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NIAGARA MOHAWK POWER CORP. v. UNITED STATES

UNITED STATES DISTRICT COURT, SOUTHERN DISTRICT OF NEW YORK


December 12, 1975

NIAGARA MOHAWK POWER CORPORATION and Public Service Electric & Gas Company, Plaintiffs,
v.
UNITED STATES of America and Interstate Commerce Commission, Defendants, and Atchison, Topeka, and Santa Fe Railway Company, et al., Defendant-Intervenors

Per Curiam

Plaintiffs seek a permanent injunction against an order of the Interstate Commerce Commission ('ICC') entered on June 3, 1974 (the 'June 3d Order') in a proceeding entitled Ex-Parte No. 305, which order had the effect of permitting a 10% nationwide increase in railroad freight rates and charges. Plaintiffs allege jurisdiction exists under 28 U.S.C. §§ 1336, 1398, 2321 and 2325.

Plaintiffs are two regulated public utilities which in the course of generating and supplying electricity to their customers allegedly purchase and ship by rail in interstate commerce 'large quantities of various commodities (including) bituminous steam coal.'

Defendants are the ICC and the United States. 28 U.S.C. § 2322. Eastern, *fn1" Southern, *fn2" and Western *fn3" railroads have intervened as defendants.

 The ICC proceeding, Ex-Parte No. 305, was initiated on April 22, 1974 when most of the nation's railroads (except the Long Island Railroad) petitioned the ICC for permission to file a master tariff *fn4" to institute a nationwide general increase of 10% on all freight rates and charges to become effective on May 2, 1974 or on not less than 10 days notice. By order dated April 29, 1974, the ICC denied the railroads' petition but stated it would file a subsequent order specifying the procedures to be followed with respect to this petition.' On May 3, 1974, the ICC entered a second order granting the railroads permission to publish and file a proposed master tariff upon not less than 30 days' notice (which proposed master tariff would increase freight rates by 10% and would become effective June 5, 1974); instituting an investigation into the revenue needs of the railroads, in which protests by shippers opposing the increases were to be filed on or before May 24, 1974 and the railroads' replies to be filed on or before May 29, 1974; and providing that the increases collected as a result of the instant order were subject to refund with interest if any such increases were subsequently disapproved by the ICC. See Special Permission No. 74-3440. On May 6, 1974, the railroads filed Tariff X-305, in which they sought general rate increases of 10% to become effective on June 5, 1974. Plaintiffs herein filed joint 'General Protest and Verified Statements' dated May 24, 1974, requesting inter alia a full hearing and investigation. The railroads filed a reply dated May 29, 1974. On June 3, 1974, the ICC entered an order, the subject of plaintiffs' complaint, suspending Tariff X-305 for seven months to permit investigation of the rate increase, but authorizing the railroads to cancel the suspended tariff on one day's notice and, subject to certain conditions not here relevant (see Chesapeake and Ohio Railway Co., et al. v. United States, 392 F.Supp. 358 (E.D. Va. 1975) (3-Judge Court, appeal filed, 423 U.S. 923, 96 S. Ct. 264, 46 L. Ed. 2d 248 (1975), to file a new tariff increasing the rates no more than 10%. Thereafter, the railroads cancelled Tariff X-305 and on June 5, 1974 filed Tariff X-305-A, embodying the 10% increase to become effective June 20, 1974.

 Plaintiffs instituted this action on August 5, 1974 seeking to enjoin the June 3d Order. The Court granted motions by Eastern, Southern and Western railroads *fn5" for leave to intervene as defendants. The ICC and the intervening railroads move to dismiss the complaint on the ground that the Court lacks jurisdiction to review the June 3d Order.

 Congress in enacting the Interstate Commerce Act of 1887 and its subsequent amendments established an extensive administrative procedure by which the ICC would oversee the railroads' rate increases. See 49 U.S.C. §§ 1-27. By statute, when a railroad seeks to effect a rate change, it must file a tariff with the ICC setting forth a schedule of new rates. *fn6" This tariff is published for public inspection. 49 U.S.C. §§ 6(1), 6(3). Normally, the effective date of the tariff is thirty days after the published notice, but this period may be reduced for good cause in the discretion of the ICC. 49 U.S.C. § 6(3). After a tariff is filed, the ICC may, upon complaint of a shipper or other interested person, or on its own initiative, conduct a hearing concerning the 'lawfulness of such rate.' 49 U.S.C. § 15(7). Pending this hearing and an ICC decision, the new rates will take effect as scheduled unless suspended for up to seven months by order of the ICC. Id. Irrespective of its decision as to suspension of the rates, the ICC, on its own initiative or on petition by an aggrieved shipper such as plaintiffs herein, may institute an investigation of specific rates, conduct a 'full hearing,' order refunds in cases where rates are found to be unjust, and/or 'determine and prescribe what will be the just and reasonable individual or joint rate.' 49 U.S.C. §§ 13(1), 15(1), 16(1).

 The June 3d Order expressed the ICC's recognition that the railroads were in need of additional freight revenues to carry their costs and improve services. The June 3d Order 'authorized (the railroads) to establish upon not less than 15 days' notice . . . an increase in rates . . . not to exceed those set forth in (Tariff X-305).' The ICC did not consider the reasonableness of the rate increase as to coal or any other specific commodity. Therefore, the June 3d Order is a general revenue order and as such is not judicially reviewable. Alabama Power Co. v. United States, 316 F.Supp. 337 (D.D.C. 1970) and Atlantic City Electric Co. v. United States, 306 F.Supp. 338 (S.D.N.Y. 1969), both aff'd by an equally divided court, 400 U.S. 73, 91 S. Ct. 259, 27 L. Ed. 2d 212 (1970); Electronics Industries Association v. United States, 310 F.Supp. 1286 (D.D.C. 1970); aff'd mem., 401 U.S. 967, 91 S. Ct. 1188, 28 L. Ed. 2d 318 (1971); Florida Citrus Commission v. United States, 144 F.Supp. 517 (N.D. Fla. 1956), aff'd mem., 352 U.S. 1021, 77 S. Ct. 589, 1 L. Ed. 2d 595 (1957); Koppers Co. v. United States, 132 F.Supp. 159 (W.D. Pa. 1955); Algoma Coal & Coke Co. v. United States, 11 F.Supp. 487 (E.D. Va. 1935). See also Aberdeen & Rockfish Railroad Co. v. SCRAP, 422 U.S. 289, 311-316, 95 S. Ct. 2336, 45 L. Ed. 2d 191 (1975); National Small Shipments Traffic Conference, Inc. v. United States, 321 F.Supp. 500 (S.D.N.Y. 1970). Congress has set forth a detailed statutory scheme for shippers such as plaintiffs to obtain review of the railroads' rate increases for coal or any other freight. 49 U.S.C. §§ 13, 15. As stated in Atlantic City Electric Co., the Courts should not 'tinker with the delicate and fragile machinery of rate fixing . . . until the administrative process has been meticulously and stringently followed and exhausted.' 306 F.Supp.at 342, quoting Koppers Co. v. United States, 132 F.Supp.at 163. Responsibility for setting railroad rates rests with the carriers and there is no requirement that the ICC review these rates at the present stage of the administrative proceedings. In view of plaintiffs' remedy under sections 13 and 15, their assumption of the role of 'private attorney general' is inappropriate.

 If the Court were to grant the injunctive relief sought by plaintiffs, the railroads under the statute could file new tariffs seeking to implement the rate increases. Moreover, the financial difficulties of the nation's railroads are a matter of public knowledge and have been aggravated by inflation.

 The Court rejects plaintiffs' contention that jurisdiction exists because the complaint alleges that the ICC procedures in this case were improper. As noted above, the issue with which plaintiffs are fundamentally concerned, i.e., the reasonableness of the increased railraod rates as to commodities purchased and shipped by plaintiffs, has yet to be considered by the ICC. See Alabama Power Co. v. United States, 316 F.Supp.at 338-39; Atlantic City Electric Co. v. United States, 306 F.Supp.at 341-42. Also, if they desire, plaintiffs may seek judicial review upon completion of the section 13 proceedings. *fn7" See Atlantic City Electric Co. v. United States, 306 F.Supp.at 343.

 Accordingly, defendant ICC's and the railroad intervenors' motions to dismiss the plaintiffs' complaint are granted.

 It is so ordered.


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