BURLINGTON NORTHERN INC. v. UNITED STATES
ORAL ARGUMENT BY ROBERT EDEN MARTIN, ESQ., ON BEHALF OF THE PETITIONER
Chief Justice Burger: Mr. Martin, I think you may proceed whenever you are ready.
Mr. Martin: Thank you, Mr. Chief Justice.
And may it please the Court:
October of 1976 the Interstate Commerce Commission prescribed a rate of $10.93 per ton applicable on coal moving from Wyoming to San Antonio, Texas.
Its action in the so-called San Antonio I case was an interim measure to get the coal moving.
And the Eighth Circuit sustained it, in part, on the basis that it was temporary.
Now, in reopening the 1978 the Commission in the San Antonio II case modified its prior order by eliminating the prior rate prescription and imposing a rate ceiling of $16.12 a ton.
This is not the prescription of a particular rate but a ceiling; that is to say, a maximum level.
The Commission's decision at 0.18 of the appendix makes it clear and says,
"It is not in any sense a requirement that the railroads increase their rates on this traffic to any particular level. "
Following that decision the railroads did in fact file a tariff at the $16.12 level.
Then on petition for administrative review in 1979 in San Antonio III, the Commission modified its decision and set a higher rate ceiling of $17.23.
Now, it should be noted that the railroad's obligation to collect and the shipper's obligation to pay the rate derives not from the Commission's order establishing any particular ceiling but from the fact that the rate was filed in a tariff with the Interstate Commerce Commission.
If the tariff were less than the ceiling, then the tariff is what the shipper would pay, not the ceiling.
Now, following San Antonio III, the railroads sought review in the Court of Appeals in the D.C. Circuit on the ground that the ceiling was arbitrary, capricious, and unlawfully low.
And San Antonio also appealed, contending that the decision was arbitrary and that the rate that resulted was too high.
The D.C. Circuit in its first decision in June of 1980 concluded that the Commission's San Antonio III rate ceiling was arbitrary, it lacked adequate rationale, and the cost findings were not adequately supported.
The entire decision in June of 1980 dealt with the new ceiling and whether it was adequately explained and supported.
The Court did not in that decision discuss at all whether the 1978 decision of the Commission to lift the 1976 prescription was proper.
The only question was the validity of the new ceiling and whether it was rationally supported.
Now, after the Court of Appeals decision and commencing with shipments moving on July 24, 1980, San Antonio quit paying the tariff rate and commenced paying at a level of $15.83 a ton, which it calculated to be the old 1976 interim prescription increased by general rate increases that had occurred since that time.
And from July 24, 1980, to May 7 of 1981, when they resumed paying at the tariff level, the difference between the tariff that was in effect and on file at the Commission and the rates that they actually paid amounted to approximately $20 million.
Now, after they quit paying at the tariff level and after other attempts to compel them to pay at that level failed, the railroads petitioned the D.C. Circuit to clarify that its decision with respect to the ICC orders in San Antonio II and III did not affect the railroads' tariffs that were on file at the Commission.
Unidentified Justice: Do you have any regrets in having made that decision to petition for clarification, Mr. Martin?
Mr. Martin: Well, I think not, because we were in a position in the fall in which we were not getting our tariffs paid, and we had to do something to clarify the problem.
And we believe that under Wichita, the Court's decision in 1980 had not acted to revive the prior rate prescription; it had not had any effect at all with respect to our tariffs.
We thought that the quickest way of getting a resolution of that issue was to go back to the D.C. Circuit; hopefully, they would rule that their order related only to the Commission's orders and not to the railroads' tariffs.
Unidentified Justice: Did you give any consideration to going before the Commission?
Mr. Martin: Well, we did go before the Commission virtually simultaneously.
We did, in fact, file a tariff again at the San Antonio III level.
In other words, we believed, as we told the Courts, that our tariff on file had not been invalidated by our revived order, but just in case it had and to be careful, we filed a new tariff at exactly the same level and went to the Commission and said, allow this to become effective if, in fact, it's necessary to do so.
Unidentified Justice: Mr. Martin, did the railroads argue below that the CADC should not declare the tariffs unlawful because the San Antonio failed to comply with the filed rate doctrine?
Mr. Martin: Yes, yes, we did.
That... there were about four or five railroad submissions to the D.C. Circuit on clarification.
I can't give you a page reference, but it was in there.
Now, the effect of the Court's clarification in June of 1981... this is the second D.C. Circuit order... was to construe its earlier 1980 decision as requiring the railroads to roll back their tariff to the San Antonio I level pending further proceedings before the Commission.
And the Court then, rather than the Commission, decided what the railroads' rate should be during the course of the remand proceedings.
We believe that that decision, both with respect to the revival of San Antonio I and the "unlawfulness" of' the railroads' tariff is in error.
Now, first with respect to the scope of authority of a reviewing court, we believe that under this Court's decisions in Arrow, Scrap, Wichita Board, and most recently, Conrail v. NARY, the Commission has the exclusive jurisdiction to decide what the level of the rates or the tariffs should be and whether particular rates or tariffs violate provisions of the Act or prior ICC regulations or rulings.
We believe that reviewing courts have no power to determine what the rates should be.
The court's function is to review and, where appropriates set aside Commission orders, which is not the same thing as setting aside or passing on the validity of the carrier's tariffs.
Now, Conrail v. NARY is the most recent decision of this Court on point.
In that case the Court of Appeals for the D.C. Circuit had vacated an ICC order that had established maximum rates on recyclables equal to 180 percent of variable cost.
The court had gone beyond invalidating the order and also ordered that carrier rates filed pursuant to 180 percent ceiling must be revoked.
And this Court summarily reversed, holding that the Commission's failure to adequately support the 180 percent ceiling did not mean that the ceiling or rate set at that ceiling were "rejected outright".
As this Court pointed out, rates up to that ceiling might eventually prevail at the Commission.
There was thus no basis for that portion of the Court of Appeals order which had gone beyond striking down the order and invalidating the carriers' tariffs.
Now, that case is squarely on point in rejecting the proposition that the function of a reviewing court is to restore the status quo ante, which is what the District Court of Appeals in this case did.
The function of the reviewing court is not to restore the status quo ante; it is to allow the Commission on remand to decide the validity of the carrier's rates.
Now, that is very close to what happened in this case, where the Commission's San Antonio III decision establishing a rate ceiling was set aside because the rationale was not adequate.
But the Court of Appeals' first decision in 1980 left open the possibility that rates at that same level might eventually prevail after the Commission's proceeding on remand.
The problem is that if the Court's 1981 decision, which is here on review, is valid, it would mean that for some interim period of time the old 1976 temporary rate would apply and no matter what the Commission might decide on the remand, the carriers could never recover their tariff rate for that interim period.
Now, the court below recognizes these consequences of its decision, but it in effect blames them on the revived 1976 order of the Commission.
However, there is nothing in Wichita, nothing in Conrail v. NARY which suggests that the holding of those cases depended on whether the Commission had issued one order or two orders to 10 orders.
So long as the tariff rate might eventually prevail on remand before the Commission, than the reviewing court has no power to interfere with the tariff.
We believe that is the holding of Conrail v. NARY.
Now, this limitation on a reviewing court's power would apply even if San Antonio I had been revived.
In fact, the Commission in 1976 had clearly intended that the order be temporary, to get the traffic moving.
This is in the appendix at E-13 and F-2.
And by its own terms the '76 order had life only
"until the further order of the Commission. "
And such a further order was, in fact, issued in 1978.
Thus by its own terms the original 1976 order ceased to have any effect two years before the period in question here.
But even more fundamentally, the Commission did not bring the 1976 order back to life in 1980 or in 1981.
The Commission has never ruled, never found, that a reasonable maximum rate for 1980-81 would be at the San Antonio I level.
In fact, in its April 1981 decision the Commission concluded that the San Antonio I rate was F-4 in the appendix; and
"cannot have continued validity because of the new statutory threshold on ICC maximum rate jurisdiction and because of the changed statutory standards since 1976. "
That is at F-8 in the record.
So the question really is where an agency rate order which was temporary in the first place expires, where the agency has not itself brought the order back to life and where the agency in fact believes that the old order is out of date and wrong and would not be revived if it was up to the Commission, can a reviewing court bring it back to life for the period of the remand?
Unidentified Justice: In the Commission procedures is there any practice parallel to the one in probate matters of a dependent relative revocation so that when a subsequent order is set aside, it revives the last proceeding?
Mr. Martin: No, Your Honor.
And the reason for that is--
Unidentified Justice: Have they ever ordered, have they ever done that?
Mr. Martin: --No.
No, Your Honor, because the reason for that is because of the interrelationship between the tariffs which are on file and the maximum rate orders.
The Commission can fully protect everyone, and that's the difference.
Where you've got a will and another will, what do you do in the meantime?
Well, you don't have that problem in the ICC or in other statutory situations that are built on the Interstate Commerce Act because there's a tariff there, and if the tariff turns out to be have been too high, the Commission can award reparations and protect everybody.
In other words, if we had a $20 tariff on file and the Commission ultimately concluded it wasn't $15, it was $17.50, that would have been a fair maximum reasonable rate for that interim period of time.
The Commission isn't stuck with the alternative of either the $20 or the $15.
It can say, $17.50 was the maximum, pay the reparations back to the $17.50 to make the shipper whole for the excess of the tariff during that period, and pay them interest.
It can do that, and it has done that.
Now, what it cannot do is authorize the railroads to go back and once its tariff has been reduced, collect more.
In other words, if our tariff was reduced from $20 to $15 for an interim period of time and the Commission later concluded that it really ought to have been $20 or $22 or $13 or anything above that there's no power to authorize the railroads to go back and retroactively collect that higher amount from the shipper.
But the reason that the will situation really isn't analogous is because of the Commission's flexibility to determine what between the $20 and the $15 is a fair rate and--
Unidentified Justice: In other words, under the new tariff that nullified any prior tariff?
Mr. Martin: --Well, what would happen is--
Unidentified Justice: I am speaking of the Commission now, not the Court.
Mr. Martin: --The Commission wouldn't enter a tariff.
The carriers go file a tariff, and the tariff becomes the rate that has to be paid by virtue of the fact that it's filed.
And what the Commission would do is look at the tariff and say is that too high or unlawful for any reason.
Now, if after having locked, it says that that $20 tariff is too high, we hereby order the railroads to reduce, and then two things happen: For the future, once the tariff is reduced, that reduced tariff becomes the rate that the shipper has to pay, and so for the future we are taken care of.
Now, the question is, what do you do about the past?
And if the $20 ought to have been $17.50, the shipper is protected by the reparations and the interest on the reparations.
But the problem we've got is that if when an order is set aside that had approved a higher rate, the effect of that order is automatically to invalidate not only the order but our tariff and make our tariff unlawful for some period in the past and it gives the Commission no opportunity to make a determination of whether it was reasonable or not, then we are stuck because there's nothing we can do for that interim period of time, and here it was nine months and $20 million.
Now, the problem here is not simply one of exceeding the Court's jurisdiction to review orders.
It interferes directly with the statutory ratemaking scheme because you have a period of rising costs and changing regulatory standards.
It is not at all uncommon for the ICC or other regulatory agencies to issue a succession of rate orders that will reflect successively higher maximum rates, which is what happened here.
Under this ruling, whenever one such order is set aside on review, the last prior lawful order would bounce back into effect, revived for some period of time.
And that would happen no matter how outdated the prior order was.
And here it was 1976 to 1980.
And it would apply no matter how inconsistent that revived order is with the changed statutory standards.
And here we had two new statutes that had come into effect.
Unidentified Justice: Do you think that the Court of Appeals, Mr. Martin, was attempting to interpret Commission intent in deciding the effect of its previous order or that its ruling as to the effect of its own decision or order wasn't based on what it conceived to be the intent of the Commission?
Mr. Martin: It said that it was not based on its own intent or subjective determination as to what the rate level should be, and it said that it was the effect of its order.
It did not go into the question of what the Commission intent was in 1976 or what the Commission's intent would be in 1980.
It simply ruled in a more or less mechanical way, without looking at anybody's intent, on the rates involved.
But the problem here is not only that time has passed but that in 1976 the Commission passed a new rule of ratemaking, 10704(b)(2) of the statute.
That was not applied in the 1976 first order because that proceeding was in midstream by the time the Act was passed.
But it was a brand-new rule of ratemaking.
Then again in 1980 the Staggers Rail Act changed the ratemaking standards some more.
And the problem is that that San Antonio I rate, which goes back to 1976 and was intended to be temporary and interim in the first place, doesn't begin to reflect those changed regulatory standards.
Now, I might... I might just go to the... well, I see that my light is on.
I would like to reserve my time, if I may.
Unidentified Justice: Mr. Martin, would you clarify one thing for me before you sit down.
And that is, San Antonio apparently applied in October of 1980 with the Tariff Integrity Board challenging the tariffs, in effect.
Now, did San Antonio appeal from the order that resulted from that?
Mr. Martin: No, ma'am, they did not.
They... their position with the Tariff Integrity Board was that our tariff, which was on file, ought to be rejected because it's inconsistent with the Court of Appeals decision.
In the Tariff Integrity Board letter from Mr. Geezenboter, which is in this supplemental brown volume of documents, rejected that and said there has been no order of the Commission directing that the tariff be rejected or reduced.
Unidentified Justice: And did San Antonio ever actually file a complaint with the Commission or just something with the Board?
Mr. Martin: No, they did not.
They took the position that the Court of Appeals decision had given them the relief they wanted; they didn't have to go to the Commission.
Unidentified Justice: Okay.
Chief Justice Burger: Mr. Schulder.
ORAL ARGUMENT BY ELLIOTT SCHULDER, ESQ., ON BEHALF OF FEDERAL RESPONDENT SUPPORTING PETITIONER
Mr. Schulder: Mr. Chief Justice, and may it please the Court:
The United States and the Interstate Commerce Commission agree with petitioners that the Court of Appeals decision in this case violates the rule against judicial ratemaking established in this Court's Wichita and Conrail decisions.
The decision below basically interferes with the Commission's exclusive authority to determine proper rates, and it reaches an inequitable result.
San Antonio has argued that Wichita and Conrail are distinguishable because they do not involve successive rate orders.
But the effect of the Court's holding in earlier ICC order revived in declaring inconsistent tariff rates unlawful is precisely the same as if the Court had directly enjoined the railroads from collecting tariff rates during the period in question.
In either situation, the Commission is precluded from making its own determination of the proper rate levels.
The Court of Appeals remand decision left open the possibility that the San Antonio rate level would prevail.
Now, under the teaching of Wichita and Conrail on the proper role of the Court of Appeals in this situation should have been to preserve the agency's authority to determine what rates are reasonable for the period on remand.
However, the Court, rather than preserve the Commission's authority, essentially has usurped the authority of the Commission by declaring the tariff rates unlawful during the period--
Unidentified Justice: Well, the Commission didn't think so initially, did they?
Mr. Schulder: --Well, the Commission--
Unidentified Justice: Or did it think that it was being usurped but that it would just knuckle down to it?
Mr. Schulder: --The Commission's initial position was that the legal effect of the Court of Appeals remand decision was to revive the San Antonio I, the earlier Commission order--
Unidentified Justice: But its attitude wasn't that that was proper?
Mr. Schulder: --Its attitude was that that would create an inequity and that the Court of Appeals should try to correct the inequity.
Unidentified Justice: But was its position, however, that the Court had overstepped its authority, or did it take a position on that?
Mr. Schulder: No, I don't believe it took a specific position on that.
However, after this Court's decision in Conrail came down, the Commission changed its position and affirmatively told the Court of Appeals that... the Court of Appeals decision was incorrect.
Unidentified Justice: But Conrail wasn't the first case of this genre, was it?
Mr. Schulder: Well, Conrail was... Conrail was the first case in which a majority of this Court held that a reviewing court has no authority at all with which to set rates or determine rate policy in the context of a remanded proceeding.
Now, the argument that the Court of Appeals overstepped its bound under Wichita and Conrail we feel is also supported by the filed rate doctrine.
If we look at the record in this case, the only tariff that was on file during the remand period at issue here, the 10-month, 9 or 10-month period at issue, was the tariff filed at the San Antonio III level.
There was, in fact, no tariff on file governing the movements in question at the level of San Antonio I.
Yet during the entire period in question here, San Antonio paid only the rate at the San Antonio I level.
The Court's decision, by declaring tariff rates... tariff rates here unlawful has rewarded San Antonio's resort to self-help and, in effect, sanctioned San Antonio's violation of the filed rate doctrine.
The filed rate doctrine has its origins in the Interstate Commerce Act, which requires shippers to pay and carriers to collect only filed tariff rates.
If a shipper believes that a filed tariff rate is unlawful either because it's inconsistent with the Commission rate order or for any other reason, the proper remedy is to challenge the filed rate before the Commission.
And if the Commission at that point finds the rate unlawful, it may award the shipper reparations for any overcharge and any interest.
Thus, the shipper is fully protected by the statutory scheme.
San Antonio, however, has argued that it is excused from paying the tariff rate for this period because the Act prohibits carriers from publishing or collecting rates in excess of those prescribed by the Commission.
But the question here is what rate the shipper must pay when there is an ongoing dispute over whether the tariff rate is in violation of the Commission's order.
It is not up to a shipper like San Antonio or even to the Court of Appeals to decide in the first instance whether a tariff rate is or is not unlawful.
The Commission is not arguing here that filed rates are automatically the lawful rates that govern a particular movement in questions but that the determination of lawful rates is for the Commission to make.
The only way to preserve the Commission's authority to make a determination, we submit, is to adhere to the filed rates with the remedy, of course, of reparations in the event the shipper wishes to file a complaint in testing the validity of a tariff rate.
Thus, the purpose of the filed rate doctrine essentially is to provide a rigid rule; that is, the shipper must pay the filed rate until the dispute over the proper rate is resolved by the Commission.
The filed rate doctrine, therefore, like the rule in Wichita and Conrail, preserves the Commission's jurisdiction over rates.
The Court of Appeals decision in this case, however, violates both the Wichita and Conrail and the filed rate doctrines.
Accordingly, for the reasons I have stated and those we have stated in our briefs, the Commission and the United States respectfully request the judgment of the Court of Appeals be reversed.
Unidentified Justice: Would you comment just to refresh my recollection on the appealability question, the jurisdictional question as to whether it's timely?
Mr. Schulder: San Antonio has raised the point that the petition in this case was not timely filed because it was filed in excess of 90 days from the Court of Appeals initial remand decision.
However, we agree with petitioners that the remand decision did not resolve the question that is at issue here and that the Court dealt with in its June 1981 decision which is before the Court now, the decision on the petition for clarification of mandate.
The earlier remand decision said nothing about whether or not its order remanding the case to the Commission for further proceedings and explanations would act to revive the earlier Commission order.
Accordingly, we agree that there is no question of jurisdiction over this case.
Unidentified Justice: Was any order entered or any mandate handed down by the Court of Appeals with respect to Judge Wilkie's opinion, or does his opinion stand simply alone on that?
Mr. Schulder: Do you mean on the petition for clarification of mandate?
Unidentified Justice: Yes.
Mr. Schulder: I am not sure.
Unidentified Justice: Well, not the petition, but Judge Wilkie's opinion is here, of course.
The question is whether or not an order was entered.
It probably is in these papers somewhere, but I just haven't seen it.
Mr. Schulder: I am not aware one way or the other.
Unidentified Justice: Is there any mandate from which an appeal is taken; I guess that's my question.
Mr. Schulder: I am not aware one way or the other whether there was a subsequent mandate issued at that point.
Chief Justice Burger: Mr. Slover.
ORAL ARGUMENT BY WILLIAM L. SLOVER, ESQ., ON BEHALF RESPONDENT
Mr. Slover: Mr. Chief Justice, may it please the Court:
I represent the City of San Antonio, one of the respondents in this case.
In their arguments on brief and in their presentations to the Court this morning the petitioners and the federal respondents raised three separate and distinct allegations of error in connection with the decision of the Court of Appeals below.
First, they contend that the decision violates the principles which this Court has enunciated in the line of decisions beginning with Arrow and culminating recently with Conrail.
They contend the decision violates those principles whether or not the San Antonio I rate order was restored or not.
Secondly, they assert that the court erred in finding that the San Antonio I rate order had continued in effect.
Finally, they charged that the court below erred in its decision in that it violated the filed rate doctrine.
Now, in the time allotted to me, and hopefully, in quite a bit less, I am going to try to respond to each of those three arguments.
But before I do, I would like to emphasize one aspect by way of factual background; and that is, the significance of the San Antonio I rate order.
It has a very practical significance to my client because it has been the only constraining force against runaway rail prices during the nation's energy crisis.
And secondly, it is extremely critical to this litigation because all of this voluminous record... and indeed, we submit, this very action before the Court today... is one of a series of unceasing efforts by the railroads to extricate themselves from the constraint of the order.
So as we go through each of these arguments, we submit that the very distinguishing feature is the San Antonio I order itself.
And in that connection, this case is a very unique case in the sense that very, very little railroad transportation takes place under prescribed rates.
A statistically immeasurable amount of transportation has taken place with rate restrictions in virtually very little experience in successive orders.
So you have here a very unusual situation.
Now, as I say, the basic allegation of error is that the court below violated this Court's rules in Wichita and Conrail.
And those rules, very generally speaking, divide the functions between the judiciary and in this case the Interstate Commerce Commission.
They draw a line of demarcation where this Court has suggested that the... that the laws and the policy of the Congress have ousted the federal judiciary from taking injunctive action.
And their basic allegation asserts that the court below crossed over this forbidden line into this forbidden territory in its decision.
Now, I think I have fairly stated what they're saying.
But how the court did it is not nearly as clear.
And what they have done or what they are seeking in this Court to do is to stretch and expand the principles and boundaries that exist today in the Arrow line of decisions.
And basically, they're very easily stated.
In Arrow and Scrap the Court concluded that the federal courts should not take injunctive action prior to the time that the Interstate Commerce Commission has acted finally.
And in Wichita and Conrail they concluded that the Court should not take intrusive injunctive action where the ICC has acted finally but the Court reverses or remands that action.
So we have a body of law that ousts the federal judiciary from taking preclusive or injunctive action in these ratemaking areas.
Now, of course, here there isn't any injunction.
So what my opponents' case comes down to is this word "affects".
They are asking you here today to buy the affects test.
They are saying when a reviewing court reaches an action which affects rates, then that should be discouraged in the same way that overt injunctive action is.
Unidentified Justice: Isn't the Court of Appeals action, however, equivalent to something like an injunction?
Mr. Slover: Well, I think we would all agree, as the Court said, that the effect of its action was the same.
But the distinction, as we see it, is that unlike the Wichita case, here the court was doing something that it was eminently qualified to do: It was construing an order.
And the considerations which caused this Court to oust the judiciary in Wichita and Conrail are in to way applicable to the construction of orders.
Unidentified Justice: Let assume that ultimately it is found that their action was correct.
Why wasn't the proper approach to it to let these rates remain in effect, adjust whatever equities might be found by reparations?
Mr. Slover: Well, of course, Your Honor, we submit that this Court's decision and the Arizona Grocery case is dispositive on that point, that neither the Commission... in other words, for example, the Commission itself could not have at the end of the proceeding said, we have examined this initial rate and we find that at some point in the past it became unsatisfactory, so we are going to set a rate for the future and also adjust for the past.
That process could not have taken place with or without the district... the Cicruit Court action.
So the rate prescription order can never be retroactively adjusted under the rulings of this Court and Arizona Grocery.
Unidentified Justice: Either way?
Mr. Slover: That's correct.
The Arizona Grocery--
Unidentified Justice: Either way--
Mr. Slover: --it was the other situation.
Unidentified Justice: --if the rate proves too low, the railroads can never go back.
Mr. Slover: That is exactly what that case says.
Unidentified Justice: Yes.
Mr. Slover: So the difficulty that we have with the so-called affects test that they're striving to extend Conrail beyond injunctions is that none of the considerations which bothered the court in Conrail... in other words, when a court enters an injunction, it has to decide, one, who is going to win on the merits or the probability of success; and secondly, irreparable injury.
Now, in Conrail the court said that the federal courts should not be engaging in these type of considerations, which in the first instance should initially be considered by the Commission.
They felt that the injunctive process was intrusive upon the Commission's area of expertise.
But there's no expertise in this case.
The court simply construed a rate order, an order which this Court has held has the force of a statute.
None of the considerations behind Conrail apply to a judge's or a Circuit Court's construction of a rate order.
So we submit--
Unidentified Justice: Do you think that the Court of Appeals here did try to determine what the Commission had intended by its various San Antonio orders?
Mr. Slover: --I... I do not know the answer to that.
I know that they had the order before it.
This Court has said that rate orders are unique, they have the force of statute, they speak for themselves.
And indeed, at that particular time, there was not the controversy which has been generated after the fact.
So we submit that this court was eminently qualified to construe a rate order, and that is, in fact, what it did.
Unidentified Justice: When you say it construed the rate order, I take it then you mean it construed the effect it thought the Commission would want the rate order to have?
Mr. Slover: I simply don't know that I would... that I would go that far.
I... I think that they had the rate order in their hand, and it said, this order shall remain effective, et cetera, until modified.
They had vacated the modification.
And again, I feel that the court was not taking injunctive action or any of this type of activity that this Court has precluded, but rather was simply engaging in the... in the uniquely judicial process of interpreting and construing an official document.
Unidentified Justice: What do you do about the filed rate point?
Mr. Slover: Well, in--
Unidentified Justice: Because I guess there was a tariff outstanding.
Mr. Slover: --Well, let me say about the filed rate.
First of all, I would disagree with my colleague in connection with his response to Justice O'Connor that this... this theory was ever really broached to the court below.
But as to the filed rate doctrines, so to speaks, I think that's really a bad rap against the court below.
The more that I thought about this arguments, the more I began to think that the... that the court below and Judge Wilkie never got into whether we were paying too much or too little or who had to pay whom.
The filed rate doctrine deals with the railroads collecting charges in tariffs and possibly our paying charges, et cetera.
Wilkie never talked about that.
Wilkie talked about--
Unidentified Justice: Well, now--
Mr. Slover: --the priority--
Unidentified Justice: --he may not have.
He may not have, but is it... it may not have ever been posed there, but it's posed here.
Mr. Slover: --Well, it--
Unidentified Justice: And do you think that it's properly posed here and--
Mr. Slover: --I absolutely do not.
Unidentified Justice: --Well, assume we disagree with you.
How do you respond to the filed rate--
Mr. Slover: Well, I think that the... the Interstate Commerce Act is very clear because the provision section 107601 that requires the carriers to file the rates is subject to the exception that where there are outstanding rate orders, they have to... they are forbidden from publishing, charging, or collecting any other rate but the rate in the order.
So we simply say that the... that the statutory source of the... of the rate filing in this statutory scheme is preempted by another part of the statute.
And indeed, that is exactly how we read Arizona Grocery.
Arizona Grocery says, when you have the rate order, you have to obey it; you can't throw tariffs in the front door that has some other rate and then have a lawsuit as to whether that was right or wrong.
Unidentified Justice: --But the tariff was filed pursuant to another rate order.
Mr. Slover: Which the Court of Appeals vacated.
Unidentified Justice: Yes, but the tariff was still there.
Mr. Slover: Well, we... the liability--
Unidentified Justice: The tariff was still--
Mr. Slover: --of the tariff--
Unidentified Justice: --there, wasn't it?
Mr. Slover: --Well, it was.
And again, Justice O'Connor mentioned whether we had filed a complaint, and indeed we did file a complaint about... about that.
And it continues to languish at the Commission today.
It was never acted upon.
But we took every action.
We do not control this pricing.
They control these... these--
Unidentified Justice: What's the railroad supposed to do when the... after the... is it supposed to withdraw that tariff or file a new one or what?
Mr. Slover: --That's what we would submit.
We would submit that the... because the order continued in full force and effect, the railroads who control this pricing... in other words, they control the--
Unidentified Justice: Are you saying that the net effect then of the Court of Appeals order was that it required the railroads to file a new tariff?
Mr. Slover: --Absolutely.
Unidentified Justice: And you say that's not contrary to the filed rate doctrine?
Mr. Slover: Yes, we would submit that, or an exception.
And while we are on the filed rate doctrine--
Unidentified Justice: May I interrupt with a question there?
Mr. Slover: --Yes, sir.
Unidentified Justice: Under your view, could they, the railroads, have immediately refiled the existing tariffs?
Mr. Slover: They could not have.
The other thing about the filed--
Unidentified Justice: Could they have filed any tariff above the San Antonio I rate?
Mr. Slover: --Yes.
We submit that the... that the... that the tariffs become secondary under the statutory scheme to the rate order.
The rate order, under this Court's decision and Arizona Grocery, is the equivalent of a statute; it is a much higher--
Unidentified Justice: Well, then they could not have exceeded the San Antonio I rate, under your view?
Mr. Slover: --Yes.
We... we submit that they could not have filed tariffs in excess of the San Antonio I rate.
Unidentified Justice: So there just is no room for a filed tariff; it wouldn't have done any good to file another tariff?
Mr. Slover: They could have filed one after San Antonio, but we take--
Unidentified Justice: No; why would they do that?
Mr. Slover: --that the... that the order is in effect; you either file at the order or the order supplants the tariff.
Unidentified Justice: Well, but they have to file tariffs.
And your point is they should have filed the tariff and had to file a tariff at the San Antonio level.
Mr. Slover: They have to conform their tariff to that order, which at that point was the only viable order.
The additional point I want to make on this filed rate doctrine, which I persist is a sort of an add-on to this case, is that all of these cases deal ultimately with who has to pay what at the end of the litigation.
I am not certain that any of them or there is any particular body of law that... that says that we have to pay up first and argue later.
They have a case pending in the United States District Court in Texas to get the filet rate.
And really, I think what their proposition comes down to here is that somehow we have to pay first and argue later.
And I am not so certain that even if you came and found that... that the rates they file are the filed rates and they have to charge them, that we have to pay them pending the litigation.
Unidentified Justice: But that's really what the filed rate doctrine is all about, isn't it?
Mr. Slover: --I... I do not see it as that, no.
Unidentified Justice: Well, do you think you could pay some other rate than the filed rate?
Mr. Slover: We believe that if you have... in other words, there are cases that if you have loss and damage, if your goods are set off, that you can set off--
Unidentified Justice: Yes, but supposing it's just a disagreement about the reasonableness of a filed rate.
Mr. Slover: --Then we submit that we could... we could withhold payment pending litigation.
Yes, that would be our position, that if the rate is--
Unidentified Justice: Is there some case in this Court that supports that?
Mr. Slover: --Well, in many of the cases that have been cited in the brief, that is what in fact took place.
I... we have cases where, not in this Court, Your Honor... but there are cases where the issue of what has to be paid pending the litigation is discussed, and they appear not to require that we pay and then argue.
Unidentified Justice: But the Court of Appeals left open the possibility that the San Antonio II and III... is that what you call them?
Mr. Slover: Yes.
Unidentified Justice: San Antonio II and III rates, or the San Antonio III rates, could be reestablished by the Commission?
Mr. Slover: Yes, Your Honor, but not retroactively.
Unidentified Justice: Well, I don't know.
The possibility was that those rates would be reestablished and that the Commission would have said, that's what they always should have been.
Mr. Slover: But, Your Honor, that's a critical distinction in this case.
They cannot go backwards on the rate order.
Unidentified Justice: I understand.
Mr. Slover: And so while it's true--
Unidentified Justice: I understand that.
But they can leave in effect... the Commission could leave in effect that tariff.
Now, when a railroad files a new tariff, the Commission can suspend it if it wants to.
Mr. Slover: --That's correct.
Unidentified Justice: And I suppose on the remand, if the Commission wanted to, it could have suspended that tariff.
Mr. Slover: Well, of course, at the time this litigation came up, as you mentioned in the direct arguments, the Commission was taking our position.
Unidentified Justice: Yes, I know.
Mr. Slover: They had attempted to file tariffs, and they did take the position that we espouse; namely, that tariffs in conflict with the rate order could not be filed.
Unidentified Justice: Well, it's already filed.
Mr. Slover: --Well, they were filed, but we consider them to be null and void--
Unidentified Justice: The Commission never ordered them suspended or revoked or withdrawn.
Mr. Slover: --But they... we concluded that they were null and void because they were in conflict with the outstanding rate order.
Now, as I say, the real heart of the position of the petitioners in the final analysis, as we read it, comes down to a series of efforts to, in essence, make the San Antonio I rate order go away.
But if you make the San Antonio I rate order go away, then you don't have to extend Conrail, you have Conrail.
Without the San Antonio I rate order, there isn't any question that the court below would have taken the prohibitive-type interference.
Unidentified Justice: Assume hypothetically that this Court reverses the Court of Appeals.
What is the posture of the carrier with respect to the San Antonio I rates that are being charged?
Mr. Slover: Well, as we see it, if you reverse the Court of Appeals, you would have to also reverse yourself in Arizona Grocery.
Unidentified Justice: Well, let's lay that aside for the moment.
We will decide that later.
But what is the posture of the carrier if we reverse?
What do they do about having only the $11 rates all this time?
Mr. Slover: --Well, as you understand, this... this... this proceeding is going on in various continuing facets, and I presume that if you were to reverse, this disputed period would become part of that ongoing proceeding.
But I am speculating.
The... as I was saying, the--
Unidentified Justice: May I ask you, I know you rely heavily on Arrizona Grocery, but isn't that a case in which the court held that reparations could not be granted when the rate had previously been determined to be lawful by the Commission and the Commission later changed its mind?
Mr. Slover: --Well, as Mr. Justice White mentioned, I think that's... the Arizona Grocery situation is something of the reverse of this situation where the Commission prescribed a higher rate--
Unidentified Justice: Yes.
Mr. Slover: --and then they prescribed a lower rate.
Unidentified Justice: After the shipments had already taken place, pursuant--
Mr. Slover: Right.
Unidentified Justice: --to the first rate which had been approved before the shipment took place.
Mr. Slover: And they... they tried to get the carrier to ante up the difference--
Unidentified Justice: No, I think the--
Mr. Slover: --to lower--
Unidentified Justice: --Oh, I see.
Mr. Slover: --down the difference of the second shipment.
Unidentified Justice: The shipper sued for reparations.
Mr. Slover: Right.
Unidentified Justice: And their claim was disallowed.
Mr. Slover: Correct.
Unidentified Justice: Now, why is that inconsistent with your position here... I mean with the position of your opponents here?
Mr. Slover: Well, in both cases this... well in the Arizona case and, as we submit, the fact, the situation in this case, the rate order cannot be retroactively adjusted.
And so in Arizona--
Unidentified Justice: Well, after it has been finally approved by the Commission then.
But here we're not doing that, are we?
I mean we are not being asked to do that.
Mr. Slover: --Well, we... we claim that the San Antonio I rate order is the only legitimate valid rate order that's stood the test of... of administrative procedure and was sanctioned by a reviewing court.
I recognize that the record and the briefs are laced with these opinions about its interim nature and its temporal nature.
But the Interstate Commerce Act doesn't provide for temporal orders or short-term orders; it just... it just requires orders.
Unidentified Justice: Well, I understand your argument.
I am just not quite clear on why the Arizona rate case provides you as much support as you think it does.
Mr. Slover: Well, we take our actions in many ways were guided by this Court's discussion in Arizona Grocery where it said, where the Commission prescribes a rate, it speaks in its legislative capacity, and it says $10, and that $10 must govern.
The carriers cannot take their pricing freedom and try $15, throw it in the front door, file a tariff as you will, make us pay, make us litigate and take their chances.
They say that the $10 prescription governs.
And that is fundamentally what our position boils down to before this Court this morning, that at the completion of the activities of the Circuit Court, the San Antonio I rate order stood in full force and effect, continued as Judge Wilkie found.
And that order set a specific rate, and under this Court's ruling in Arizona, that is the only legal lawful rate, and they cannot vary it by filing tariffs or by any other means.
Their relief was not to engage in this withering array of lawsuits and legal actions and maneuverings, but to go back to the Commission and seek to act upon the circuit's mandate just as they did when they were dissatisfied with the Eighth Circuit.
They went back, and they made their case to try to modify the prescription.
And that would have been their best course of relief following the action of the D.C. Circuit.
Unidentified Justice: Let me try again.
Mr. Slover: Yes.
Unidentified Justice: If we were to reverse the Court of Appeals and vacate its judgment, then is San Antonio III rate structure the prevailing rate for this whole period?
Mr. Slover: Yes.
In other words, as... as... thinking about that here, in other words, if you reverse... if you reverse Wilkie... or, to state it differently, what we contend happens at the end of the Circuit Court's activities is that the price constraint continues.
These people are continued under the regulatory rate ceiling, and they seek a result that at the end of the Circuit Court's action the ceiling is gone, they are back to voluntary pricing.
So taken on balance, if you were to reverse the D.C. Circuit, you would, in essence, be restoring pricing freedom to these railroads over our traffic because there wouldn't be any constraining rate orders at all.
Unidentified Justice: And if we affirm the Court of Appeals, then San Antonio I rates are applicable and it's open to them to try to get--
Mr. Slover: Correct.
And indeed, the day after the Circuit Court was open to them, the Circuit Court never interfered with anything that the ICC could have done--
Unidentified Justice: --But that still leaves a couple of years of rates at the San Antonio I level long after the San Antonio I tariff was filed, doesn't it?
Mr. Slover: --No, it leaves, I think, the time period is... is about six or seven months or eight months.
Unidentified Justice: How much money would be involved?
Mr. Slover: --I believe the figure has been computed at approximately $19 million.
I never figured out, I don't contest it.
As you perhaps appreciate, the numbers in these coal rate cases are... are very, very enormous.
So if you were to affirm the court below, the effect of your holding would be that the San Antonio I rate order continued until the Commission finally vacated it back in April of 1981.
The last point that I shall make very briefly is that the most understandable part of the presentation of my opponents is this facade of how they get the San Antonio I rate order to self-destruct or to have been lifted or vacated.
And I simply want to say that the record in this case before the Commission shows that the railroads were intensely trying to vacate the order, to lift it, to get out from under this pricing constraint.
And we were resisting it steadfastly throughout the course of the proceedings.
And so to come before this Court now and say that the existence of this order, which is of such critical significance to this litigation and to my clients is metaphysical or semantical really belies the fact.
Everybody, including the Circuit Court and the Commission, were acutely aware of the distinction between vacating or lifting an order and modifying it.
And we submit that no case can be made on the facts of this record that the San Antonio I order somehow had gone out of existence before it got to the D.C. Circuit.
Unidentified Justice: May I ask one other question about the consequences of an affirmance?
You don't take the position that the May 7th order of the Commission where they allowed, pursuant to which you have been paying the higher rate, that that was invalid?
Mr. Slover: Well, we had some doubts about it, but those doubts did not--
Unidentified Justice: In other words, what I am really asking is if you were... are you entitled to--
Mr. Slover: --No.
Unidentified Justice: --recover the excess--
Mr. Slover: We're really--
Unidentified Justice: --of over the San Antonio I rate for the period subsequent to May 7, '81?
Mr. Slover: --Well, that issue is pending at the Interstate Commerce Commission as to what the--
Unidentified Justice: It seems to me one possible--
Mr. Slover: --They are now--
Unidentified Justice: --consequence of your view would be that the revival of the San Antonio I rates required that that be the ceiling until--
Mr. Slover: --It was vacated.
Unidentified Justice: --today.
Mr. Slover: And... no, it... we... we take the position that that be the ceiling until it was properly vacated.
And the Commission vacated it last May.
Unidentified Justice: And that was consistent in your view, with... they were permitted to do that under the Court of Appeals mandate?
Mr. Slover: They were permitted to get to work on that the afternoon of Judge Wilkie's decision.
Nothing that the Circuit Court did in any way interfered with that.
Our difficulty was that we felt that the process that led to the vacation might have been a little summary.
But fortunately that's not--
Unidentified Justice: But for purposes of our analyzing your argument here, we can assume that you accept the validity of the May 7th action of the--
Mr. Slover: --That is correct.
Unidentified Justice: --May 7, '81, action of the Commission?
Mr. Slover: Yes, Your Honor.
Unidentified Justice: Well, could, that afternoon without a hearing or anything else, could the Commission have amended its San Antonio I order to the extent that it just permitted the... well could it just have withdrawn it that afternoon?
Mr. Slover: We would have argued that they could not have.
We would have suggested and contended, as we did before the Fifth Circuit, that something in the nature of the defective hearing, that Wilkie found difficulties with, should have been reheard.
Unidentified Justice: You don't think they could have done something to the order that would have permitted the railroads to file new tariffs immediately?
Mr. Slover: Well, I guess the question there is one of how much they could have done.
They in fact did do something very summarily, and that has clearly been accepted by the courts.
So my answer to your question, with the benefit of hindsight, is that, yes, they could have acted expeditiously.
And indeed, Your Honor, the railroads could have asked the D.C. Circuit not to vacate the order.
As we point out, many of the litigants in these rate cases come before the Circuit Court and say, it's a lousy order, but don't vacate it; we need it for the duration.
Unidentified Justice: I take it the Commission's position now is that the railroad tariffs that were filed based on San Antonio III are still in effect?
Mr. Slover: Well, as has been pointed out, the Commission's position is a little like a chameleon here.
At one time their position was as ours is and at another time they took the position that they had--
Unidentified Justice: Well, at some point in this proceeding the Commission took the position that the railroad tariffs that were on file were the governing rates.
Mr. Slover: --Right.
Unidentified Justice: And that is in effect saying the railroad should be permitted to file a new tariff at the San Antonio III level.
Mr. Slover: That's correct.
Chief Justice Burger: Do you have anything further, Mr. Martin?
REBUTTAL ARGUMENT OF ROBERT EDEN MARTIN, ESQ. ON BEHALF OF PETITIONERS
Mr. Martin: I'd just like to address a couple of the questions that have been raised.
First, with respect to where the filed rate doctrine was raised in our papers before the D.C. Circuit in the first argument section of the petition for clarification that we filed in November, pages 11 through 12.
This is in response to Justice O'Connor's question.
I'd like to address the Chief Justice's question with respect to what happens if we reverse or if we don't reverse.
If there is a reversal, our argument would be that everybody is protected because the entire matter of what happens to a rate from 1978, when San Antonio II came down, to the present and through tomorrow will be before the Commission.
The Commission will rule on what would have been a reasonable maximum rate throughout that entire period and can protect everybody, including San Antonio.
The problem is, what happens if you don't.
And here we have from 1978--
Unidentified Justice: Wait a minute, now.
What can the Commission do, you say?
What rates have been charged up 'til now?
Mr. Martin: --From 1978 to '79, the San Antonio II level was charged.
From '79 until '80, the San Antonio III level was charged.
Unidentified Justice: May '80.
Mr. Martin: Yes.
Unidentified Justice: Now, the Commission cannot get the railroads to give up any of those collected rates?
Mr. Martin: Yes, sir.
Unidentified Justice: On what basis?
Mr. Martin: Because the issue of the validity of the maximum rate that the railroads charged from '78 to '80 was the question that was before the Commission in San Antonio III.
It went before the D.C. Circuit.
The D.C. Circuit remanded it and it's still on remand.
So I think this is very important.
Before the Commission right now there is a proceeding in which... it is ongoing.
The Commission will some day decide what would have been a maximum reasonable rate for this entire period.
If it finds that the rate--
Unidentified Justice: I take it your colleague on the other side doesn't agree with that.
I understood him to say that if we reversed there was no way that a reasonable rate could be set for this interim period.
Mr. Martin: --No, if that's what he said he's wrong, because the problem is with respect to the hole in the middle.
The whole 1978 to the present and the issue of the maximum rate is before the Commission right now.
But if San Antonio is right, then there is a chunk of that period from July of 1980 to May of 1981 in which the Commission would not have jurisdiction to decide what's a maximum reasonable rate.
So the Commission could, according to his theory, find that the San Antonio II level was okay from '78 to '79, the San Antonio III level was okay from '79 to 80.
But there's a dip for nine months in which the Commission has no power to do anything because of the D.C. Circuit's decision.
And then from May of '81 on, again jurisdiction would revert to the Commission to find what's a maximum reasonable rate.
Our theory is that there's no hole, that the Commission has jurisdiction over the entire period.
Unidentified Justice: If the Court of Appeals is reversed, the status quo ante is restored, I take it?
Mr. Martin: The carrier's tariff is on file today, Your Honor.
Back in May of 1981 the Commission, in the decision that is in the brown book at 5, restored pricing freedom to the carriers.
Unidentified Justice: Can they recover from San Antonio the shortfall in the interim?
Mr. Martin: If you reverse, we will be able to go back and collect from them for that interim period of nine months our tariff.
And then if the Commission decides that the tariff was too high for that period or any other portion of this four-year period, it can require us, yes, sir, to pay reparations and to pay interest.
Now, I would like to address the point that was made about San Antonio I being the only constraining force on the railroads and you have to somehow affirm the Court of Appeals because it's the only constraining force.
That just isn't right, because from 1978 to '80 it didn't exist and it doesn't exist today.
I would like to call the Court's attention to the Appendix F-11, which is where the May 7, 1981, order appears.
And as of that date and that order, San Antonio I on everybody's theory is gone, everybody's.
And Judge Wilkie acknowledged it in his decision at A-6.
So that is gone, and the Commission has jurisdiction over the entire period to implement the standards of the Act, and the only question is whether there's a nine-month chunk in the middle of that period over which it has no jurisdiction and over which it has no alternative except to restore a rate which it believes is out of date by years, is inconsistent with the statutory standards.
Again, a brief reference, at F-7 and F-8 of the record.
We don't have to speculate about what the Commission's intent is, at least today, because we know.
In May of 1981 it got out this decision, in which it said that the San Antonio rate is supported neither by current cost data or current legal standards, or at least that there's no reason to believe it is, and that not even San Antonio contends that its evidence would ultimately justify reimposition of the San Antonio prescription.
This is the Commission in May of '81.
It says that the San Antonio I rate, if restored, would be way below even the threshold for Commission maximum rate jurisdiction, and a rate of that kind "cannot have continued validity".
This is at F-8 of the record.
So we know what the Commission's view is in the wake of the remand.
We know what the Commission's view is in 1980-81.
We don't have to speculate about it.
Chief Justice Burger: Thank you, gentlemen.
The case is submitted.