ABERDEEN & ROCKFISH R. CO. v. SCRAP

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Argument of Charles A. Horsky

Chief Justice Warren E. Burger: We'll hear arguments next in 73-1966 and 1971, Aberdeen and Rockfish Railroad against the Students and United States against Students.

Mr. Horsky, I think you may proceed when you're ready.

Mr. Charles A. Horsky: Mr. Chief Justice and may it please the Court.

This, I think is the third time this proceeding has been before this Court.

I hope I can persuade you that it should be the last.

The present posture of it involves basically two questions, the jurisdiction of the lower court to enter an order and on the merits whether the order was correct.

Because it has been the position of the intervening railroads whom I represent that the lower court lack jurisdiction and we have urged that.

I'm speaking first and I will try and confine myself to the jurisdictional issue.

Mr. Randolph will deal with the merits should the Court reach them.

Justice William H. Rehnquist: Mr. Horsky, are you going to cover the jurisdiction of this Court as well as of the District Court?

Mr. Charles A. Horsky: I had hoped that I could rely on our briefs for that but I'll be glad to comment on it if you like.

Let me put this case in context.

The proceeding -- this proceeding began in 1972 and the course of events that the Court and at the Commission since that time is set out in our briefs in detail.

I think I can make the present posture of it clear in a very few words.

At the 1972 term, this Court dealt with the problem of a temporary emergency surcharge which had been proposed by the railroads in early 1972.

As the Court is aware as the Chief Justice indicated in the preceding argument in the railroad industry tear of changes are made by the railroads and subject only to a power in the Commission to suspend for a period of seven months.

The rates proposed by the railroads go into effect as a matter of law.

And they remain in effect unless and until the Commission itself finds them unlawful.

In 1972 when the Commission declined to suspend the temporary emergency surcharge of this District Court, the same District Court we have now, enjoined the Commission to do so.

This Court reversed that decision on the ground of Arrow Transportation Company that the Court had no jurisdiction to deal with suspension orders.

In the meantime, the railroads had replaced the 2.5% temporary emergency surcharge with a general 4% rate increase which became generally effective in October of 1972.

With one exception as applied to recyclables, the Commission did suspend the increase until June 1973 while it undertook a rather elaborate effort to further explore the environmental problems.

Shortly before 1970's, June 1973 when that 4% increase was to take effect on recyclables, the respondents here sought an injunction and the District Court again enjoined the rates.

Again, this Court reversed.

While that appeal by our side from that injunction was pending, the appellees, the respondents here sought declaratory judgment in the lower court.

They sought two things.

They sought first, a declaration that the environmental impact statement prepared by the Interstate Commerce Commission was inadequate.

And that therefore, its order allowing the rate increase is to go into effect was invalid and that the Commission should be directed to prepare a new environmental impact statement.

And second, that the rate should be enjoined.

A divided District Court this time for the first time concluded that it had jurisdiction to review the general revenue orders by reason of a supposed NEPA exception National Environmental Protection Act.

It's too hard to say, that's NEPA if I may and that on the merits, the environmental impact statement as applied to recyclables was inadequate and must be read on by the Commission.

It declined however to enjoined the collection of the rates and they are now being collected.

Now, that's the posture of the case as it now before you.

The respondents do urge Mr. Justice that there is no jurisdiction in this Court on two grounds that the order of the Commission was phrased in terms of setting aside rather than in enjoining the Commission, and that the case may be moot.

Justice Potter Stewart: The order of the court?

Mr. Charles A. Horsky: The order of the court below.

Justice Potter Stewart: You said you are on the Commission.

Mr. Charles A. Horsky: I'm sorry, the order of the court below.

Justice Potter Stewart: It's phrased in terms in setting aside (Voice Overlap).

Mr. Charles A. Horsky: Setting aside rather than enjoining.

We dealt with that Mr. Justice in our reply brief in some length both the Government and ourselves and in interest of time.

I don't think the arguments are meritorious and I would prefer not to take my time on them but I will if you like.

I'd like to deal with the jurisdiction of the District Court which is terribly important and I'd like to persuade you if I can that the dissenting judge below reached the correct result when he said that they did not have jurisdiction.

Justice Potter Stewart: Did I misunderstand you did you say you didn't think the arguments were meritorious?

Mr. Charles A. Horsky: I thought they were not meritorious.

The arguments says that the jurisdiction of this Court to review this appeal.

I don't believe they are very substantial.

Justice William H. Rehnquist: Your position is basically the revisers didn't intend any change and then I take --

Mr. Charles A. Horsky: Well, quickly.

It's clear under the Urgent Deficiencies back in 1913 that it would be jurisdictional.

The revisers note say, they didn't intend any change in the Electronic Industries case.

The same point was briefed and argued to this Court and the Court would have had decided it in our motion.

They made a motion to dismiss the appeal on this ground and you did not reserve a question of jurisdiction of the merits.

I think there is not very much reason why I should be worried about those arguments at this point.

The question of jurisdiction of the District Court as I say is really a very important question and I do want to talk about that.

I can state it very simply for about 40 years since a decision by Judge Chesnut in Baltimore and the Algoma case.

The district courts -- the federal district courts had declined jurisdiction when asked to review general revenue orders of the Commission.

That is orders which are so-called Ex parte orders in which the railroads proposed a general across the board rate increase.

And in which the decision of the Commission as to whether or not to suspend the order, suspend the increases for the seven months period is really based on whether or not the railroads need additional revenue.

It has nothing to do with whether the rates are just unreasonable in such cases and in this case.

The Commission makes very clear that the rates which have been increased by the general revenue order can be challenged in a subsequent proceeding before the Commission under Section 13 or Section 15 by any party on any ground that will ordinarily be available.

And in the Algoma case as Judge Chesnut pointed out, the consequences that challenging them in the general revenue proceeding is premature and that the people are properly remitted to the procedure where the rates that actual legality of the rates can properly be test.

Justice William H. Rehnquist: What if one wanted to challenge the Commission's determination that the railroads in fact needed more revenue?

Mr. Charles A. Horsky: That would be open if the Commission had relied on it in its determination.

In other words, you file a Section 13 proceeding.

I mean a Section 13 complaint against the recyclable rates.

The Commission has a hearing. It's mandated to have an investigation.

It's not optional, it must do it and it must come out with the decision as to whether or not the rates are just and reasonable.

If the Commission's decision is bottomed on the needs of the railroad, that is reviewable by the courts just like anything else.

If the Commission does not rely on that, if that isn't an issue as to justness and reasonableness then it need not be reviewed because it isn't relevant anymore.

Justice William H. Rehnquist: So, that wouldn't be an occasion for reviewing a general rate?

Mr. Charles A. Horsky: I should think no.

No, that's not any reason why you need to review a general revenue order because if it becomes a matter of issue in a particular case where the real issue is presented that is, is this a lawful rate to the extent that the needs of the revenue -- needs of the railroads for revenues enter into that determination?

It is reviewable just like any other consideration which enters into it.

The Algoma rule really is very similar to the more familiar role in the Arrow Transportation case which this Court accepted and applied in the previous decision in this case in that earlier SCRAP case.

That decision was as I say that the Arrow decision that courts will not review suspension orders of the Commission.

Because the ICC has no general power to get to give prior approval to rates, these Ex parte proceedings, these general revenue proceedings are handled essentially the same way as to the suspension power.

General revenue orders don't determine whether the rate is just and reasonable.

They leave that as does as a suspension order to a further administrative remedy.

Now, in this case, Judge Wright writing for himself and Judge Richey concluded not to follow the Algoma rule.

He had in fact, in 1970 dissented from its application in a case that I'll come to in a moment that reached this Court from the District of Columbia.

But in this case, he did not dissent from the Algoma rule; he found what he instead was a NEPA exemption to it.

That is that under, if the challenges under Environmental Protection Act, the Court has jurisdiction to review notwithstanding the Algoma rule.

We believe that that is directly in the teeth of the prior decision of this Court in the earlier case -- earlier hearing in this case.

Let me remember -- let me refresh your recollection.

In that case, the lower court the same district judge concluded that although under the Arrow Transportation Company rule, district courts did not have the power to interfere with the exercise of the Commission's suspension order.

Nonetheless, because this was a NEPA case, they could go ahead and do it.

This Court reversed and it said in its opinion that NEPA did not contemplate any wholesale overruling of prior law.

Justice William H. Rehnquist: But of course the Arrow depended on a particular provision of statutory law, didn't it?

This is the general rate order's kind of a judicially carved out.

Mr. Charles A. Horsky: Well, I think that's a distinction really that's -- I don't think that's quite true Your Honor.

You did refer to Section 157 into the history but I believe that the analysis in Aero and the analysis in the Algoma case are practically the same.

They go back to the statute.

They look at the statute?

What does the statute contemplate?

You have a very nicely balanced system created after a great deal of experimentation by Congress using railroad initiative to create the rates, a certain amount of Commission power to suspend them for a while and an adequate remedy with reparation if necessary for anyone who is injured by this process.

And the District Court decision in Algoma just like the Arrow Transportation decision and the previous decision in SCRAP are all part of that statutory system which has been worked out over the year.

Justice Byron R. White: How long do you say was the decision in some 40 years ago by --

Mr. Charles A. Horsky: 1935 has been followed --

Justice Byron R. White: Judge Chesnut (Voice Overlap)?

Mr. Charles A. Horsky: -- followed consistently.

There have been no dissents from it.

I come --

Justice Byron R. White: (Voice Overlap) going to be my question, to follow consistently with no dissents from it?

Mr. Charles A. Horsky: That's right.

(Voice Overlap) Let me come to that because the Algoma rule was before this Court in the 1969 term in three cases.

In each case, the lower court had applied it with only one Judge, Judge Wright dissenting out of the nine lower court judges.

And two of those case, the Alabama Power case and the Atlantic City Electric Company case.

This Court divided evenly and the cases were affirmed by an equally divided court.

In the third of those cases, the Electronic Industries case, the decision of this Court was unanimous and affirmed unanimously.

I come back in a moment to the --

Justice Byron R. White: To all summary actions of the Court?

Mr. Charles A. Horsky: All summary actions.

Justice Byron R. White: And this is -- are all three in the 1969 terms?

Mr. Charles A. Horsky: All three of the 1969 term.

I'll come back to the Atlantic City and Alabama Power in a moment.

Justice Byron R. White: Electronic was opposed, is that affirmance?

Mr. Charles A. Horsky: That was an affirmance.

Justice Byron R. White: Simply affirmance?

Mr. Charles A. Horsky: Yes, some unanimous affirmance.

Justice Byron R. White: Yes.

Mr. Charles A. Horsky: Let me talk about the Electronic Industries case because I think you don't need to reach really the Algoma rule in this case because I think the Electronic Industries case applies here.

In the other two cases in Atlantic City and Alabama Power, the challenge was as Mr. Justice Rehnquist has suggested to the whether the Commission was right in its determination that revenue needs warranted the increase.

That cut across all the rates.

In Electronic Industries, the challenge was to particular rates on television sets, radio sets, components of those sets just as here the challenge is to recyclable commodities.

And we submit that the unanimous decision of this Court in Electronic Industries means that certainly you will not permit a challenge to particular commodities in a general revenue order proceeding which is what this case is.

The Government, I'm happy to say, agrees partially with that but not wholly with it.

They agreed that the Electronic Industries case means what I have just said it means.

But they don't agree that this is such a case.

They say and I'm quoting from their brief that “the respondents broadly attacked to the Commission's general revenue order.”

I don't think that's correct.

In fact, I think that did wrong.

The general revenue order here decided essentially that the railroads need for revenue permitted the Commission to terminate the suspension which has originally ordered prior to the exploration of the suspension date.

That determination isn't challenged by the respondent.

They zero in on a few specific rates on a dozen or so recyclable commodities.

They say that those are the ones that are bad and that seems to me to be just like Electronic Industries and if as I suggest Electronic Industries means that you can't take particular rates and challenge them in a general revenue proceeding.

I think that would dispose of this case but if the Court were to agree with the Government that this is not an Electronic Industries if you're back to Algoma and the problem that divided the Court in 1969.

I would like to take a moment or two to urge as strongly as I can that you do affirm the Algoma doctrine.

The basic point in that doctrine is that nobody is entitled to a rate which is less than just and reasonable and that there can be no resolution of that question, no divinity of resolution of what that question -- the answer to that question except in the Section 13 or Section 15 proceeding.

You can't settle it in the general revenue proceeding.

In the Section 13 proceeding, the Commission can and it does take into account all factors that go into the reasonableness of the rate including of course environmental factors allowing a review of it in a general revenue order is really no different than reviewing a suspension order and it really is no different in reviewing any kind of an interlocutory order before there has really been a decision.

But it's more than that, this would certainly encourage objections to all general revenue orders under our new legislation effective this year, those objections are now going up to District Court but the Court of Appeals but I would venture to say we have an appeal and each of the Eleventh Circuit Courts from every general revenue order by somebody.

Unknown Speaker: That definitely does not support after a certain (Inaudible)?

Mr. Charles A. Horsky: No, any new -- I'm thinking of the future.

Justice William J. Brennan: It's got to be couple of years before we get to that, I guess?

Mr. Charles A. Horsky: Well, if a new order comes out, if the railroads asked for a new general rate increase, we're going to have objections, we're going to have injunctions the possibility of discriminatory decision -- different decisions and different circuits.

And any decision that they make as this Court indicated in the previous reversal of the District Court in this case would have an impact -- the premature impact on the administrative procedure that violate what you had said should not be done in the Wichita Green case.

Moreover, it seems to me that because one would expect these attacks and one would expect as we have had in this case injunctions after injunctions which have to be appealed to be reversed.

The effect on the railroad's revenues were these orders are based on revenue needs would be substantial.

The railroads are in need of revenue.

I don't mean that's the reason why the Court should have jurisdiction.

But it does seem to me that that is a fact to be taken under consideration in by this Court in determining whether a rule which has been in effect for 40 years which is part of the framework of this nicely balanced system which is worked out as I say in the statute between the rights of the railroads to propose rates, the rights of the Commission to suspend them, the rights of the shippers and others to protest them, to be protected and get rebates or reimbursement if the rates are wrong.

Whether any change in a 40-year-old system should be made by this Court or if it is to be changed at all should not be made by Congress.

Thank you.

Chief Justice Warren E. Burger: Thank you Mr. Horsky.

Mr. Randolph.

Argument of Randolph

Mr. Randolph: Mr. Chief Justice and may it please the Court.

In the time remaining to appellants, I would like to devote my attention to the merits of the case as Mr. Horsky said in our position on the jurisdictional issue is set forth in our reply brief on pages 2 to 4 .

The ICC and the United States have not taken any position against or argued against the exercise of jurisdiction by the District Court since appellee is invoked to District Court's jurisdiction.

I'm sure that they will devote substantial attention to it.

The issue on the merits in this case is whether the Interstate Commerce Commission adequately complied with the National Environmental Protection Act (NEPA) as it did the ICC in its final environmental impact statement in this case adequately consider the environmental impact of its actions.

In the first opinion that the Court rendered in this case in 1973, the Court remarked that the ICC, the Interstate Commerce Commission, had issued a report in October of 1972, which rather approximately 300 pages in length and gave extensive and I quote the Court “consideration to environmental factors.”

The Commission at that time did not issue an environmental impact statement as NEPA requires for a significant federal actions effecting the environment because the Commission believes that the action that they were then taking which was allowing a rate increasing to go into effect would not affect the environment.

However, as Mr. Horsky has described when the Commission's report was issued, there were number of protest, number of critical comments.

As a result, the Commission reopened the proceedings in regard to one particular class of items recyclables and I think its well to define what we mean by recyclables here.

It sounds like a one small group of class of commodities.

In fact, it's a huge class of commodities.

On page 13 of the appendix, the Commission drops a footnote and defines what is meant by recyclables.

At least a number of classifications of different commodities, I emphasize the word “classifications.”

In other words, --

Justice William H. Rehnquist: You said at page 13 you said of the Brown of --

Mr. Randolph: 13 of the appendix.

It's the last footnote on the page.

There are -- they may be confusing because in the upper right hand corner there are numbers that say, 91 and this was a federal offset and I think that's the reason.

Justice Potter Stewart: Unless, to look at the bottom numbers.

Mr. Randolph: Yes.

Justice Potter Stewart: On page 13, at footnote.

Uh-huh!

Mr. Randolph: The footnote describes in that and defines what is meant by recyclables and then lists for a number and by description of various classifications of commodities.

However, it's misleading to think that these are the only commodities that we're only talking about a dozen or so commodities because within each one of these transportation classifications are hundreds and hundreds and hundreds of different commodities for example I had Xeroxed before the argument.

All the commodities comprised in the last two items that is 41 ashes and 42 wastes to scrap and this is from the tariff that's issued by the American Association of Railroads and it runs on page after page after page.

Justice Potter Stewart: I see these commodities.

I have never heard it before like noils, rovings, collets.

Mr. Randolph: No, they're noils.

Justice Potter Stewart: Noils?

Mr. Randolph: They are noils.

Justice Potter Stewart: And the rovings?

Mr. Randolph: The rovings are basically --

Justice Potter Stewart: And the collets?

Mr. Randolph: Collets that's a glass scrap and noils are glass are basically fibers.

Justice Potter Stewart: These are (Inaudible) which I have never heard in my life.

Mr. Randolph: Yes.

And they moved on the nation's railroads everyday Mr. Justice.

And they all have different tariff rates and I think I have heard estimated and I don't think anyone really knows how many different rates there are throughout the United States.

Someone has estimated a trillion.

I think a billion is certainly a very conservative estimate as a number rates and all one has to do is think of the fact that for any given commodity such as potatoes moving between Baltimore and Washington D.C. you have one rate and if it moves between Washington D.C. and some other cities.

So, from -- for the tens of thousands of commodities are moved on the nation's railroads everyday between hundreds of thousands of points of origins and destinations, you have different rates.

We're dealing here with a group of commodities recyclables.

It is a large group of commodities and for every place, destination, origin there are different rates that are applicable.

The ICC, the Commission in trying to determine what environmental impact a rate increase would have on these recyclable commodities took a very general view.

It dealt with eight specific broad classifications of commodities and it dealt in general terms with recyclables.

And having reopen to proceeding to deal with recyclables and having issue of bibliography that is distributed to all interested parties of 500 different sources setting forth what effect could be expected of the rate increase and contacting by telephone, by mail compiling, analyzing -- the Commission finally issued a 200-page draft impact statement copy of which is reprinted in the appendix.

After the Commission issued that draft impact statement, they received comments from various federal agencies.

They received comments in the parties to the case.

To give the Court an idea of what how generally general revenue proceeding really is.

Just consider the fact that 469 attorneys entered appearances in this proceeding, 469.

The proceeding is very general, the Commission asked for comments.

It received comments.

The final report which runs nearly 200 pages and it's printed in the front of the appendix.

For example, went into great detail about the general classes that the Commission decided to consider.

Let me take steel for example.

The Commission has a section -- scrap steel.

What effect will a 4.1% or 6% increase on the transportation rate for scrap steel have on the environment?

Consider that, the Commission went through a review of steel making industry at large that reviewed steel making technology, how steel is made, what kind of furnaces are used.

It took a look at the steel foundry systems throughout the United States.

It considered the scrap industries structure, the various different kinds of scrap that are used then for scrap technology.

As a result through 200 pages of very, very detailed on clamp analysis, the Commission came to a conclusion and the conclusion was that perhaps this whole impact statement was mistitled.

Maybe it should've been called an environmental non-impact statement because the Commission's conclusion was that this rate increase would have no significant effect whatever on the environment.

If the Commission's consideration of environmental factors on October 1972 was extensive as this Court said.

By the spring of 1973, it was tenfold more.

It pervaded this entire proceeding since this impact statement was issued.

There have been five more general revenue proceedings.

They're coming now at the rate of one every six or seven months as the railroad's revenues declined as cost go up and the railroads need more money.

The environmental impact statement issued an Ex parte 295 which came after this proceeding was filed with this Court large with the Court.

Also an environmental impact statement was issued in a general overall investigation of the underlying rate structure of the railroads in this Country Ex parte 270 that was large in this Court.

If one reads the brief filed by SCRAP in this case and particularly the factual statement, one will come away with the conclusion on particularly on pages 10 to 11 of the sort of green color brief that everything the Commission has done since this proceeding, since this impact statement has contradicted itself.

Although, it found no significant environmental impact here in later proceedings through using more sophisticated analysis and greater study and so on and so forth.

It came to a different conclusion.

Nothing could be further from the truth.

On page 10 for example in the SCRAP brief, appellees state rather than having no significant environmental impact is claimed in the Commission's previous boilerplate findings referring to this case that the Commission found in Ex parte 295 that the following would occur with respect to nonferrous metals and then there's a quotation.

Let me read to the Court exactly what precedes that quotation.

The Commission said and I quote --

Justice William J. Brennan: I'm sorry, what page again?

Mr. Randolph: Page -- at the bottom of page 10 to 11 Mr. Justice Brennan.

Justice William J. Brennan: Thank you.

Mr. Randolph: The Commission said, and I'll read right up to the beginning of that quotation.

“However, the quantitative effects of the 3% rate increase will be very small.”

In all case, only a fraction of 1% of the presently recyclable volume of any commodity as a result in environmental impacts in terms of the increase consumption of resources including energy and of pollution are expected to be insignificant.

And now, we reach the quotation.

“Specifically, in regard to nonferrous metals, the decrease in scrap consumption is expected to be two one-hundredths of 1% of the present volume.

As a result of which and then the quotation picks up, “an estimated 3,000 tons of metal will be annually required.”

The same is true for the quotation on page 11 what the appellees have set forth as seeming to be a great environmental impact.

Actually, according to this Commission's later environmental impact study is a decrease in recycled scrap of 0.18 of 1% as a result of the 3% rate increase.

And I might add too -- sir?

Chief Justice Warren E. Burger: (Voice Overlap) you lost me at least as to what you were reading from when you added the omitted parts on page 10.

Mr. Randolph: I'm reading from – Yes, sir.

I'm reading from a final environmental impact statement is a later general revenue proceeding.

This has been filed enlarged with the Court, its Ex parte 295.

And I might say also that this minimum impact that the Commission found which confirms everything that it said in this case which involved Ex parte 281 is on a worst case basis.

This is the worst that could be expected at two one-hundredths effect.

The District Court held here that the Commission felt to give adequate consideration to the environment and must begin this proceeding allover again.

Why?

Because the Commission felt that issue and environmental impact statement hardly because the Commission did not comply with the NEPA's five requirements of what the Commission must look at.

No, the District Court said that the Commission did comply with NEPA as to form.

Because the ICC's consideration of environmental impact was not extensive could hardly claim that because the Commission's conclusion of no significant effect from the rate increases was mistaken.

Curiously, there's no one in this case yet it says, the Commission was wrong back in 1973 when it issued this impact statement that that 4.1% rate increase would affect the environment.

Nobody said that.

No.

What the District Court held is that the Commission didn't do enough that it should've study some more that maybe it was right here, maybe it was wrong but it had to “not limit its analysis as it did here” to the “marginal impact of the most recent rate increase” with no discussion whatever of the underlying rate structure itself as that is significantly effects the environment.

I want to pause at this point and point out to the Court that everything that I have said so far in regard to analysis, you'll notice.

And also in regard to what the District Court held has very little to do directly with the environment.

And the questions that I have talked about you could have a team of the greatest environmental scientist in the world sitting in a room with all the books.

They could never solve any of these questions.

Why not?

Because what we're really talking about here is economic forecasting not and only derivatively the environment that is if recyclables do not move on the nation's railroads, then as a result more virgin ore will have to be consumed to produce the final end-product.

But what we're engaged in here and what the Commission was engaged in is really of economic forecasting.

This is not a case for example like where the question was, what effect will thermal pollution have on the flora and fauna of the title estuary?

That's not the question here.

The question here is what effect on the movement of the goods on the nation's railways will a 3% or 4% rate increase have?

Once we recognize that, you must recognize as well that any investigation into that kind of a question can mushroom into its open-ended.

It can mushroom into the entire American economy.

Let me give you an example.

You cannot talk or begin to talk about, what effect the rate of increases on the movement of scrap steel will happen until you know how steel is currently made?

You have to know what the structure of the steel industry is.

You have to know ore virgin materials and short supply, could scrap steel be used under present conditions.

How scrap steel collected?

What is the structure of the scrap steel industry?

How is it shipped?

You couldn't stop there, still more.

What is the demand for steel?

Will the order industry increase orders for steel or decrease?

What is the construction industry?

And once you reach that point, you have to go further.

What is the public demand?

Will people buy, what will the state of the economy be?

And so on until you've analyze the entire American economy to determine what effect the certain rate increase will have in the movement of steel scrap throughout the nation's railroads.

And remember we're not talking about just one commodity.

We're talking about literally under these classifications hundreds and hundreds and hundreds of commodities.

In having done all that, if it takes you six months or seven months or a year or two years are so on and so forth.

By the time the ink is dry and the things is printed up, it's probably out of date because there has been a tax cut, an oil crisis, the prime interest rates have changed.

The District Court's critic, we submit of the Commission's environmental impact comes down to simply this that the Commission could have done more.

But that we submit is a standardless inquiry.

We submit as well that the Commission could always do more when it's engaged in environmental forecast which brings us to what we think is the basic proposition in this case.

While we believe and we said in our brief that every agency must take a hard look at the environmental consequences of what it proposes to do.

That nevertheless, the nature of the inquiry depends on the nature of the function performed by the agency.

This was a general revenue proceeding.

The Commission's inquiry was very general.

The one thing that's clear under Section 157 of the Interstate Commerce Act is that Congress wanted the Commission to answer the questions.

The question, do the railroads need increase revenue?

Not to say, did the railroads need increase revenue way back when which is what the Commission will have to do if they're ordered back to reopen this proceeding.

And we submit as well that under NEPA what Congress wanted an agency to do is answer the question, will this action have an effect on the environment.

Not answer the question, did that action have an effect on the environment.

And the reason I say that it's because if the Commission does not act within seven months then the rates go into effect under the Section 157 of the environmental policy or of the Interstate Commerce Act.

Let me emphasize this again, the Interstate Commerce Commission cannot revise the entire underlying rate structure in a general revenue proceeding.

It can only consider the question whether the increase and rate is justified by the railroad's need.

We submit in that situation the only thing the Commission has to analyze is whether that increase in rate will have an effect and adverse effect on the environment.

They did that here.

Justice William H. Rehnquist: The assumption is that the existing rate structure is satisfactory and the only question is whether you want -- need to increase it across the board?

Mr. Randolph: In the general revenue proceeding, that's correct.

Now, the Commission did not say that, “Well, we're going to take the underlying rate structures are given to him, we're just going to ignore whether that has an environmental effect.”

The Commission said that we're studying that in Ex parte 270.

We've hired a special counsel.

We have these proceedings going on to consider the entire rate structure the United States is no small test.

This is only second time in the Commission's history that has hired a special counsel and the Court of course knows who the first one was, Mr. Justice Brandeis.

But I just want to say one more thing about the -- this question of looking into the underlying rate structure.

The District Court relied upon comments from other agencies and you have to read the District Court's opinion very carefully in this regard because the Court did not say that the Commission failed to respond to the comments of under -- of other agencies when it issued its impact statement.

On page 31 (a), what the Court said is the Commission did not order its conclusions in response to comments of other agencies.

While the other agencies for example on page 706 of the appendix, the counsel and environmental quality gave a comment to the Commission when it issued its impact statement.

It said, “We are aware of the difficulties in accomplishing everything that we think you should do in a short time.”

And therefore, what we suggest is you postpone any rate increases on recyclables pending completion of Ex parte 270, the separate proceeding.

The Commission's response to that suggestion was you're right, we're going to go ahead with Ex parte 270 but we can't postpone increases on recyclables because under 157 of the Act we can only -- we can't say that well, we're not going to allow this increase to go into effect to seven months because we're not sure what effect is going to happen.

Under 157 of the Act, the Commission has to say, “We're going to allow the increase to go into effect unless we have solid evidence that it would be unjust and unreasonable.”

Therefore, the Commission had to allow the increase to go into effect.

There are number of other comments that were made.

I submit that the comments of other agencies here were answered, were responded to if you read through the impact statement it's replete with responses to comments of other agencies and so on and so forth.

I'd like to conclude by just saying one word about the hearing requirement.

The District Court said that when this goes back, the ICC has to conduct in oral hearing.

NEPA does not require oral hearings.

157 of the Intestate Commerce Act does not require oral hearings.

Somehow, the District Court put those two statutes together and came up with the requirement of oral hearings.

We're not entirely clear why and we don't think that kind of analysis should be affirmed by this Court.

Therefore, we ask for reversal.

Chief Justice Warren E. Burger: Thank you Mr. Randolph.

Mr. Hellegers.

Argument of John F. Hellegers

Mr. John F. Hellegers: Mr. Chief Justice and may it please the Court.

I respectfully submit that this is a case of which this Court lacks jurisdiction.

The case is here on direct appeals under 28 U.S. Code, Section 1253 from the grant of a 13-month-old declaratory judgment that the Interstate Commerce Commission was obliged to prepare an adequate environmental impact statement in Ex parte 281, this general revenue proceeding and that it did not in fact do so.

Now, if I had to depend for my information on this case on the jurisdictional statements and the briefs of the appellants, I would've thought that this declaration had deprived the appellant Railroads of millions of dollars in loss revenues and paralyze the Commission's ability to conduct general revenue proceedings and that this was why the judgment was appealed.

But on closer examination that turns out that this simply isn't so.

It was left to us to bring the attention of the Court that the ICC has issued the whole serious of general revenue orders in the last 13 months.

Probably, more solved in that in any other year and recent history; this includes one that was served just yesterday which we've lodged to the Court.

And also something that I would never have guessed from reading the appellant's papers was that if we take the rates the actual rail rates that are allowed by the Commission in effect just prior to Ex parte 281 which is this proceeding is being 100 then it turns out that now the rates on primary commodities to find as all those that are not recyclables would be in the neighborhood of 140 and those on recyclables would be in the neighborhood of 120.

Now, I submit that the judgment from which these appeals were taken is certainly not an injunction and I would also point out that nobody claims that it is rather the claim is that there is unwritten exception to Section 1253 which authorizes direct appeals to this Court not only to the grant -- from the grant to denial of an injunction which is what 1253 requires but also from certain non-injunctions.

And I would point out that the appellants do not rely on any currently effective statutory language for that proposition.

What they rely on is ghost language which was deleted from the traditional code 27 years ago in 1948.

Justice William H. Rehnquist: If the case identical to this had been here in 1947 would you say we had no jurisdiction over it?

Mr. John F. Hellegers: I was just about to answer Your Honor's question.

The answer to that is that if this case had come up under the Urgent Deficiencies Act on the surface of it, it might appear that the Urgent Deficiencies Act would confer jurisdiction.

But I think that there is some considerable doubt about that on the peculiar circumstances of this case.

The Urgent Deficiencies Act allowed appeals not only from the grant or denial of an injunction but also from the final hearing in any case that was brought to suspend or set aside an ICC order.

Now, I'd like to call the Court's attention very particularly in that context to a case that was cited to us by the railroads and which I regret that we did not pick up in our briefs but I certainly would if the brief were being written today.

That is the case of United States versus Griffin which is in 303 U.S. 226.

And in Griffin, the Supreme Court in the unanimous opinion or unanimous judgment in an opinion by Mr. Justice Brandeis construed the Urgent Deficiencies Act and held that it's grant of extraordinary jurisdiction, three-judge courts and direct appeals to the Supreme Court was not to be read even as broadly as its literal language on the result of that would be to authorize jurisdiction which had no substantial policy justification.

Specifically in Griffin, the issue was that the urgent Deficiencies Act on its phase authorized three-judge court jurisdiction in any suit brought to suspend and set aside and join or no any order of the Interstate Commerce Commission.

And the court held that the words “any order” do not mean literally any order because there are some orders of the Interstate Commerce Commission which said Mr. Justice Brandeis are manifestly not of such public importance as to require this jurisdiction in the extraordinary procedure of a three-judge court and direct appeals to the Supreme Court.

So, on the construction that they quote on the Urgent Deficiencies Act in Griffin, I would say that it's doubtful whether even had that statute been in effect whether a case is highly unusual as this would want direct review by the Supreme Court and a fortiori there is certainly nothing in the Urgent Deficiencies Act which requires the or certainly on the current statutes which requires the Court to give literal construction to a statute which has been dead for 27 years in order to authorize an appeal here which has no substantial policy justification.

Justice William H. Rehnquist: Well, you say a statute that's been dead for 27 years, are you arguing then that the revisers in 1948 intended to change?

Mr. John F. Hellegers: Well, I'm arguing certainly that they took out the language on which the appellants relied for jurisdiction in this case.

Justice William H. Rehnquist: Well, but then you argue that the revisers did intend to change?

Mr. John F. Hellegers: Well, I'm arguing Your Honor that jurisdiction in this Court it seems to me is a matter that's governed by statutes and it's governed by currently existing statutes and the rule for many years has been one of strict construction of jurisdictional statutes.

And the -- I think a paraphrase of that rule is that if Congress wants to confer extraordinary jurisdiction on this Court for direct appeal but it has to do so specifically in terms and in literal statutory language.

And just last December, the Court had a case, the Gonzales case in which it was held that the 1253 which is the statute under which this purportedly comes up is not to be given its -- the full breadth that its literal language might imply if this leads to undesirable results.

Justice William H. Rehnquist: Well, it's one thing I think for this Court to say something like that but I think quite another to say that Congress when it adopted a revision of the entire judicial code and to one section was put on somewhat different form intended the substantive change.

Mr. John F. Hellegers: Well, the case on this that cited to us Your Honor is the Ryder case which goes back to 1884 and the proposition which -- for which Ryder has cited is that in this kind of revision that Congress has not intended to make changes.

But I have looked into this, I've jeopardize Ryder, read the succeeding cases and I have never found the case and none has been cited to us by the appellants in which the Ryder rule was used to create direct appeal jurisdiction in this Court for that was interrogation of the then currently existing statutory language.

So, --

Justice Byron R. White: What is the efficiency in this order of the three-judge court “vacated” the orders of the Commission “ordered” the Commission to conduct “further proceedings?”

Now, what's the efficiency in that on the -- 1253 terms?

Mr. John F. Hellegers: I think that as Your Honor read that order it's in two parts.

One, purports to vacate the Interstate Commerce Commission's orders in Ex parte 281 and the other, remands the case to the Interstate Commerce Commission for further proceedings in accordance with the opinion.

Justice Byron R. White: Well, they've ordered the Commissioner to conduct further proceeding.

Mr. John F. Hellegers: All right, fine.

Justice Byron R. White: Yes.

Mr. John F. Hellegers: I think that we have to look those parts one by one.

And on the first part, the words “vacate and void” which the Court also used sound certainly as they ought to mean something, but when we look more closely at this we find that they mean almost nothing even potentially.

Perhaps, literally nothing.

We assumed in writing the brief that the lower court was cracked in its characterization of the effect of vacating the Commission's orders when it said that the only effect of vacating the Commission's orders is that the railroads may not rely in certain hypothetical subsequent proceedings on a Commission finding that the proposed rates in 281 were just unreasonable.

And we took that at face value.

The appellants said nothing which intended to suggest that that was wrong.

I have since been persuaded that the lower courts vacating “of the Commerce Commission's orders” doesn't even have that effect.

And the reason is that the Interstate Commerce Commission specifically declined to make any finding that these rates were just and reasonable.

And there is also some ambiguity in the Government's brief which we picked up in ours about whether the vacating of the Commission's orders is going to have an effect on the burden of proof in hypothetical subsequent reparation proceeding should any occur.

And the way that we picked it up from the Government's brief was that the vacating of the Commission's orders would have the effect of shifting the burden of proof.

I've since been persuaded that that's not correct either that the burden of proof in a 13 (1) proceeding is always on the complainant and that nothing that happens by way of voiding or vacating the general revenue order.

Justice Byron R. White: Well then what about the word “ordered?”

Mr. John F. Hellegers: Well, I think --

Justice Byron R. White: I think that's sort of an injunctive, isn't it?

Mr. John F. Hellegers: Well, I think for that, we would rely on the Taylor versus Board of Education case, Judge Friendly's opinion in that in which he said that not every order that has words of command is an injunction; just as not every order that has words of prohibition is an injunction on that side either.

But certainly what the Court did, did not meet the requirements let's say of rule 65 for an injunction as to form, it was not couched in language of injunction and indeed none of the appellants here --

Justice Byron R. White: Do you think injunction was sought?

Mr. John F. Hellegers: Pardon me?

Justice Byron R. White: 53 means only that would satisfy Rule 55 affirmance?

Mr. John F. Hellegers: Well, injunction under 1253 is the word to be construed very narrowly as Your Honor will recall from cases like Mitchell versus Donovan and Gunn versus University Committee to End the War.

The word “injunction” as it appears in 1253 has always been subject for this canon of very narrow construction.

It is not a casual term which encompasses everything that doesn't fit neatly into some other category.

So, our contention on that is that this order comes in two distinct parts and neither one of them satisfy the test for an injunction.

So, the question is why are we here and why does this Court have jurisdiction.

Now, in talking about United States versus Griffin again, I brought out the point that the test there was whether the order which was sought to be brought here was of the kind of public importance that would warrant that.

Here, of course the order is 13 months old, it has never had any practical effect in the railroads so far as I can determine on any rate charge.

It is had no practical effect whatever in impeding the Commission in approving subsequent general revenue orders and indeed they have more on these 13 months and I think they have many other 13-month period in recent history.

Chief Justice Warren E. Burger: You mentioned that before but do you think inflation has anything to do with that?

Mr. John F. Hellegers: I'm sure it does Your Honor.

I think that's the reason why that they've had these.

Chief Justice Warren E. Burger: Not very surprising but you have this rate increase unrelated to any thing that's happened in the environmental.

Mr. John F. Hellegers: I did not intend to express surprise that they had these.

My point was that the, that nothing in the lower court's opinion has had any practical effect on impeding one.

Chief Justice Warren E. Burger: You haven't mentioned or did I missed it, the Wichita case here where this as I recall it we remanded, we were dealing with the case where the District Court remanded to the Commission.

It says, “It was done here.”

Mr. John F. Hellegers: Uh-huh!

Chief Justice Warren E. Burger: What do you have to say about the Wichita holding?

Mr. John F. Hellegers: Well, I would treat Wichita along with all --

Chief Justice Warren E. Burger: In terms of our jurisdiction.

Mr. John F. Hellegers: Yes, sir.

I would treat Wichita along with all of the other cases which the appellants cite for the proposition that there is no practical distinction between enjoining and setting aside an ICC order and that that distinction has been blurred in previous cases.

And I think the reason that that has been blurred is that in those cases there was no practical distinction in all of these in putting Wichita so far as I can recall.

There were some direct immediate practical effect from the lower court's order.

Somebody either could do something, it could not do something, or he was enjoined to do something or -- but it had an effect on what people could do on the real word.

And here, we don't, we've had 13 months and it's had no effect.

Now, I'd like to pass very briefly to the issue of the lower court's jurisdiction.

And on that I'd like to leave my argument principally to the briefs and specifically that some briefs that were not in this case but to the government briefs in the Alabama Power and Atlantic City cases that were before this Court five years ago in which the Commission took a long hard look as they say at the jurisdictional issue of the lower court and came out to a conclusion that is squarely in favor of us.

And the Government has reaffirmed that conclusion here saying that the Alabama Power and Atlantic City argument that it made is very applicable in this case.

The only thing that I'd like to say on that issue in addition to that is that it seems to me that the heart of Horsky's argument is that this suit is really just a backdoor effort to get rate reparations without going through the administrative procedure that is set up for rate preparations a 13 (1) proceeding.

That, I would submit is simply incorrect.

Nobody in this case has asserted that he has any absolute right not to pay the rates as raised.

What the argument is that if the Commission wants to raise these rates and we concede that its discretion to do so that the Commission has to comply with its statutory procedural mandates and we claim that that is not the case here.

And that therefore, we are entitled to have judicial review of our claim that it's not.

And I would submit that that puts the case on all force to deal with the Heart case that was here four years ago for the plaintiffs in that case did not assert any absolute right not to have a highway built through their park.

They simply claimed that if the Secretary of Transportation was going to approve such a highway he had to follow the proper procedures and the Court of course held that they were entitled to judicial review of their claim that that did not happen there.

Now, I'd like to move finally to the merits.

The central contention it seems to me on the merits is that it's beyond the power of the lower court or of any court to tell the Interstate Commerce Commission that it is prepared and inadequate environmental impact statement in this general revenue proceeding.

And that that is so even when the clear consensus of comments from sister agencies with environmental expertise which the Interstate Commerce Commission is specifically required by statute to consult and attain the comments from in preparing its environmental impact statement.

From the consensus of these other agencies is this is a sadly deficient statement.

In fact, I think we can fairly and conservatively characterize those comments as being scathing.

And I'd like to call the Court's particular attention to something that was filed yesterday by Mr. Merrigan which I just saw yesterday new one for the first time.

This is Mr. Merrigan's supplemental brief for appellees, National Association of Recycling Industries et al.

Unfortunately, it's in the same shade of green or almost as our brief in chief but at appendix D which is pages 9 (a) through 18 (a), we have correspondents from the -- between the United States Environmental Protection Agency and Mr. Merrigan --

Chief Justice Warren E. Burger: You're basically -- for a moment.

What page in this in Mr. Merrigan?

Mr. John F. Hellegers: It's in the 1 Your Honor label supplemental brief and it would be at 9 (a) and following pages appendix D.

Unknown Speaker: (Inaudible)

Mr. John F. Hellegers: That's right.

Chief Justice Warren E. Burger: Alright.

Mr. John F. Hellegers: On page 9 (a), we have a letter to Mr. Merrigan from a Deputy Assistant Administrator for Solid Waste Management Programs and EPA.

And then we have some correspondence between the Environmental Protection Agency and the office of the Solicitor General in which EPA requested permission to file a brief in this case and the letter in which they requested leave to file -- that was a fairly good (Inaudible), I would imagine of what they intended to file.

And when I say scathing comments I refer for example to what's at the top of page 12 (a) where the Environmental Protection Agency actually calls into question whether the looked at the Commission talked at environmental effects in this case was made in good faith.

They actually used those words which are words to go beyond anything that we've said or felt that we had to say.

There are many other comments that were made by other environmental expert agencies and I emphasize again that the Commission was required to solicit their opinions in this case and consult with them.

They are extensively cited in our brief.

Justice Byron R. White: What's this letter we have in Solicitor General that we just got this morning?

Mr. John F. Hellegers: Well, I just got that this morning too.

Justice Byron R. White: That refers to this supplemental?

Mr. John F. Hellegers: It refers to this and as I recall that the substance of that letter is directed to Mr. Merrigan's allegation that CEQ, the Counsel on Environmental Quality also sought leave to file a similar brief and was --

Justice Byron R. White: Is there any relation to your argument as your argument (Voice Overlaps)?

Mr. John F. Hellegers: Well, I'm arguing only from what I see in print before me.

Justice Byron R. White: Do you agree with the Solicitor General or not?

Mr. John F. Hellegers: That what?

Justice Byron R. White: What he has said, his criticism?

Mr. John F. Hellegers: Well, I have no knowledge of whether to see if he has try to file a brief or not and he goes a little further and says there were time problems which is why this wasn't permitted to be put before the Court by the EPA itself that comes through Mr. Merrigan.

Now, these comments here that I'm directing the Court's attention to right now come from the Environmental Protection Agency which put through its Office of Solid Waste Management is also very actively and expertly involved in questions of recycling of commodities and the effect of rail rates there.

Now, I'd like to call the Court's attention to something else that was just lodged yesterday because we got it only yesterday.

This is the Interstate Commerce Commission's order in Ex parte number 310.

The service date is March 25, 1975 which is yesterday.

And I'd like to call the Court's particular attention to page 39.

Justice Potter Stewart: Now, what's that doctrine?

Mr. John F. Hellegers: It looks like this.

Justice Potter Stewart: From yesterday?

Mr. John F. Hellegers: It came in yesterday, yes sir.

Justice Potter Stewart: 39?

Mr. John F. Hellegers: Page 39 of that.

And there the Interstate Commerce Commission makes the statement that it remains a basic economic fact.

This is so maybe 10 or 15 lines down in the second paragraph right after footnote 4.

It remains a basic economic fact that not granting a proposed rate increase for recyclables would generate a degree of positive environmental benefit.

And then if you read down to footnote 5, you find that their expert authority for the effect of rate increases on the environment as the United States Environmental Protection Agency 1974.

Now, also this proposition that it lies beyond the Court's power to tell the Commission that its impact statement is inadequate would require the Court in this case to disregard the history of the case which is the history of the ICC using the word “insignificant” like a rubber stamp to characterize the environmental impact of raising freight rates.

As we point out in our brief, the prior history prior to this impact statement is that the ICC had never prepared an impact statement on any rate regulation activity of its and its device for avoiding this was that it made a boilerplate finding in each of a great number of cases that the proposed action would have no environmental impact.

And the lower court found that this was qualified boilerplate, a mere stratagem and words to that effect and that of course is not challenged in this Court.

But the point of this is that the ICC kept using this word “insignificant.”

So, we come to the present impact statement and lo and behold we find our very prolix document.

And after each section, the ICC tells us that the environmental impact of what it proposes to do will be “insignificant” there is that word again.

And it doesn't give any figures to tell what it means by “insignificant.”

Now, there's been some criticism of our use of the impact statement and Ex parte 295 but in Ex parte 295, the ICC finally got a round to saying what it meant by “insignificant” and it turns out that what they mean by insignificant is that a 3% rate increase on metal scrap alone not counting any other kind will have the effect of requiring increase consumption of electric power sufficient to supply a residential city of 130,000 people or 43,000 households assuming about 3 persons to a household according to the current census data.

And it turns out that the fuel cost of generating that electricity alone is going to be an excess of $6 million which is a figure that no one has contested since we've used it in our briefs.

It turns out that the capital cost of creating the generating capacity for that is an excessive $39 million.

Now, the point of these uncontested figures is that maybe you think that these figures are insignificant maybe you don't but it's a point on which there can be disagreement and there is nothing and I emphasize this, there is nothing in the historical expertise of the ICC which automatically validates its characterization of an insult to the environment or cost as being insignificant.

So we have to know what they mean by insignificant.

Now, it's argued that the 295 and following impact statements merely reaffirmed the Interstate Commerce Commission's findings in Ex parte 281 that the impacts were insignificant.

But the difference is that we knew what in -- that we know what insignificant means now and we didn't know them.

And as I said, you can defer as to whether that word ought to be applied and other agencies have deferred on the last page of the Ex parte 295 impact statement.

The -- I'm afraid there's only one copy, I think with the Court but the Department of Interior quite gently points out that the assumption that have changed of less than 1% metals consumption is insignificant can be questioned.

I think that's a very conservative statement and EPA in this material it's filed at the rear of Mr. Merrigan's brief on page 14 (a) looks at those figures and it looks at the conclusion insignificant and it says that the -- that in Ex parte 295, these are certain scrap commodities.

The Commission has reached the conclusions contrary to those but its cursory analysis in Ex parte 281.

Now, in conclusion, I'd like to point to something that has greatly struck me about the briefs in this case that we've gotten from appellants and that's the distance traveled in those briefs between the jurisdictional statements in the original briefs and the reply briefs.

I thought that the reason of this case was brought to this Court when I read the jurisdictional statements on the opening briefs was that the lower court's judgment was going to require things that were literally impossible.

Now, in the reply brief, we find that well they are arguing that not only of these things not impossible but the deficiencies have been cured since and these supposedly impossible things have been done.

We found that argued in the opening briefs that this would bring general revenue proceedings to a screeching halt.

We were not told that there have been four or five depending on how you count since that.

We were not told that the rates are going up by 40% on virgin materials and 20% on scrap.

Thank you.

Justice William H. Rehnquist: Mr. Hellegers.

Mr. John F. Hellegers: Yes, sir.

Justice William H. Rehnquist: I just was reading over this United States against Griffin that you cited to the Court and that seems to go to a limited construction of the District Court's jurisdiction rather than to a limited construction of this Court's jurisdiction.

I would think that would tend to support the proposition that perhaps the District Court didn't have jurisdiction or nothing.

We don't have it.

Mr. John F. Hellegers: Well, it seems to me Your Honor that part of its doing is taking jurisdictional language from the Urgent Deficiencies Act which as the Court says, it creates extraordinary jurisdiction and the words “extraordinary jurisdiction” can obviously be filed as well at this Court's jurisdiction perhaps more so as to the lower courts.

And it's saying that when that language literally followed or blindly followed is going to lead to a result which has no policy justification then it will not be followed.

And it seems to me that that is equally as applicable to the question of direct appeal jurisdiction in this Court which has always been most narrowly confined.

Justice William H. Rehnquist: Do you say then it's quite conceivable that even though Congress wanted a case a case to be heard by three judges rather than one in the District Court, it might not have wanted it appealed directly to this Court?

Mr. John F. Hellegers: Your Honor, the answer of that is that this case was brought before a three-judge court because we asked for an injunction.

We asked for an injunction against the collection of certain rates pending the completion of an adequate environmental impact statement.

Had we asked only for the relief that was in fact granted?

I would submit that that would've been proper to bring before a single judge and that that would've gone to the Court of Appeals.

Now, I would call Your Honor's attention also to the Brashear case which we cite in which it has held obviously that not everything that was heard before a three-judge court by virtue of that alone qualifies for direct appeal in this Court.

Chief Justice Warren E. Burger: Mr. Merrigan.

Argument of Edward L. Merrigan

Mr. Edward L. Merrigan: Mr. Chief Justice and may it please the Court.

I appear here today for the National Association of Recycling Industries, Your Honors.

This industry represents the Trade Association represents all of the processors, collectors, and manufacturers who utilize waste paper, textile waste and nonferrous metal scraps such as copper lead, aluminum and so forth in manufacturing processes.

In area of course, it's been a party to the 281 proceedings before the Commission and intervened in the case before the District Court and has participated in all those proceedings since I think before this case was last before this Court.

I want to say from the very outset, Your Honor that -- Your Honors that this case clearly does not involved any complicated abstract environmental issues such as Mr. Randolph seem to try to indicate to this Court today.

Indeed, I think that his description of the situation is pretty much the same type of approach the Commission has taken.

They really simply can't see the forest for the trees and they haven't tried to see the forest.

They've been climbing over tree after tree.

There are three statutes that this Court really has to look at when you approach this case to understand what Congress has been trying to get this Commission to do.

First, is NEPA itself.

NEPA says that the very opening Section 4331 (b) that it is the duty of the federal government to use all practicable means consistent with other essential considerations that national policy to enhance the quality of renewable resources and approach the maximum attainable recycling of depletable resources, that's statute number one.

Statute number two, is the Resource Recovery Act of 1970 wherein Congress directed the Government to study the transportation rate situation and the picture covering recyclable commodities and to correct it where a discriminated against recyclables.

And then just recently, when Congress had before the Railroad Reorganization Act of 1973 which was dealing with the failing railroads in the east.

It again included a Section 603 which directly pointed to the Interstate Commerce Commission and directed the Commission to adopt the appropriate rules to eliminate discrimination against the shipment of recyclable materials in rate structures where such discrimination exists.

So, we start this case with an understanding that the Commission has been clearly directed by Congress and this Court has a legal basis to proceed from not a complicated abstract environmental basis.

You have a legal basis to proceed from to understand that the Commission is simply is not been doing its job in its area and that's what this is all about.

Now, the history in this case is that right on through the rendition of its final order in Ex parte 281, the Commission plainly refused to file any impact statement whatsoever.

Any impact statement that could be called an impact statement and they approved the increase on recyclable commodities without filing anything under NEPA.

It was only when an injunction was there and then threatened because they would've been clearly beyond the appeal of the law that they then reopened the case.

At that point and five months later after they had approved the rates on recyclables already, they issued a draft statement.

And seven months later, without holding any hearing whatever, they issued the final statement which is of course before the Court today.

Now, Your Honors to understand the real essence of this case, I ask you please to look at pages 6 to 7 of our main brief before this Court which is the green original brief.

It sets forth what the real rate picture is and what Congress has been trying to get that with this Commission and what this Commission has been refusing to do.

In 1959, the --

Chief Justice Warren E. Burger: We'll resume there after lunch and I think your five minutes is consumed Mr. Merrigan.

[Lunch Recess]

Mr. Edward L. Merrigan: Mr. Chief Justice, I understand I have one short minute left.

Chief Justice Warren E. Burger: Well, that's what you've been told.

We'll give you the minute.

Mr. Edward L. Merrigan: Thank you very much Your Honor.

I was directing the Court's attention to pages 6 and 7 of NARI's main brief in this case and with a limited time, I have left I can only ask Your Honors to look at those rates which are taken from the Commission's file so as the net average rate for the transportation of competing recyclable waste paper and wood pulp and competing metal scrap and ores to show how the annual rate increases by their percentage application alone continue to excess of a discrimination in those rates year by year by year.

Also, I just want to briefly say Your Honor that when Mr. Randolph, the Solicitor General said that Section under that there are really a big in rates involved in this ex parte proceedings I would ask Your Honors to look at point 3 of our supplemental brief and understand that that makes a Section 13 complaint procedure absolutely no remedy whatever.

Because that means that the shapeup in a case of this kind must challenge rate after rate after rate and we estimate on the basis of the railroad's own figures that it would take a thousand to 3000 case years to challenge just the rates in the eastern district alone, that's in our supplemental brief.

In his closing, the Solicitor General stated when Congress passed NEPA it intended to say while this Court what impact will an increase have, not did it have an impact.

In this case, we say that this is the -- none of this case that the impact statement was not made until after the Commission had approved the increase and then for the first time look at the impact.

Thank you Your Honor.

Justice William H. Rehnquist: Just a moment Mr. Merrigan.

Does it make any difference in the applicability of NEPA to this case that the rates are set by the carriers rather than by the Commission?

Mr. Edward L. Merrigan: No, Your Honor.

We say not because under 157, the statutory scheme is that they filed a rate then it's subject to Commission approval.

And in answer to what Mr. Horsky said in his argument, the Commission passes not only on the Commission passes in a 157 proceeding on the lawfulness of the rate and that's what's involved here.

We say these rates are unlawful because of the violation of NEPA.

Justice William H. Rehnquist: But if there's, assume there've been no violation of NEPA by the railroads --

Mr. Edward L. Merrigan: Well, --

Justice William H. Rehnquist: -- because they're not subject to it.

Mr. Edward L. Merrigan: NEPA readdress to the federal agency the Commission Your Honor and the Commission has its statutory duty under the Interstate Commerce Act and of course under NEPA too to perform its function under NEPA in this action.

And I don't understand the Government to argue either the Government or the railroads to argue that the Commission does not have the duty to prepare an impact statement.

That seems to be out of the question anymore that they would argue that.

They do have the obligation under NEPA and since this is a proceeding under the Section 157 of the Interstate Commerce Act, this is a major federal action which has to be supported by a NEPA statement because of the Government's involvement.

Thank you, Your Honor.

Chief Justice Warren E. Burger: Mr. Butler.

Argument of E. Bruce Butler

Mr. E. Bruce Butler: Mr. Chief Justice and may it please the Court.

I'd like to summarize for the Court what we just feel to be the basic inadequacies with the statement.

These are essentially that the Commission failed to come to grips with central issues post by other federal agencies.

Justice Potter Stewart: Could you represent by a statement on what you understand to be the role of the Court in this area with respect to the subject matter you just spoke of?

Mr. E. Bruce Butler: We would suggest that the court -- the lower court has an obligation to look first at whether there has been procedural compliance with these specific statutory requirements of NEPA namely whether the Commission in this case has filed an impact statement discussing the points outline in the statute.

Justice Potter Stewart: Assume procedurally the Commission has complied beyond that what does this Court is suppose to do?

Mr. E. Bruce Butler: Well, I think that that's the real question here what -- where does procedure end and substance begin.

And we would suggest that certainly at the bottom and the underlying rate action is clearly a substantive matter.

The conclusion of the Commission as to whether its -- and is there an environmental impact.

That we would also suggest is a conclusion but those we would also agree that should be tested by the arbitrary and capricious standard.

The question, did the Commission come to grips with central issues?

We believe its procedural matter and therefore tested under the rule of reason as we've suggest in our brief.

And looking at that in that matter, we feel that the lower court was entirely correct in concluding that the Commission did not come to grips with the central issues.

CEQ --

Unknown Speaker: What does that mean?

Mr. E. Bruce Butler: Well, --

Unknown Speaker: Perhaps you may just ignore the issues or they dealt with them but you don't like to what they dealt with them?

Mr. E. Bruce Butler: The format clearly.

Unknown Speaker: In both I gather but --

Mr. E. Bruce Butler: Obviously the second but that is not we're here arguing.

We're suggesting that CEQ and EPA made numerous comments to the federal agencies suggesting that various matters to be considered.

What's the impact on long-term investment?

What is the impact of the underlying rate structure and some of these issues such as the underlying rate structure clearly the Commission offers a conclusion they offers no supporting data.

And other issues it's simply does not address the subject matter.

And as evidence for this we would cite the comments of these five agencies.

I don't think it serves any purpose to try and read these to you now, they're in the record they have been excerpt by each of us but as we suggested earlier the comments are scathing and that they continue until today.

Justice Byron R. White: Do you think they must in effect write an opinion that covers all the points you think should be covered?

Otherwise, there's been a procedural default?

Mr. E. Bruce Butler: No, I think and this is not something that's in after the fact suggestion by these various agencies.

These are comments that were made very early in the proceeding by not only the agencies by the parties as well.

Justice Byron R. White: Do you say they admit to discuss and dispose of a suggestion by an agency expressly?

Do you take it there's been a procedure at all?

Mr. E. Bruce Butler: It is a rule of reason, I would suggest that there are -- you had to look at in its totality.

How many various comments were --

Justice Byron R. White: Yes, for some issues that's true.

If they don't expressly say something about it, there's been a default.

Mr. E. Bruce Butler: That is clear, yes.

Even though you're convinced that the agency knew about it and rejected and had to reject in order to --

Mr. E. Bruce Butler: I think the purpose of NEPA is that in the environmental impact statement, the Commission is to set forth what his reasoning is so that not only the courts can judge of what the issues are but NEPA is also for the benefit of Congress and the President.

So, they can judge what the basic environmental issues are and take future action to depending on that.

If there are no further questions, I thank the Court for its indulgence.

Chief Justice Warren E. Burger: Very well.

Unknown Speaker: Mr. Chief Justice, may it please the Court.

Mr. Justice White, I'd like to pick up for the question that you just ended with.

Now, the fact of the matter is in this case, the District Court did not charge the Commission with failing to respond to the comments of other agencies.

What the District Court said precisely on page 31 (a) of its opinion is that the Commission responded but it failed to order its conclusions, not that it didn't respond, it simply failed to order its conclusions because the fact of the matter is that throughout this entire impact statement the Commission responded again and again and again to the various comments of the federal agencies.

For example, EPA, CEQ, Department of Commerce thought the Commission should engaged in a study regarding whether increases or cost justified for each recyclable commodity.

On page 149 of the appendix, the Commission responded.

It said, that burden with thrust to railroads -- thrust upon a railroads to cost justifying increase rates on each of tens of thousands of commodities between hundred of thousands of points “could ensnare the railroads in a morassic calculations from which they have never be able to instruct themselves.”

GSA said that the ICC should keep transportation of recyclable commodities under continued surveillance.

At page 158 of the appendix, the ICC responded will do so.

It's doing so in Ex parte 270.

The Commerce Commission or the Commerce Department, EPA and CEQ all said, “Examine the present rate structure.”

At pages 24 to 58 of the Commission's environmental impact statement, the Commission said, whether the increases and rates over the years have cause the misalignment or discrimination against certain commodities as a matter we're studying in Ex parte 270 at which is on-going investigation of the entire rate structure.

Interior Department suggested that the ICC included table of contents to its impact statement.

You'll see it at appendix page 199, the ICC did so.

Interior Department or the CEQ said that the ICC failed to analyze the effect on investment decisions.

The ICC responded to that at page 157 on and on and on, this whole impact statement nocuously enough.

The ICC has responded to all these comments.

The one curious thing is that the other agencies haven't responded to the ICC's response.

I don't know where one cuts off to this dialogue back and forth.

But it seems to me as I stated originally that the point that the District Court made and said was the fundamental defect in the ICC's impact statement on page 34 (a) of the decision of the District Court was its failure to discuss the underlying rate structure and CEQ said to the ICC, you ought to do that.

Now, we understand your time constraints said do it.

What you should do is hold down the rates on recyclables and continue investigation as other have proceeding Ex parte 270.

The ICC said we don't have any power to do that under the Interstate Commerce Act.

I take that the ICC have all of these agencies as the expert on that question.

I would also like in the time remaining to bring to the Court's attention.

There has been a great deal of talk about supplemental brief that was filed yesterday.

The supplemental brief was filed by counsel for NARI and it's a green sort of an off-green color.

And I would direct the Court's attention to pages 14 (a) to 15 (a) of that supplemental brief which is of buff green in color.

That contains the letter from EPA that was directed to the Solicitor General.

The letters dated I believe February the 4th.

If you take that letter and compare it to pages 10 to 11 of the SCRA brief, you'll notice something quite peculiar.

Beginning at the bottom of page 10 of the SCRAP brief which is the large green copy and carrying over the page 12 of the SCRAP brief.

There's a whole series of quotations that I pointed out originally in my opening argument.

We think we're taking completely out of context and distorted what the Commission found in later proceedings.

The exact same quotations appear in exactly the same form in the EPA letter to the Solicitor General.

We think the EPA and I might add that the EPA letter came to the Solicitor General's office one week before the SCRAP brief was filed.

I don't think I have to say much more about that.

The other point is that it's been great to have talked about what significance Ex parte 295 has here.

The SCRAP people tell you that the Commission has now quantified its finding.

It's given you numbers but they failed to point out is that just last week Mr. Merrigan filed a suit almost the same as this challenging Ex parte 295, the Commission's later findings.

Why?

Because in Ex parte 295 as in Ex parte 281, as in every general revenue proceeding the Commission's had, it has not been able to examine the underlying rate structure which is supposedly the fundamental defect that the District Court found.

It would be impossible for the Commission to examine the underlying rate structure in a proceeding which is coming now at the rate of every six months.

The District Court said that that was the fundamental deficiency in the Commission's decision failed to examine the underlying rate structure.

I repeat that the point that we want to get across here most emphatically is that in a general revenue proceeding, the Commission cannot order the underlying rate structure.

All it can simply do is look at whether the increases are cost justified, whether the revenues that the railroads are bringing in as opposed to their cost justify an increase.

The Ex parte 310 that was served in the Court this morning shows that the Commission's findings are clearly correct.

The railroad suffered the greatest losses since the depression of the first quarter of this year.

Thank you.

Chief Justice Warren E. Burger: Thank you gentlemen.

The case is submitted.