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ATLANTIC CITY ELEC. CO. v. UNITED STATES

October 28, 1969

ATLANTIC CITY ELECTRIC COMPANY et al., Plaintiffs, and State of New York et al., Intervenors-Plaintiffs,
v.
UNITED STATES of America and Interstate Commerce Commission, Defendants, and Aberdeen and Rockfish Railroad Company et al., Intervenors-Defendants



The opinion of the court was delivered by: MCLEAN

McLEAN, District Judge.

Seven public utilities operating in the northeastern section of the United States brought this action to enjoin and set aside an order of the Interstate Commerce Commission made on January 9, 1969, in a proceeding entitled "Ex Parte 259, Increased Freight Rates, 1968." The order permitted the Class I railroads of the United States to put into effect a rate increase on a great number of commodities. Among the rate increases so authorized was an increase of 5 per cent on bituminous steam coal, up to a maximum of 15 cents per ton. Plaintiffs are large users of bituminous steam coal and hence are adversely affected by the order. They claim that the order is unlawful and that the procedures employed by the Commission have deprived them of due process of law.

 The State of New York and the Departments of Agriculture of ten other northeastern states have been permitted to intervene as parties plaintiff. They complain of the increase of 6 per cent authorized by the order in freight rates on grain, feed and feed ingredients moving into the northeastern states.

 Many Class I railroads have also been permitted to intervene. They support the Commission's order.

 The Commission has moved under Rule 12(b)(6) to dismiss the action on the ground that plaintiffs and intervenor plaintiffs have failed to state a claim upon which relief can be granted. In essence, the Commission asserts that the attack upon its order is premature. Decision of this question requires analysis of the Commission's order and consideration of the remedies available to plaintiffs and intervenor plaintiffs under the Interstate Commerce Act. 49 U.S.C. § 1 et seq.

 The various steps in the proceeding before the Commission which resulted in the order under attack are set forth in two reports of the Commission, an interim report dated November 25, 1968 (332 I.C.C. 590), and a final report dated January 9, 1969 (332 I.C.C. 714). They may be briefly summarized as follows.

 On March 7, 1968, the Class I railroads filed with the Commission a petition for permission to publish increased freight rates. The Commission granted their request. On March 11, 1968, the railroads filed their master tariff X-259 containing schedules of proposed increases, to be effective on May 27, 1968. The effective date was later postponed to June 24, 1968. The proposed increases ranged generally from 3 to 10 per cent, depending upon the commodity involved. By order entered June 19, 1968, the Commission suspended until January 24, 1969 all increases in excess of 3 per cent. This order also directed that an investigation be made of the proposed increases.

 The investigation was divided into a number of parts, designated as "subnumbers." "Sub-No. 2" was concerned with "railroad cost and revenue need." Other sub-numbers pertained to the increases requested on particular commodities. Sub-No. 3 was concerned with coal; Sub-No. 5 with grain. Hearings were held before hearing examiners. Plaintiffs and intervenor plaintiffs appeared and protested the proposed increases.

 The Commission's interim report dated November 25, 1968 was devoted to the need of the railroads for increased revenue, i.e., Sub-No. 2 of the proceeding. The Commission concluded that "the proposed rate level, generally speaking, is within the zone of reasonableness." 332 I.C.C. at 608. The Commission went on to find that "the increased freight rates and charges herein authorized will not exceed a maximum just and reasonable level of rates and charges." 332 I.C.C. 609.

 It further found:

 
"Our findings as to justness and reasonableness, which are based upon all of the evidence, before us including typical evidence as to rates and charges in and between all territories, will apply to the general bases of rates and charges, and will not preclude interested parties from bringing any maladjustments to our attention for correction. The increased freight rates and charges authorized herein are not considered as prescribed within the meaning of the decision in Arizona Grocery Co. v. Atchison, T. & S.F. Ry. Co., 284 U.S. 370 [52 S. Ct. 183, 76 L. Ed. 348], and will, in all respects, be subject to complaint and investigation as provided by the act." 332 I.C.C. 609.

 By order dated November 25, 1968, the Commission vacated its suspension order of June 19, 1968 and permitted the full increases proposed by the railroads to take effect, except as to certain commodities, one of which was grain. As to these, the suspension order was continued.

 At the beginning of its final report dated January 9, 1969, the Commission referred to its interim report of November 25, 1968, and stated that the proceeding had been continued thereafter "for the consideration of the lawfulness of the proposed and interim increases as they applied to specific commodities and services, and ...


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