice William H. Rehnquist: Even if it ended up -- if they want to if he is going back to Seattle he don't -- he'd pay only from Portland to Seattle?
Mr. Charles H. White, Jr.: I believe that's right, Mr. Justice Rehnquist, and that leads me to a point that this Court touched upon way back in a Turner Lumber case that reconsignment privileges are during times of economic crisis anyway is inherently ways for transportation resources.
They have been tolerated by the Commission.
They haven't been formally promulgated in anyway.
The tariff provisions provided -- providing for reconsignment have been merely tolerated and during times of unquestioned crisis -- transportation crisis, the lights of which we experienced during Russian grain deal, that practice has not been and should not be tolerated one way against the overriding public need to keep the cars moving for all commodities.
That leads me to another point, Mr. Justice Rehnquist.
The -- my brother is concerned that car Service Order 1134 eliminates the reconsignment practice, it does not.
It during -- its duration, during the crisis limited the practice to five working days and it did not eliminate reconsignment and because it did not eliminate reconsignment as a marketing technique, I submit that the mechanism in 1134, mechanism for adjusting the needs of a particular segment of the economy vis-à-vis the overall economy must be preserved to the Commission.
1134, I submit, is a careful accommodation of the public interest and the interest of a segment of the economy.
The Court did not throw up the particular accommodation; the Court instead threw up the whole mechanism.
Justice Harry A. Blackmun: Mr. White, if you -- let me theorize a little bit.
If the ICC didn't have this emergency power, do you think it would have by this time have devised some solution to this long standing chronic problem?
Mr. Charles H. White, Jr.: Mr. Justice Blackmun, which chronic problem do you mean, the car shortage or the reconsignment?
Justice Harry A. Blackmun: The car shortage.
Mr. Charles H. White, Jr.: Well, --
Justice Harry A. Blackmun: It seems lways to be with us --
Mr. Charles H. White, Jr.: I can report that the Commission has taken a very significant and important step just this week I believe in ex parte 241.
This Court had the earlier face of 241, the Allegheny-Ludlum case.
The Commission is exercising its authority which it firmly believes it has to order the nation's carriers to augment their boxcar fleet.
There's a motion to show cause and a show cause order outstanding today ordering the nation's railroads to restore their boxcar fleets to the standards that pertain in the 1970 to 1972 period.
Justice William J. Brennan: Financing on that I gather has put a problem.
Mr. Charles H. White, Jr.: It's -- the financing is a mixed problem because some of the nation's railroads as you know, Mr. Justice Brennan, are in the financial trouble but others are not.
Justice William J. Brennan: But this applies uniformly?
Mr. Charles H. White, Jr.: This applies uniformly and it is aimed at increasing the fleet by some 69,000 units and reducing the bad order ratio.
So, the Commission has taken forceful steps and Congress has taken forceful steps.
There's legislation pending right now, the Senate 1149, looking towards financial aid from Congress and looking ultimately towards the creation of a national boxcar fleet if the financial doesn't work.
So, very important strides are being made.
But, I think we can predict with some certainty that it will take time and during the time it takes, there will be -- we can state with a certainty, continuations are periodic reoccurrences of transportation emergencies and because we can safely predict that transportation emergencies will be in our future, the Commission needs to have a full array of remedial tools to cope with emergencies as they come over the horizon.
That means it must have a full array of demurrage techniques, it must have a full array of free time limitation techniques and it must in this particular instance preserve the technique --
Justice William J. Brennan: I gather this order -- did this order ever come effective?
Mr. Charles H. White, Jr.: This order was effective during the -- and it worked.
The first step of the judicial review in this case was a TRO hearing and which that TRO was denied and the Service Order worked.
It was in effect from May until the three-judge hearing I believe was in August or September.
Justice William J. Brennan: Has the emergency that prompted it --
Mr. Charles H. White, Jr.: The emergency probably --
Justice William J. Brennan: That's over, is it?
Mr. Charles H. White, Jr.: I would say given the lumber prices in the housing industry that probably is over now.
But it was the order was alive --
Justice William J. Brennan: Well, I meant the grain deal.
Mr. Charles H. White, Jr.: Oh, well, --
Justice William J. Brennan: That was the emergency that created it.
Mr. Charles H. White, Jr.: No Your Honor, that was -- yes, that was a -- the part of this tremendous unexpected emergency.
But the emergency itself was being exacerbated by the lumber reconsignment practices which using the plaintiff --
Justice William J. Brennan: You mean independent of the grain?
Mr. Charles H. White, Jr.: Independent of but it was an event that could not be tolerated in the face of the overriding need to get the cars moving.
Chief Justice Warren E. Burger: Well, in the past three years, we've had three or four years, we've had two or three car shortage cases here before us, have we not?
Mr. Charles H. White, Jr.: Yes indeed, Mr. Chief Justice.
Chief Justice Warren E. Burger: All emergency situations stemming from other factors?
Mr. Charles H. White, Jr.: No, I respectfully would not call them all emergency situations.
You have had --
Chief Justice Warren E. Burger: But you said car shortage problem --
Mr. Charles H. White, Jr.: -- there were chronic shortage problems that is not what I'm here talking about today, Your Honor.
We're talking about a -- and very unusual emergency existing on top of the chronic shortage.
Chief Justice Warren E. Burger: But there's nothing unique about a car shortage problem in this country from time to time, is there?
Mr. Charles H. White, Jr.: No, we have -- we're in a period of a chronic shortage.
Chief Justice Warren E. Burger: But sometimes we have the cars but we have them in places where they aren't needed.
Mr. Charles H. White, Jr.: Indeed, we do and that's one of the reason why we have to have -- the Commission has to have the ability to order the cars to be moved to where they are needed the most.
Justice William J. Brennan: Well, Mr. White, the statute of course confers this power only shortage of equipment or other emergency and you just said that this is a chronic condition.
Is it --?
Mr. Charles H. White, Jr.: No Your Honor --
Justice William J. Brennan: -- if it's chronic?
Mr. Charles H. White, Jr.: I'm trying to explain, if I may, that what I'm talking about here is a series of car Service Orders and the car Service Order that was aimed at an emergency.
Justice William J. Brennan: Well, it's a never ending emergency, wasn't it?
Mr. Charles H. White, Jr.: No, indeed, I don't believe it is.
Chief Justice Warren E. Burger: I understood your answer to be that there has been a chronic shortage for some time but this was an extraordinary emergency.
Mr. Charles H. White, Jr.: This was an emergency on top of the chronic shortage, an emergency that triggered the extraordinary summary powers that the Commission has.
Justice William J. Brennan: That being the grain -- that the grain deal --
Mr. Charles H. White, Jr.: The grain deal was one segment of it as I have mentioned, Mr. Justice Brennan.
Justice William J. Brennan: Well, that's over?
Mr. Charles H. White, Jr.: That's over.
Justice William J. Brennan: Now, what's left in the way of the emergency?
Mr. Charles H. White, Jr.: I don't believe that the emergency that supported 1134 still exists and that's totally consistent with.
Justice William J. Brennan: Well, nobody know that then if you prevail here what happens to 1134?
Mr. Charles H. White, Jr.: If we prevail, 1134 might -- 1134 is still is in existence but it has been suspended by the Court.
Justice William J. Brennan: I know that but if you prevail, what happens?
Mr. Charles H. White, Jr.: If we prevail --
Justice William J. Brennan: Reinstated?
Mr. Charles H. White, Jr.: If we prevail, 1134 probably would be terminated because of the -- beyond of the emergency.
We're not here for that simple reason, we're here to preserve a technique, a remedy, an adjustment mechanism that might be used in the future and that must be available to the Commission in the future.
Justice William J. Brennan: But you don't think that something like mootness about this thing?
Mr. Charles H. White, Jr.: Indeed, I don't, Mr. Justice Brennan.
The Court recently looked that the mootness issue on the DeFunis case but one of the exceptions to the DeFunis is as the Court pointed out was the southern Pacific Terminals case versus ICC which involved precisely the same kind of order that we have here in the sense that they were recurring short term orders that could be mooted out, so to speak, that could be non-effective by time the Courts cut mechanism into reviewing them.
We precisely have the same situation here, we can predict future emergencies and we can predict the repetition of the same kind of a question before the courts and we respectfully submit that this is a -- and indeed if there ever was a situation where the exception to DeFunis applies that here might have a capable -- initial capable of repetition yet evading judicial review.
Justice Harry A. Blackmun: Well, Mr. White, following through a little on this, didn't the 1134 by its terms have an expiration date?
Mr. Charles H. White, Jr.: Indeed, it did as to all car Service Orders and they last for the -- well, let me just explain --
Justice Harry A. Blackmun: Do you mean half months in duration by its terms?
Mr. Charles H. White, Jr.: Well, it originated --
Justice Harry A. Blackmun: Unless --
Mr. Charles H. White, Jr.: In six weeks I believe the first time around and it was renewed.
And this is precisely the -- it's a mechanism that's necessary in emergency situations.
At the end of the expiration of the duration of the car Service Order, the Commission has compelled to again look at the situation to determine if the emergency still exists.
If it doesn't still exists the car Service Order terminates.
Justice Harry A. Blackmun: Well, if you prevail here it doesn't go automatically back into effect at this late date?
Mr. Charles H. White, Jr.: Yes, it goes into effect but it compel -- the Commission will be compelled to consider the underlying economics to see if indeed the emergency still persists and if it does not persist car Service Order 1134 will have done its -- well have been terminated and will no longer apply.
Justice Harry A. Blackmun: Let's see if I follow that, if you prevail here even though there's been no extension to November 20, 1974, it's your position that it will automatically go back into effect?
Mr. Charles H. White, Jr.: The Commission has -- time -- from time to time extended the car Service Order but it had no application.
It extended it for this reason, Mr. Justice Blackmun, during this period the Commission has been very carefully building a record of statistics.
If we are successful today and car Service Order 1134 is reinstated, it will have the body of information upon which to make a judgment whether the emergency still exists and more likely than not will determine that it does not exist in car Service Order will be terminated.
Justice William H. Rehnquist: Well, is there somewhere in the record, Mr. White, something other than the notations at page 17 of the appendix which indicates that the original expiration date was May 15 or July 31, 1973 some indication that the Commission has renewed it?
Mr. Charles H. White, Jr.: Yes indeed.
It has been renewed on that date as renewed the second time but of course it was suspended by the -- was held void ab initio by the Court, so it had no effect other than the Commission has been gathering data all during this period and obviously we'll be forced or we'll take it upon itself to reexamine the underlying premises of the car Service Order at determination of judicial review.
Justice William H. Rehnquist: Well, did the Commission extend the order, and their subsequent order as extending the order?
Mr. Charles H. White, Jr.: Yes it did Mr. Justice Rehnquist.
Justice Harry A. Blackmun: Where has that appeared?
Mr. Charles H. White, Jr.: It appears in the federal register -- I can't cite you the pages but when an order is extended, it is -- a notice has given to the public by federal register publication.
I certainly I can't provide the Court --
Justice Harry A. Blackmun: But it isn't in the record here?
Mr. Charles H. White, Jr.: Sir?
Justice Harry A. Blackmun: It isn't in the appendix here?
Mr. Charles H. White, Jr.: No, it isn't but I certainly can supply the Court with --
Chief Justice Warren E. Burger: You supply the clerk with copies and of course your friend --
Mr. Charles H. White, Jr.: Indeed, I will, Mr. Chief Justice.
Justice Byron R. White: What is the essential to extend the car Service Order?
Mr. Charles H. White, Jr.: The Commission's judgment, Mr. Justice White, that the emergency --
Justice Byron R. White: The emergency still exists?
Mr. Charles H. White, Jr.: Still exists and that that judgment is subject to both administrative review by way of petition for reconsideration and judicial review on whether or not there was indeed --
Justice Byron R. White: Though it's been extended every two or three months since --
Mr. Charles H. White, Jr.: While this matter is pending before this Court, yes, Your Honor.
Justice Byron R. White: There are whole series of extension?
Mr. Charles H. White, Jr.: Yes Your Honor, the order is alive but suspended.
It has not been in effect.
Justice William H. Rehnquist: Was there any reason why the Commission couldn't have a sought a stay from this Court after the three-judge District Court set its order aside?
Mr. Charles H. White, Jr.: No Your Honor, there's no reason why it could not have.
Justice Harry A. Blackmun: Mr. White, --
Mr. Charles H. White, Jr.: Yes Mr. Justice.
Justice Harry A. Blackmun: -- the evidence from what you have said that the car shortage problem is chronic although you suggest that this particular order was triggered by the soviet wheat deal, let's assume it is severely chronic and that this practice of affording what in effect you've characterize as storage facilities has to be eliminated or modified on a long term basis not just an order of 60 or 90 days, under what section to the Act would the Commission proceeded and what would the procedure be?
Mr. Charles H. White, Jr.: I suspect the Commission would undertake a rule making procedure probably under Section 15(7) that basically allows the Commission to examine the rate structure.
It would be a rule making proceeding with full notice and full participation by the parties something in line without the proceeding perhaps in ex parte 241 perhaps even indeed a sub-numbered proceeding in that case, the case of course that was reviewed here in Allegheny-Ludlum.
The Commission would provide full due process protection in any kind of a overhaul or long term change in the marketing practice.
It -- my judgment, it would probably be something akin to ex parte 241, investigation of boxcar adequacy.
Chief Justice Warren E. Burger: Thank you, Mr. White.
Argument of Seymour L. Coblens
Mr. Seymour L. Coblens: Mr. Coblens.
Mr. Chief Justice and members of the Court, may it please the Court.
In answer, since I do not get any rebuttal, I'd like to answer some of the questions of my friend.
In answer to Mr. Justice Stewart's question, I believe, and possibly there was a misunderstanding.
As far as I know, there is no judicial precedent upholding an order of this kind.
There is an order that the Commission couldn't even find and nobody else could until they dredged it up which they claim to be a precedent that is number one.
Chief Justice Warren E. Burger: Well, would that make any difference if in fact --
Mr. Seymour L. Coblens: No, --
Chief Justice Warren E. Burger: -- is there an overlook?
Mr. Seymour L. Coblens: It doesn't make any difference, Your Honor, except the fact that I didn't want there to be any misunderstanding that there was a judicial precedent upholding in order of this kind and I don't think that there has been a judicial precedent.
As far as I know, this is the first case of this kind and in so far as I know, as far as the industry is concerned, this matter is something that the industry as such was not aware of, at least not recently.
Now, with respect to the question of Mr. Justice Rehnquist, a statement was made that if it went from Portland to Denver and back to Seattle that there would be no charge it is my understanding that is not the correct statement of the facts.
I have been informed that there is no way in which you can back hold a car, it has to move forward from west to east.
You can't, if you move it backwards then it becomes an entirely new rate.
This is the information I have received and I respectfully, I believe my brother is in error when he made that statement.
Now, with respect to order number 1134, it is still in existence and as my brother has stated.
It is in full force and effect, it can be activated by the Commission at any time and that solely in the discretion of the Commission whether it's made effective.
So, that --
Justice Harry A. Blackmun: But dependent on the finding of emergency?
Mr. Seymour L. Coblens: Dependent upon the finding of emergency but as of the Lohman, it is not the --
Justice Harry A. Blackmun: Apparently, it stayed, isn't it?
Mr. Seymour L. Coblens: I beg your pardon, it has not stayed sir.
Justice Byron R. White: Well, what did the Court -- what did the District Court do?
Mr. Seymour L. Coblens: Oh, I beg your pardon.
The District Court stayed the effectiveness of the order.
Justice Byron R. White: The order --
Mr. Seymour L. Coblens: It declared it null and void not by reason of emergency but by reason of the fact that it was an illegal rate order.
Justice Byron R. White: So, it's not in the effect?
Mr. Seymour L. Coblens: It's not in the effect in so far as becoming effective as far as the rates are concerned but the District Court made no finding with respect to emergency because certain precedents which I will --
Justice Byron R. White: But do you agree that the Commission had going for the procedure of extending the order?
Mr. Seymour L. Coblens: Yes sir.
This is true.
I have seen the --
Justice Byron R. White: And each time asserting an emergency?
Mr. Seymour L. Coblens: Each time as far as I recall asserting an emergency.
Now, this Court can affirm the judgment of the courts below on one of two grounds.
The first is to follow the reasoning of the District Court and hold that Service Order number 1134 did not constitute a car Service Order as authorized by 49 U.S.C. 1(15) and was invalid because as the Court stated, it was in illegal rate fixing order developed through procedures lacking due process.
Now, let me say parenthetically, nobody before this Court argues that the Interstate Commerce Commission does not have the power assuming that it uses due process to do what it desires assuming that it gives due hearing with respect to reconversion.
I think my brother admitted that if it uses Section 1549 U.S.C. 1(15), it can issue a new tariff or compel a new tariff but in that case of course we would have to have a hearing and the industry input would have to be there and you would not have bungled without us knowing anything about it.
The industry would have an opportunity to have something to say.
At this point, there is no opportunity whatsoever the order was issued before we even know about it and sometime it become effective before the industry knows anything about it.
So, there is no question about the power of the Interstate Commerce Commission assuming that it provides ordinary due process which Section 1(15) does not provide and this is what this case is all about as I indicated in my brief.
Chief Justice Warren E. Burger: Could you give a hypothesis as to how long that due process might take the kind of due process you're talking about.
Mr. Seymour L. Coblens: Well, of course the Court well knows the --
Chief Justice Warren E. Burger: But not that we measure due process by time when we're --
Mr. Seymour L. Coblens: By time I would say --
Chief Justice Warren E. Burger: -- confronted with an emergency that does enter into, doesn't it?
Mr. Seymour L. Coblens: But Your Honor, we've had an emergency for 75 years and this business of reconsignment has been in existence for 50 years and as my brother states, they can expect further emergencies from time to time.
So, that when you're talking in terms of possibly a year as against 50 years or 75 years, it seems to me that if this Court which balances the interest and this is the balance wheel of the nation really that even assuming it takes a year they give due process which it might very well.
The element of due process which the Court well knows is so important is worth it particularly when we know that for years and years and years unless something is done we're going to have some emergency or another, if it's not the Russian grain deal, it will be the Patagonian wheat deal or it will be some other deal that will come in and because the basic fact is there just not enough cars and when you don't have enough cars the slightest dislocation causes a “emergency on the basis of the Interstate Commerce Commission”.
Justice Harry A. Blackmun: Mr. Coblens, in that connection, suppose the Commission issued an order just stating that no car could be held more than five days of the reconsignment point valid without a hearing?
Mr. Seymour L. Coblens: Yes sir, they filed without a hearing under 1(15) if they found an emergency.
Justice Harry A. Blackmun: So that they could go that far?
Mr. Seymour L. Coblens: That is correct sir --
Justice Harry A. Blackmun: And you'd have no objection?
Mr. Seymour L. Coblens: I would have an objection.
If we have no -- I'd be to the extent possible I would try to prevent it.
My basic point is number one, the court below held that this was a rate order and consequently they say to decide as a rate order.
In addition to that, as I would like to propose out orally argued, the fact that this Court noted probable jurisdiction and did not merely affirm on the basis of the opinion indicates the Court is interested in the broader aspects of the case, then the points made by the court below.
The court below went on perfectly sound and legal grounds namely that it was a rate order and Section 1(15) did not provide for changes in rates but there is underlying this whole case and something I'd like to get across to the Court a more fundamental question, a question which is this Court peculiarly is designed to take care of.
And that question is this, “Must this Court or any court accept the ipse dixit of the Interstate Commerce Commission inspite of all the evidence to the contrary that the freight car situation on the nation's railroad is a temporary emergency which should be dealt with under the provisions of 491 U.S.C. 15 rather than a long continuing and probably permanent problem” and as the Court well knows this is what we have.
Section 49 U.S.C. 114 which is the general rule making power and provides full due process procedures and Section 49 U.S.C. 15 which is the true and joint rate provision of the Interstate Commerce Act provides an ordinary means of dealing with the problem giving all interest to parties full due process rights.
The broader issue before this Court and it can only be made before this Court is whether this Court will sanction the abrogation of the doctrine of judicial supremacy which I have been taught and have taught others to believe is one of the principle doctrines of American constitutional law.
Chief Justice Warren E. Burger: If I understand your friend's argument on this matter of a chronic condition related to an emergency, it's perhaps vaguely analogous to a person who has diabetes which is chronic but goes into diabetic shock perhaps from time to time and perhaps he analogize this immediate situation to a diabetic shock which cause for something ordinary -- something other than ordinary treatment?
Mr. Seymour L. Coblens: Except the fact and I forget now how many diabetic shocks to lumber industries has had in this regard where orders of various kinds have been issued against the lumber industry by reason of one “emergency” after another.
Now, how many emergencies make an emergency?
This is what you're up against.
How many emergencies do you have to have before you had a chronic situation and it's my contention, Your Honor, that when you have an emergency that existed for 50 years so there about it's not an emergency anymore.
It's a -- it's something that should be dealt with giving the input of the industry under either Section 1(14) or Section 15 which allows due process rights.
Justice Byron R. White: This isn't the basis the District Court went on.
Mr. Seymour L. Coblens: This is not the basis of the District Court --
Justice Byron R. White: The District Court said that you know it's an emergency and it seems to accept that fact that it was, it isn't a car Service Order.
Mr. Seymour L. Coblens: The issue of emergency was not raised before the District Court and for a perfectly good reason.
I had two cases against the --
Justice Byron R. White: So, the question is whether it's a car Service Order or not?
Mr. Seymour L. Coblens: Well, that's what the way the District Court, I believe, however, when it comes up to this Court, this Court can --
Justice Byron R. White: Well, did you assert in the District Court?
You attacked the order, didn't you?
Mr. Seymour L. Coblens: I attack the order --
Justice Byron R. White: Did you say it wasn't an emergency?
Mr. Seymour L. Coblens: I did not bring that point before the Court because the Court had already ruled against me on that question and I will confess it.
Justice Harry A. Blackmun: What you're really arguing now is that even if the District Court was wrong in calling it a rate order --
Mr. Seymour L. Coblens: That's right.
Justice Harry A. Blackmun: But it is the car Service Order, you say nevertheless you're entitled to an affirmance because there's no emergency?
Mr. Seymour L. Coblens: That's correct sir.
And that this Court asked --
Justice Harry A. Blackmun: What do we have before us, on which we can judge whether there was a original --
Mr. Seymour L. Coblens: The history and the cases that Justice Rehnquist wrote and I have cited in my brief.
This is a long --
Chief Justice Warren E. Burger: Are we going to fact -- are we going to be fact finders on that?
Mr. Seymour L. Coblens: I don't think it's a fact finding.
I think this Court has already held that there's a chronic car shortage, Justice Rehnquist has held that, has stated that.
Justice Byron R. White: Well, let me ask you, are you supporting the District Court's conclusion?
Mr. Seymour L. Coblens: I am supporting the District Court's conclusion and --
Justice Byron R. White: Except for the reasons that it used?
Mr. Seymour L. Coblens: That's right, sir.
Justice Byron R. White: That it is not a car Service?
Mr. Seymour L. Coblens: That's correct sir.
I say that I have two strings to my bowl.
I believe --
Justice Byron R. White: Tell me again why this isn't a car Service Order but a rate order.
Mr. Seymour L. Coblens: Because of the fact that it affects the rates, the traditional and historic way in which car Service Order have been enforced and except for the two orders that frankly I didn't know about and the ICC didn't know about, the traditional way is by use of demurrage charges and as has been stated --
Justice Byron R. White: But it increases the cost to the shipper?
Mr. Seymour L. Coblens: It increases the cost to the shipper, everything increases the cost to the shipper or to ultimate buyer in an economic sense.
Justice Byron R. White: And unfortunately, yes.
Justice Potter Stewart: Well, it increases the cost.
This has been pointed out only if the order doesn't -- only to the extent that the purpose of the order is not achieved.
The purposes of the order is to free up freight cars and to the extent it does to the extend it prevents freight cars being used in this way longer than five days then it doesn't increase much at all?
Mr. Seymour L. Coblens: But the difficulty with that is that this is what the Intestate Commerce Commission has stated as I point out in my record and in the affidavit before the court below, there are many economic arguments for reconversion and for the practices of the lumber industry and the lumber industry or the wholesale lumber industry has never have an opportunity to submit those arguments because never has the Interstate Commerce Commission taken this question off in a full due process hearing.
Justice Byron R. White: If you -- but if this were just a demurrage in short putting a uniform charge daily charges or something like that for holding a car too long, you wouldn't -- you probably wouldn't be here?
Mr. Seymour L. Coblens: I would not be here because --
Justice Byron R. White: But this puts a very different charge on different shippers --
Mr. Seymour L. Coblens: That is correct.
Justice Byron R. White: -- depending on what the rate structure?
So, the extra charges depended upon a rate rather than a demurrage some uniform charge?
Mr. Seymour L. Coblens: That -- what it does is it splits up the rate from a through and joint rate.
My brief and the affidavit shows that in some cases triples the rate and it's grossly aggravates the situation rather than --
Justice Harry A. Blackmun: Well, it doesn't triple it if the car moves?
Mr. Seymour L. Coblens: I beg your pardon.
Justice Harry A. Blackmun: It doesn't triple it if the car moves.
Mr. Seymour L. Coblens: That is true.
Justice Harry A. Blackmun: And this Court has upheld the demurrage charges against challenge and I guess what I want and I think that Mr. Justice White wants is what's the difference?
Mr. Seymour L. Coblens: The difference is in the structure of the Interstate Commerce Act, the Interstate Commerce Act only gives authority to the Interstate Commerce Commission for emergency action in the case of rules under 1(15).
Justice Brandeis in the Pecan case which I have cited has stated that 1(15) must be very strictly construed and that it is only traditional and at that time it was traditional only to enforce rules by various -- either by prohibitions or criminal prohibition or by in some cases demurrage charges.
Now, if we follow Justice Brandeis' reasoning that this in effect the quasi-criminal statute and since the Interstate Commerce Act in this particular section because of the very emergency factor involved and because of the fact that it does a way with due process must be strictly construed.
Therefore, the court below held that since it is such and unusual remedy and since Section 1(15) does not give that remedy, it does not come under the terms of Section 1(15) and that's the difference because of the fact that in one case due process is granted and in the other case it is not.
The Commission has had authority under Section 49 U.S.C. 15 to deal with this problem fo 50 years.
Justice Harry A. Blackmun: Can't you say the exactly the same thing about demurrage charges exactly the same thing and further I thought a little while ago you had conceded that if the Commission put out a plain bar order and said no car maybe held more than five days, this should be all right without due process.
Mr. Seymour L. Coblens: No, if I said so I misspoke myself Your Honor.
Justice Byron R. White: Yes, but it wouldn't -- you wouldn't say it was a great order, would you?
Mr. Seymour L. Coblens: No sir, I would say that it --
Justice Byron R. White: Well, it would be to the effect it would have the same effect, wouldn't it?
Mr. Seymour L. Coblens: It might have yes, it would have the same effect in the sense that it would put criminal penalties presumably, Your Honor, that there have to be some penalties of some kind.
Justice Byron R. White: Yes, but it wouldn't be a rate or the Commission unless the Commission said the line “all rates would apply” -- the individual rates would apply as the individual rate wouldn't apply did at least with the car order.
Here, they went on and said the individual rates will apply not the through rate.
Mr. Seymour L. Coblens: That is correct sir.
I don't know exactly -- I can't guess what penalty the Interstate Commerce Commission.
In some cases, they imposed fines in some cases they imposed jail sentences so that made to the violation of the Interstate Commerce Act.
Justice Byron R. White: In other case, do so when they say no more than five days they put the demurrage charge.
Mr. Seymour L. Coblens: They put a demurrage charges on it.
That is true sir and my contention is --
Justice William J. Brennan: I think it is conceivable that demurrage charge could be the equivalent of the increase rate, couldn't it in dollars?
Mr. Seymour L. Coblens: Except --
Justice William J. Brennan: And of course --
Mr. Seymour L. Coblens: Except the fact that --
Justice William J. Brennan: No couldn't be -- I mean suppose there were $100.00 a day demurrage charge?
Mr. Seymour L. Coblens: No, it might not be or if it's $10,000.00 a day I assume so but you get to a point at which a demurrage charge becomes more than something different than a demurrage charge.
Justice Byron R. White: Well, here, if they hold it one day too long it cost let's say the example of $1,500.00.
Mr. Seymour L. Coblens: That's correct sir.
Justice Byron R. White: For $7,500.00 a day.
Mr. Seymour L. Coblens: So that you come down to a question I suppose a question of degree in the sense that when in a demurrage charge usually starts at $10.00 a day and make it over $20.00 or $25.00, $50.00 or what have you that has been the traditional way and which it's done.
I -- if at the five days they put a demurrage charge of $1,500.00 --
Justice William J. Brennan: Which a day?
Mr. Seymour L. Coblens: A day which I suppose is something the Commission --
Justice William J. Brennan: Well, the demurrage charge will have to be uniform the way this rate thing works some -- I gather some shippers pay according to these examples thousands dollars more of the 300 more other 600.
Mr. Seymour L. Coblens: That is correct depending upon where it finally winds up.
A demurrage charge would be uniform but let's say if it was $1,500.00 a day, my contention then would be and I think would be justified that this isn't true demurrage.
This is in effect a change of quality rather than purely quantity.
At some point, a change in quantity becomes a change in quality and my contention is that based upon the way in which this order was designed and is designed, I'm talking specifically with 1134.
It's a rate order, it's designed to affect the rate are which commodities move, rates at which commodities move on a through and joint rate are governed by Section 49 U.S.C. 15.
Section 49 U.S.C. 15 provides due process rights.
Section 1(15) which is the one under which 1134, all it requires under the -- under its word is that “the Commission is of the opinion that and emergency requires” is required.
And the worst part about that is that several courts of this country have held and I've cited them, the Dougherty case and the two Southern Railroad cases have held that we as a Court cannot go into the question of whether the opinion of the Interstate Commerce Commission is it is not justified or we can do is to decide whether or not the Interstate Commerce Commission is corrupt to arbitrary or some other thing.
Justice Potter Stewart: And it's because of those cases that you didn't make your lack of emergency argument --
Mr. Seymour L. Coblens: That is correct sir.
That is exactly so and the reason I didn't make it in my case -- in my court was because my court -- the US District Court for the District of Oregon had decided the Dougherty case, and as an advocate, the court well know it would be foolish for me to go before a court which had ruled adversely to me and try to make an argument which they have ruled adversely to me on.
So, I had -- I took another argument which I think is perfectly valid and I used it.
Now, before this Court however I'm on an entirely different situation.
I am -- before the Court which has authority for the whole nation.
You can look at the thing as a whole, you can look at it.
Is this due process and is this a violation of due process and are we violating the rule of judicial supremacy which this Court has recently upheld in US versus Nixon?
Are we violating that rule, in the Dougherty case and in the two Southern Railway cases by saying that --
Justice William O. Douglas: Mr. Coblens?
Mr. Seymour L. Coblens: Yes sir.
Justice William O. Douglas: You referred the due process as you have quite frequently, you are not speaking in a constitutional sense, are you?
You're not urging that there's been a constitutional denial of due process?
Mr. Seymour L. Coblens: No, I'm arguing that the whole scheme of the Interstate Commerce Act except for Section 1(15) provides a hearing provides all the administrative procedures which allow you to bring before the Commission itself, the economic arguments on behalf of the industry.
I don't know, Your Honor, and I have never really thought the question through whether or not an Interstate Commerce Act which did not provide for due process and all these other cases would be struck down by this Court.
This Court has never been faced with that problem because the history of the Interstate Commerce Act has been that if any thing the Interstate Commerce Commission has been overly solicitous in all cases except under 1(15) and it's this exception of 49 U.S.C 1(15) that I am here complaining about particularly as used in this case.
Does that answer the Court's question?
Justice Harry A. Blackmun: Yes, in this case you're making a statutory argument?
Mr. Seymour L. Coblens: I'm making a statutory argument but I think that if in all other cases, if the other provisions of the Interstate Commerce Act did not provide due process, I think certainly counsel -- other counsel -- thank you sir.
Other counsel would've been here long before me arguing the constitutional question and I would not be here possibly arguing the constitutional question.
Now, I feel it -- before this Court, this question is not an emergency.
How long do you have a situation which is existed admittedly for 50 years and which we know it's going to exist for another 50 years unless a complete change is made?
How can the Interstate Commerce Commission claim that it's an emergency and emergency as I understand is based upon the dictionary definition is a “sudden, total and unexpected event”.
Justice Byron R. White: While the Commission in here apparently suggests to you that if the District Court is reversed on the car service as against rate order issue then the Commission is going to -- you're going to have some chance to litigate before the Commission again with respect to --
Mr. Seymour L. Coblens: We never did have a chance to litigate, Your Honor.
Justice Byron R. White: Well, I know but they still have to decide each time whether there's an emergency.
Mr. Seymour L. Coblens: This is true but we never get a chance to litigate.
Justice Byron R. White: Why you can't even litigate and you can --
Mr. Seymour L. Coblens: No, I cannot because under the Dougherty case and under the --
Justice Byron R. White: I know you can raise it, you may lose, you'll see if you lose.
Mr. Seymour L. Coblens: Well, I can raise it, Your Honor, but I can raise it only under such conditions as gives me no chance at all.
It's like a Mexican escape, Your Honor.
You are --
Justice Byron R. White: If someone renews an order every three or four months for three or four years that on the basis of an emergency, it doesn't sound much like the case you're talking about.
Mr. Seymour L. Coblens: But they don't renew it on the basis of every four years, this is a --
Justice Byron R. White: You mean every two or three months.
Mr. Seymour L. Coblens: Every two or three months.
Justice Byron R. White: Well, that's what I said.
Mr. Seymour L. Coblens: But I do not have any judicial --
Justice Thurgood Marshall: Didn't you waive it?
Mr. Seymour L. Coblens: I beg your pardon sir.
Justice Thurgood Marshall: Didn't you waive the argument on emergency?
Mr. Seymour L. Coblens: Did I waive it sir?
Justice Thurgood Marshall: You knew about it and you decided not to raise it, what's the difference of being a non-waiver?
Mr. Seymour L. Coblens: A waiver is when a person --
Justice Thurgood Marshall: As you said, it's intelligently done.
Mr. Seymour L. Coblens: I beg your pardon sir?
Justice Thurgood Marshall: Waiver is what is intelligently done and saying that this was.
Mr. Seymour L. Coblens: Well, also it's when you have a choice.
I had no choice.
A waiver is a situation where a man who has a choice between A and B intelligently chooses B.
I had no choice in this case between A and B because --
Justice Thurgood Marshall: You have to use A and B.
Mr. Seymour L. Coblens: Not practically sir.
Chief Justice Warren E. Burger: Are you suggesting that judges never changed their minds about some things?
Justice Thurgood Marshall: Well, when you have the same judge, it's very difficult to get them to change his mind.
Chief Justice Warren E. Burger: We've all tried it and sometimes exceeded, haven't we in practice?
Mr. Seymour L. Coblens: Yes sir.
Chief Justice Warren E. Burger: We, even here we change our minds sometimes.
Mr. Seymour L. Coblens: Well, this Court is unique, I must say that.
This Court because of your very -- because of the way and which this Court sits and because of your very unique position -- excuse me sir.
Chief Justice Warren E. Burger: And you may finish your sentence.
Mr. Seymour L. Coblens: Thank you sir.
Because of your very unique position in the American history, this Court is not a court, it's the highest court of political decision that there is in the American constitutional system.
And consequently, you, as conditions change have the right to change your mind.
Other courts do not have that right and don't exercise it.
Thank you, sir.
Chief Justice Warren E. Burger: Thank you gentlemen.
The case is submitted.