Service Order No. 1134, promulgated by the Interstate Commerce
Commission (ICC) without notice or hearing pursuant to its
emergency powers under § 1(15) of the Interstate Commerce Act,
which limited the holding time of lumber cars at reconsignment
points to five working days and subjected the shipper holding the
car at such points for more than that period to the sum of the
rates from origin, to hold point, to destination,
held
within the ICC's power under § 1(15) to avoid undue detention of
freight cars used as places of storage during an emergency freight
car shortage that the ICC, exercising its expertise, found to
exist. Pp.
420 U. S.
187-191.
365 F. Supp. 609, reversed.
DOUGLAS, J., wrote the opinion for a unanimous Court. POWELL,
J., filed a concurring opinion,
post, p.
420 U. S.
191.
Opinion of the Court by MR. JUSTICE DOUGLAS, announced by MR.
CHIEF JUSTICE BURGER.
This is an appeal from a judgment of a three-judge District
Court, 28 U.S.C. § 1253, which held invalid an order of the
Interstate Commerce Commission promulgating
Page 420 U. S. 185
a car Service Order [
Footnote
1] under § 1(15) of the Interstate Commerce Act, as amended, 41
Stat. 476, 49 U.S.C. § 1(15). [
Footnote 2]
Oregon Pacific Industries v. United
States, 365 F. Supp. 609 (Ore.1973).
Page 420 U. S. 186
Lumber is often moved to market on a wholesalers'
sale-in-transit schedule. Cars are sent to hold points, where, in
time, reconsignment order are received for shipment to customers of
wholesalers. The tariffs allow indefinite holding, subject to
demurrage charges for detention in excess of 24 hours, but the
Commission found that these demurrage charges never discouraged
shippers from lengthy holding of cars. In 1973 there was, according
to the Commission, a transportation "emergency" which required
"immediate action to promote car service in the interest of the
public and the commerce of the people." Accordingly, on May 8,
1973, the Commission,
sua sponte, without notice and
hearing, entered its Service Order No. 1134 which limited the hold
time at reconsignment points to five days (120 hours), exclusive of
Saturdays, Sundays, and holidays. If the lumber cars were held at
reconsignment points longer than five working days, the
reconsignment privilege would be lost, and the shippers would be
subject to local or joint tariff rates from the point of origin to
the hold point, and from the hold point to the ultimate
destination.
The District Court held that there were four categories of
emergency action which the Commission could take under § 1(15):
"(a) to suspend . . . rules, regulations, or practices then
established with respect to car service. . . . "
Page 420 U. S. 187
"(b) to make . . . directions with respect to car service . . .
during such emergency as . . . will best promote . . . service . .
. [and provide compensation as between carriers]."
"(c) to require . . . common use of terminals, . . . and"
"(d) to give directions for preference or priority in
transportation. . . ."
The District Court held that the Commission's authority under
(b), (c), or (d) would not support the order in this case, and that
the order could be sustained, if at all, only under (a). It
concluded that (a) was not adequate, since the challenged order did
not "suspend" any rule or regulation "with respect to car service."
It reasoned that the order "condones the practice of sales in
transit" for an indefinite time, but requires shippers employing
the practice to pay a higher rate to the carriers than the
demurrage rate under the prior order. That was, in its view, a rate
order having no place under § 1(15), which gives the Commission
power to act
sua sponte in an "emergency" in a narrow
group of cases. 365 F. Supp. at 612.
The District Court pointed out that § 1(10) defines "car
service" as "the use . . . movement . . . and return of . . . cars
. . . used in the transportation of property . . . by any carrier
by railroad," and it emphasized that
"'car service' connotes the use to which the vehicles of
transportation are put [by a carrier]; not the transportation
service rendered by means of them,"
365 F. Supp. at 611;
Peoria & P.U. R. Co. v. United
States, 263 U. S. 528,
263 U. S. 533.
We emphasized in
United States v. Allegheny-Ludlum Steel
Corp., 406 U. S. 742,
406 U. S. 743,
that car service rules dealt with the management of "a single
common pool" of cars "used by all roads," and that they pertain to
railroad use
Page 420 U. S. 188
of cars. Since "railroad use" involves shippers, we think the
District Court read § 1(15) too narrowly.
We noted in
Allegheny-Ludlum that § 1(15) traces back
to the Esch Car Service Act of 1917, 40 Stat 101. [
Footnote 3] 406 U.S. at
406 U. S. 744.
The use of freight cars as warehouses -- the practice which
prompted the Commission to act in the present case -- was one of
the evils at which the original Car Service Act was aimed.
Mr. Esch, sponsor of the legislation, said: [
Footnote 4]
"Another cause of car shortage is the holding of cars on the
part of shippers themselves, using the car as a species of
warehouse, instead of promptly unloading it. I think that is quite
a universal evil throughout the United States, but it is due in
some measure to the lack of warehouse and elevator facilities at
the terminals."
"
* * * *"
"Mr. MADDEN. If the gentleman will yield to me, I would like to
ask him one question. I would like to ask the gentleman if there is
any provision in this bill to compel railroad companies to pay
demurrage to the shippers in case they failed to furnish the cars
within the time they were required for the shipment of the
goods?"
"Mr. ESCH. The gentleman means reciprocal demurrage?"
"Mr. MADDEN. This gives the Interstate Commerce Commission the
right to authorize them to charge certain demurrage of the shipper
if he fails to unload the car. Ought not the shipper to have a
claim against the railroad company in case they fail to furnish the
cars? "
Page 420 U. S. 189
"Mr. ESCH. I have no doubt, under the proposed amendment, in
case of emergency, the commission could make any rules or
regulations that they saw fit that would promote the transit of
freight, because the power is very broad, and necessarily so."
And the Reports make clear that one aim of the Act was "to the
end that the public may receive the best possible service in
transportation." [
Footnote 5]
Car shortages, it was found, resulted in short supplies of basic
foods in the markets, "with attendant high prices." [
Footnote 6] The interests of shippers and
consumers -- not the carriers alone -- were very much in the
forefront.
As we have noted,
Peoria & P.U. R. Co., supra,
emphasized that the car service authority extends to the "use" of
cars, and not to a "transportation service," but there the issue
was whether one carrier was bound to perform switching services for
another carrier. The Court held that it was not; power over the
"use" of cars, however, was left undisturbed. In this connection,
it is obvious that a shipper by rail does not "rent" a vehicle, as
do shippers by truck. The cars are all "used" under the management
of carriers, who naturally receive directions or requests from
shippers. The cars cannot be used efficiently to serve the needs of
shippers and consumers if they are used not as carriers, but as
warehouses.
In
Turner Lumber Co. v. Chicago, M. & St. P. R.
Co., 271 U. S. 259,
demurrage to prevent "undue detention" of cars "loaded with lumber
held for reconsignment" was fixed by the Commission without notice.
The Court, speaking through Mr. Justice Brandeis, upheld the
charge, saying:
"All demurrage charges have a double purpose. One is to secure
compensation for the use of the car and of the track which it
occupies. The other is to promote car efficiency
Page 420 U. S. 190
by providing a deterrent against undue detention."
Id. at
271 U. S. 262.
In
Iversen v. United States, 63 F.
Supp. 1001,
aff'd per curiam, 327 U.S. 767, the
Commission entered a car Service Order limiting reconsignment
privileges to a specific number of days and providing that cars
held in excess of that time would be subject to the sum of the
local rates from origin to reconsignment point to destination.
[
Footnote 7] It was held that
the demurrage item was a "rule" respecting "car service" within the
meaning of § 1(15). The holding in
Iversen was implicit in
the holding in
Turner. [
Footnote 8] The District Court suggested that the Service
Order was invalid because its effect was to "fix" rates and charges
during an emergency -- a power not covered by § 1(15). That precise
point was raised in
Iversen, 63 F. Supp. at 1006, and the
ruling, which we affirmed, was
contra. Suspending or
changing demurrage charges
Page 420 U. S. 191
may increase the transportation charges; but, as
Turner
makes clear, demurrage charges have a dual purpose, and it is
enough if one of them is a deterrent against undue detention of
cars. As we said in
Turner, at times, the cause of "undue
detention" of freight cars is that they are used
"as a place of storage, either at destination or at
reconsignment points, for a long period while seeking a market for
the goods stored therein."
271 U.S. at
271 U. S. 262.
The substitution of tariff rates already fixed and on file for the
old demurrage rate is not an unreasonable method of accelerating
the movement of freight cars. That was the aim and purpose of the
present Service Order, and it was promulgated in an "emergency"
[
Footnote 9] which the
Commission, using its expertise, found to exist. We cannot say the
order was unreasonable on the record before us. Insofar as
appellees raise questions of unfairness, they are precluded by the
opinions of Mr. Justice Holmes in
Avent v. United States,
266 U. S. 127, and
of Mr. Justice Brandeis in
Turner Lumber Co. v. Chicago, M.
& St. P. R. Co., supra, which disposed of due process
questions under § 1(15). We therefore hold that the Commission had
the power to promulgate Service Order No. 1134 summarily. [
Footnote 10]
Reversed.
[
Footnote 1]
This Service Order by its original terms was to expire July 31,
1973, unless otherwise modified or changed by the Commission. 38
Fed.Reg. 12606. The Commission twice extended the deadline,
id. at 19831, 31681, and on April 11, 1974, made it
effective "until further order of the Commission," 39 Fed.Reg.
13971, on each occasion having found "good cause" for the
extension. The April 11 amendment also suspended the Service Order
indefinitely, effective April 15, 1974.
The Solicitor General, without citation of any authority,
expressed his view that the District Court's decision was correct,
and moved that its judgment be affirmed. The Western Railroad
Traffic Association has filed an
amicus brief taking the
opposing view.
[
Footnote 2]
Section 1(15), 49 U.S.C. § 1(15), provides:
"Whenever the Commission is of opinion that shortage of
equipment, congestion of traffic, or other emergency requiring
immediate action exists in any section of the country, the
Commission shall have, and it is hereby given, authority, either
upon complaint or upon its own initiative without complaint, at
once, if it so orders, without answer or other formal pleading by
the interested carrier or carriers, and with or without notice,
hearing, or the making or filing of a report, according as the
Commission may determine: (a) to suspend the operation of any or
all rules, regulations, or practices then established with respect
to car service for such time as may be determined by the
Commission; (b) to make such just and reasonable directions with
respect to car service without regard to the ownership as between
carriers of locomotives, cars, and other vehicles, during such
emergency as in its opinion will best promote the service in the
interest of the public and the commerce of the people, upon such
terms of compensation as between the carriers as they may agree
upon, or, in the event of their disagreement, as the Commission may
after subsequent hearing find to be just and reasonable; (c) to
require such joint or common use of terminals, including mainline
track or tracks for a reasonable distance outside of such
terminals, as in its opinion will best meet the emergency and serve
the public interest, and upon such terms as between the carriers as
they may agree upon, or, in the event of their disagreement, as the
Commission may after subsequent hearing find to be just and
reasonable; and (d) to give directions for preference or priority
in transportation, embargoes, or movement of traffic under permits,
at such time and for such periods as it may determine, and to
modify, change, suspend, or annul them. In time of war or
threatened war, the President may certify to the Commission that it
is essential to the national defense and security that certain
traffic shall have preference or priority in transportation, and
the Commission shall, under the power herein conferred, direct that
such preference or priority be afforded."
[
Footnote 3]
See H.R.Rep. No. 18, 65th Cong., 1st Sess.; S.Rep. No.
43, 65th Cong., 1st Sess.
[
Footnote 4]
55 Cong.Rec. 2020-2021.
[
Footnote 5]
S.Rep.,
supra, n 3,
at 2.
[
Footnote 6]
H.R.Rep.,
supra, n
3, at 1.
[
Footnote 7]
Iversen v. United States involved four Service Orders
of the Commission. Service Order No. 396 in that case was on all
fours with the one in the instant case. In
Iversen, Judge
Prettyman, speaking for a three-judge District Court, said:
"[D]emurrage charges are in part compensation and in part
penalty; . . . in full character, they are neither, not being rates
as that term is used in connection with ratemaking nor penalties as
that term is used in respect to penal impositions. They are
sui
generis. Historically, textually, in purpose and in content,
they are an integral part of the established rules and regulations
relating to the use and movement of cars. From the beginning, they
have been sustained as rules and regulations. They could not have
been sustained as carrier charges or as penalties. As an integral
part of the rules and regulations in respect to car service, they
fall within the provisions of Section 1(15) of the Interstate
Commerce Act. It follows that, when an emergency exists, the
Commission can, without hearing, issue, effective for a limited
time, orders in respect to these charges."
63 F. Supp. at 1005-1006.
[
Footnote 8]
The District Court distinguished
Turner on the ground
that it involved a "demurrage tariff duly filed," 271 U.S. at
271 U. S. 260.
But it was filed by reason of § 1(15) during an "emergency" and, as
in the present case, "without notice." 271 U.S. at
271 U. S.
260.
[
Footnote 9]
A car Service Order of the Commission issued July 25, 1922,
because of an "emergency" without notice and hearing was sustained
in
Avent v. United States, 266 U.
S. 127, against the claim that the order violated the
Fifth Amendment.
[
Footnote 10]
This is the only question we decide today. The Commission's
present obligation with respect to the promulgation of car service
rules, the issue that concerns our Brother POWELL, has not been
raised by counsel here or in the court below, and, accordingly, is
a matter we do not address.
MR. JUSTICE POWELL, concurring.
I am in agreement with the Court's opinion that the Interstate
Commerce Commission had the power under
Page 420 U. S. 192
§ 1(15) summarily to take the action which is the subject of
this litigation. I believe, however, that, in addition to reversing
the judgment of the District Court, we should direct that the case
be remanded for a prompt proceeding under § 1(14) of the Act.
The Commission entered Service Order No. 1134 on May 8, 1973,
without notice, hearing, or an opportunity by interested parties to
submit evidence or grounds of objection. The Commission found, as
it had to under § 1(15):
"[A]n emergency exists requiring immediate action to promote car
service in the interest of the public and the commerce of the
people. Accordingly, the Commission finds that notice and public
procedure are impracticable and contrary to the public interest. .
. ."
The Commission's counsel stated at oral argument that, while the
car shortage problem has a long history, the present order was in
response to a particularly sharp but temporary increase in the
severity of the problem. Counsel acknowledged, however, that this
temporary emergency has subsided, and that the order has been
maintained in effect largely because of this litigation. [
Footnote 2/1]
Summary action is justified by the need to prevent imminent and
severe public harm, harm that could not be avoided were action
delayed. In authorizing this type of action, Congress implicitly
concluded that avoidance of the public harm justifies bypassing
normal procedures.
Page 420 U. S. 193
But the justification for summary action ends with the emergency
that called it forth.
No reason has been given us why the normal procedures with
respect to "car service" rules under § 1(14) should not now be
followed. [
Footnote 2/2] Although
these do not require a full adversary hearing, due notice must be
given all interested parties, with the opportunity to object,
submit evidence, and file briefs in support of their position.
United States v. Florida East Coast R. Co., 410 U.
S. 224 (1973);
United States v. Allegheny-Ludlum
Steel Corp., 406 U. S. 742
(1972).
The Court's reversal of the District Court's decision, without
more, will result in the vacating of its order of October 18, 1973,
restraining enforcement of the Commission's emergency order of May
8, 1973. Absent the restraining order of the District Court, the
emergency car service rules apparently will remain in effect. I
think it unfortunate to leave the case in this posture.
Accordingly, in addition to reversing the judgment of the District
Court, I would direct that the case be remanded to the Commission
with directions that it proceed promptly in accordance with the
requirements of § 1(14) to determine what changes, if any, are
required in the car service rules.
[
Footnote 2/1]
Although originally drawn to expire July 31, 1973, the
Commission later continued it in effect, while suspending its
application, "until further order of the Commission." 39 Fed. Reg.
13971. The order was vacated, however, by the District Court on
October 18, 1973, some five and a half months after its
promulgation. Presumably, our reversal of the District Court will
allow the Commission, in its discretion, to lift the suspension of
the order without any renewed finding of emergency.
[
Footnote 2/2]
The procedural safeguards afforded by § 1(14), and which the
Commission must follow absent an emergency, not only afford
protection to the interests of private parties affected by agency
action; they also insure that the agency has before it the
information necessary to make a decision reasonably accommodating
diverse and often competing public interests. Summary action may
result in the imposition of hardships which, upon a more adequate
consideration, will prove to have been unnecessary.
See
Freedman, Summary Action by Administrative Agencies, 40
U.Chi.L.Rev. 1, 270 (1972).