National Ass'n of Food Chains, Inc. v. Interstate Commerce Commission
Opinion of the Court
I. BACKGROUND
This petition for review challenges a decision of the Interstate Commerce Commission which limited the scope of service which must be offered by the class of motor common carriers known as meat haulers. Petitioner National Association of Food Chains (“NAFC”) is a nonprofit organization of retail food chains; the other petitioner, the Eastern Meat Packers Association (“EMPA”), is a trade association of independent meat packers. The intervenors are motor common carriers that transport loose meat and carcass meat pursuant to authorization by the Commission.
Prior to 1958, tariffs for the transportation of loose and carcass meats generally provided for unloading by the receiver (consignee) rather than by the carrier. In 1958
On November 15, 1968, the Commission initiated an investigation into the lawfulness of the new tariffs,
On July 11, 1969, Review Board No. 4 of the Commission ordered cancellation of most of the consignee unloading provisions on the ground that the carriers had not shown the proposed limitation of service to be just and reasonable without a concomitant reduction in line-haul rates. Unloading Restrictions on Meats and Packinghouse Products, 335 I.C.C. 391 (July 11, 1969). The Commission found it impossible to state how much carrier unloading actually had taken place under the tariffs in effect from 1958 to 1968;
“The evidence submitted by respondents deals mainly with the reasons which lead them to publish the proposed ‘no-unloading’ rules. As stated on brief for a group of respondents, ‘the crux of the issue involved herein was the unloading practices that the carriers have been subjected to when cargo of the type here involved was tendered for delivery to consignees in the East and in the South.’ According to respondents, such unloading practices (referred to sometimes as ‘abuses’) by or at the premises of consignees have included: refusal by a consignee to permit the truck driver to unload when ready, or at all; coercion of the driver into employment of a particular unloading crew, consisting in some cases of consignee personnel and sometimes of persons of obscure identity; imposition of an arbitrary unloading charge in the range of from $40 to $45 and sometimes more.”
335 I.C.C. at 396. The Commission agreed “in principle” that the carriers had adequate reason to publish rates which did not include unloading services; the tariffs were rejected because there had not been a cost showing that the line-haul rates would be just and reasonable for the diminished service.
The carriers sought judicial review of the Review Board’s decision, and the case was remanded to the Commission for further hearings in Refrigerated Transport Co. v. United States, 313 F.Supp. 880 (N.D.Ga. 1970). The court held that the ICC had given insufficient notice that it intended to investigate both the rules and the rates proposed in the 1968 tariffs, and ordered that the carriers be given an opportunity to present economic justification of their line-haul rates without unloading service.
One result of the orders issued by the court in Refrigerated Transport was that the proposed “no-unloading” tariffs were able to become effective by late 1969. The court’s temporary restraining order, issued November 28, 1969, and the decision on the merits had the effect of reopening the Commission’s investigation, thus limiting the Commission to a seven-month suspension of the tariffs before they became effective. 49 U.S.C. § 316(g).
Judge Allard’s extensive criticism of the carrier’s cost data is not the subject of review in this proceeding. At issue is the threshold question whether the carriers operate under an unavoidable obligation to provide unloading service. Judge Allard founded his decision on the Commission’s requirement that a common carrier extend “complete service” under its authority,
“The fact that [unloading] service has been provided for many years has become the custom and trade practice. . . . Thus, even assuming, arguendo, that respondents initially did not have the obligation to unload, ordinary considerations of fairness in the Marketplace dictate that once an obligation, such as unloading, has been assumed by the carrier as part of its line-haul service and trade practices have developed in reliance thereon, that obligation becomes fixed upon the carriers.
“Even respondents acknowledge that at least since 1958, it has been the general custom and practice of the trade for them to unload loose and carcass meat. . [T]he fact that unloading has been provided for over 10 years is sufficient to establish it as a general custom and trade practice upon which shippers and consignees have come reasonably to rely. . . .
“Because of the inability of some consignees to unload loose and carcass meats, the record shows that at least some protestants have had difficult making sales, and have lost important customers . in the Southeastern Territory since the proposed rule became effective. Particularly hard-hit by the proposed rule have been shippers, such as Hormel, who cannot readily ship to the Southeast from plants in territories not affected by the proposed rule, as can many of its competitors. In addition, all Midwestern shippers have been competively injured by the proposed rule, vis-a-vis local meat-packers, who because of their proximity to the destination territory, do not have to rely upon common carriage to distribute their products, but can use private carriage instead.”
Slip op. at 29.
On appeal to the Commission, Judge Al-lard’s decision was affirmed substantially in
“[W]e conclude that the question whether loading or unloading, in connection with pickup and delivery, is an essential part of the transportation service must depend upon a case-by-case analysis of the terms of a carrier’s outstanding authority in light of the statutory obligation to provide a complete service, the characteristics of the commodities transported, and the commercial needs and practices of the industry or shippers served.”
346 I.C.C. at 792. The Commission concluded that there was a demonstrated commercial need for unloading services, and that the hardship that would be caused some consignees and shippers made elimination of the service an inappropriate response to the alleged abuses:
“As to whether a commercial necessity exists for carrier unloading, [t]he main thrust of [the] . . . evidence is that there is a commercial need for carrier unloading since consignee unloading is not feasible, costwise, and cannot be undertaken by small receivers of these commodities. .
“Respondents have capably performed unloading in the past and can continue to do so if abuses at consignee’s docks are eliminated. Total curtailment of unloading functions is not shown to be necessary to alleviate these abuses. . To completely end carrier unloading services adequately performed in the past for those consignees which have not created the problems for respondents is unwarranted. Such consignees will suffer unnecessary hardships if respondents are permitted to curtail all unloading.”
346 I.C.C. at 793, 794. Rejection of the proposed tariffs was held to be unconditionally mandated by both the Commission’s regulations and the national transportation policy:
“In sum, the proposed consignee unloading rules are (1) unnecessary to prevent the abuses that have occurred, and (2) violate this Commission’s tariff regulations requiring carriers to offer substantially the full scope of their authorized operations, consistent with the statutory requirement of section 216(b) that adequate and complete service be provided. It would be wholly inconsistent with our basic philosophy of regulating transportation for us to allow carriers to disregard their responsibilities to provide needed services, and deprive the public of services it has been accustomed to receiving. Were we to permit this to occur, the entire congressional concept of regulation in accordance with the provisions of the national transportation policy would be defeated. ”
346 I.C.C. at 795 (emphasis added). Three Commissioners dissented, contending that the ten years of operation between 1958 and 1968 did not represent sufficient evidence of “trade practice” to create a legal duty. The dissenters also emphasized that it was unfair to impose as a legal duty a service the carriers had added with no increase in rates.
The October 18th decision prompted a large number of petitions for reconsideration. In its decision on reconsideration, issued March 14, 1975,
“In view of this general shipper and consignee acquiescence in a consignee-unloading rule when accompanied by a reduction in rates, we are no longer persuaded that there is a commercial need for carrier unloading. It appears, rather, that much of the shipper and consignee opposition to the proposal in the present proceeding stemmed from a desire for lower rates rather than a need for actual unloading by carrier employees. In addition to these circumstances, we note that consignee unloading has, in fact, been the prevalent practice over the years, that carrier unloading provisions have tended to result in abusive practices toward carrier personnel, and that health regulations of various localities prohibit unloading of loose and carcass meats by carrier employees. In the absence of an actual necessity of consignees for carrier unloading, we think that these considerations are sufficient reason not to require maintenance of carrier unloading provisions.”
349 I.C.C. at 199. The effect of the Commission’s decision on reconsideration was to require carriers who wished to abandon their unloading service to file reduced line-haul rates which could be justified as reasonable for the reduced service.
Petitioners contend (1) that the Commission’s inference of consignee acquiescence to elimination of carrier unloading services at a lower line-haul rate was unreasonable and unsupported by the evidence, (2) that the Commission’s conclusion that there is no commercial necessity for carrier unloading was unsupported by substantial evidence, and (3) that the Commission’s order contravened the National Transportation Policy
II. THE STANDARD OF REVIEW
The Commission’s order is the product of informal rulemaking under Section 4 of the Administrative Procedure Act, 5 U.S.C. § 553(c).
If it is established that the Commission has presented a rational basis for its action, our function is at an end. It is not for us to inquire into whether the decision, in this case to limit the statutory obligation of meat haulers to offer unloading services, is wise as a matter of policy, for that is left to the discretion and developed expertise of the agency.
“Judicial vigilance to enforce the Rule of Law in the administrative process is particularly called upon where, as here, the area under consideration is one wherein the Commission’s policies are in flux. An agency’s view of what is in the public interest may change, either with or without a change in circumstances. But an agency changing its course must supply a reasoned analysis indicating that prior policies and standards are being deliberately changed, not casually ignored, and if an agency glosses over or swerves from prior precedents without discussion it may cross the line from the tolerably terse to the intolerably mute.”
Our scope of review is defined by the above-cited precedent. We must determine whether the Commission has supplied a rational basis for its order; that is, whether it demonstrably has given reasoned consideration to the issues, and has reached a result which rationally flows from its conclusions.
III. THE BASIS OF THE MARCH 14 ORDER
A. Consignee and shipper acquiescence
The Commission’s October 18 decision did not mandate that all meat haulers provide in their tariffs for a carrier unloading service. Rather, it recognized that unloading practices differed substantially, and concluded that the question whether unloading was essential depended on a case-by-case analysis of (1) the terms of the carrier’s outstanding authority in light of the statutory obligation to provide a complete service, (2) the characteristics of the commodities transported, and (3) the commercial needs and practices of the industry or shippers served. 346 I.C.C. at 792.
Rather than following that policy of case-by-case analysis, the Commission chose to infer from the lack of protests in another docket that shippers and consignees would consent to consignee unloading if offered at reduced line-haul rates. It does not appear that any such acquiescence ever existed. Petitioners cite extensively in their brief to their challenges throughout the investigation to abandonment of unloading service under any circumstances,
The Commission has defended its use of official notice by observing that two of the nations’ largest meat packers, Swift Fresh Meats Company and Armour and Company, actively supported the proposed tariffs in the noticed proceeding. Respondents’ brief at 16. Petitioners have replied, however,
It is undeniable that the Commission placed substantial reliance on its conclusion of acquiescence in its decision on rehearing. The Commission’s conclusion, quoted above, was that “In view of this general shipper and consignee acquiescence ... we are no longer persuaded that there is a commercial need for carrier unloading.” 349 I.C.C. at 199. The Commission then recited the additional considerations (1) that consignee unloading has been the prevalent practice, (2) that carrier unloading has resulted in abuses, and (3) that health regulations of various localities prohibit carrier unloading, and concluded that “[i]n the absence of an actual necessity of consignees for carrier unloading, we think that these considerations are sufficient reason not to require maintenance of carrier unloading provisions.” Id. (emphasis added)
[7] To the extent that the Commission’s decision was based on shipper and consignee acquiescence, its decision is not adequately supported. Both the Commission and the intervenors, however, have argued that the additional considerations listed in the decision establish a rational basis for the conclusion that there is no “commercial need” for carrier unloading.
B. Commercial Need
Prior to its decision on reconsideration, the Commission consistently had rejected the contention that an absence of commercial need for carrier unloading could be established by trade practice, consignee abuses, or problems with local health regulations. In accepting that contention on reconsideration, the Commission abandoned its “case-by-case” approach in favor of a decision of general application. It is not for us to ask whether this choice was the best policy decision; under the narrowed standard of review applicable to this appeal, our sole concern is whether the Commission has given reasoned consideration to the problem and has presented a rational basis for its decision.
The first consideration recited by the Commission was that consignee unloading has, as a practical matter, been the prevalent practice “over the years.” If supported, this observation could be an adequate ground for the general conclusion that carrier unloading is neither a matter of trade practice nor a commercial necessity. The Commission, however, provided no further discussion of its conclusion, and its unelaborated statement is insufficient basis for rejection of the extensive discussions by Administrative Law Judge Allard and by the Commission itself in its original decision.
Judge Allard, as noted above, found that it had become trade practice to rely upon carrier unloading, and concluded from “ordinary considerations of fairness” that the ten years during which shippers and consignees came to rely upon carrier unloading had created the obligation to continue the service. Respondents and intervenors all have attacked this conclusion on the same grounds, alleging that the ten-year period 1958-1968 was an aberration, with very little carrier unloading being performed either before or after that period.
Even were we to accept this argument, it was not made by the Commission in its order and cannot be a basis for affirmance. SEC v. Chenery Corp., supra. Although a “decision of less than ideal clarity” must be upheld “if the agency’s path may reasonably be discerned,” Bowman Transportation, Inc. v. Arkansas-Best Freight System, Inc., supra, 419 U.S. at 486, 95 S.Ct. at 442, we are unable to discern the Commission’s basis for its action.
The Commission had already rejected the contentions based on examination of time spans alone. It appears that the institution of carrier unloading in 1958 was designed to improve the market share of the common carrier meat haulers, and was the foundation of the motor common carriers’ success
The lack of carrier unloading before 1958 is of lessened significance if carrier unloading was the instrument by which the carriers were able to compete successfully. As for the fact that much carrier unloading has been discontinued since 1969, it must be remembered that this entire period represents the delay during which the proposed tariffs were effective pending final decision by the Commission. In the absence of an explanation by the Commission of its changed position on reconsideration, we cannot infer that the Commission has determined that its own proceedings were sufficiently protracted to establish the proposed tariffs as a trade practice.
It must be concluded that the Commission did not demonstrate a rational basis for its conclusion that consignee unloading has been the custom and trade practice over the years, and that there is not a commercial need for carrier unloading. The Commission’s two other possible grounds for its decision are (1) the alleged abusive practices toward carrier personnel and (2) that health regulations of various localities prohibit unloading of loose and carcass meats by carrier employees.
It must be noted that even if there were substantial factual bases for both considerations, they alone may not justify a decision that all of the carriers were entitled to discontinue unloading services. The Commission expressly so held in its October 18 decision, in which it concluded both that “[t]otal curtailment of unloading functions is not shown to be necessary to alleviate [the] abuses,” and that “the practices of consignees, of charging the carriers for unloading with special help allegedly required by local health or other requirements” could not sanction complete elimination of unloading services. 346 I.C.C. at 794, 795.
Considering the abuses alleged by carriers in the form of extortion by loading personnel at the consignees’ docks, the Commission suggested that the carriers establish two-tier tariffs under which unloading would be provided only if elected by the consignee, admonished the consignees that “any recurrence of these or similar abuses will force us to take appropriate corrective action,” and concluded that consignees which had not caused problems should not be forced to suffer for the acts of others. 346 I.C.C. at 794-795. The Commission had considered the “health regulation” arguments to be subject to the same reasoning.
The examples of abuses cited by the intervenors (e. g., Brief of intervening respondents Altruk Freight System, et al., at pp. 46-51) do not add to this analysis. The intervenors allege that a two-tier tariff is
In its order on reconsideration, however, the Commission did no more than recite the problems of abuses and health regulations, without indicating why it had chosen to reject the reasoning of its initial decision. We will not postulate possible explanations, nor weigh the complaints of intervenors about the two-tier system. Judicial review can be meaningful only if we are fully informed of the bases of agency action, and the order under review is singularly lacking in information. It must be concluded that the Commission did not demonstrate that its conclusion as to the commercial need for unloading services was supportable on the record before it.
IV. CONCLUSION
Viewed in the most favorable light, the Commission’s order on reconsideration is lacking in the sort of reasoned consideration that is necessary for judicial review. We may not reverse agency action when a rational basis has been presented, and it would be equally irresponsible for us to affirm agency action when no rational basis is apparent.
The Commission’s order on reconsideration is vacated, and the case remanded for further proceedings not inconsistent with this opinion.
. The intervenors that have participated in briefing are Refrigerated Transport Co., Inc., Southern Motor Carriers Rate Conference, Inc., Altruk Freight Systems, Central and Southern Truck Lines, Inc., Clay Hyder Trucking Lines, Inc., Coldway Food Express, Inc., Colonial Refrigerated Transportation, Inc., Indiana Refrigerator Lines, Inc., Rowley Interstate Transportation Co., Inc., Subler Transfer, Inc., Tompkins Motor Lines, Inc., and Watkins Motor Lines, Inc.
.The lead docket is entitled Unloading Restrictions on Meats and Packinghouse Products, Docket No. 35054. The various proceedings are described in the decision of ICC Review Board No. 4, Unloading Restrictions on Meats and Packinghouse Products, 335 I.C.C. 391 (1969).
. John Morrell & Co. v. United States, Civil No. 68-C-1818 (N.D.Ill. Oct. 2, 1968); 7owa Beef Packers, Inc. v. United States, Civil No. 68-C-2043-C (N.D.Ill. Nov. 28, 1968).
. Witnesses estimated that even under the carrier-unloading tariffs consignees chose to do their own unloading in anywhere from 10 to 40% of the time. 335 I.C.C. at 397 n. 8.
. In Restrictions on Service by Motor Common Carriers, 111 M.C.C. 151 (1970), the Commission adopted 49 C.F.R. § 1307.27(k), which provides in pertinent part that “No provision may be published in tariffs . . . which results in restricting service to less than the carrier’s full operating authority. . . The Commission reasoned as follows:
“Common carriers by motor vehicle are a public institution upon which the general public must depend for adequate, economical, and efficient transportation. They are engaged in what has always been regarded as a public calling, and by reason of that fact they are subject to specific legal obligations. . . This Commission’s regulatory powers over motor common carriers under the Interstate Commerce Act are designed to enforce these basic obligations comprehensively and strictly. Motor common carrier authority to serve imports a corresponding duty and obligation to serve.”
Ill M.C.C. at 161. The Commission’s action was based on the National Transportation Policy, the preamble to the Interstate Commerce Act, which declares the purpose of regulation to be, inter alia, “to recognize and preserve the inherent advantages of each” mode of transportation, and “to promote safe, adequate, economical, and efficient service and foster sound economic conditions in transportation .
. Unloading Restrictions on Meats and Packinghouse Products, 349 I.C.C. 189 (1975).
. See n. 5, above.
. 5 U.S.C. § 553(c): “After notice required by this section, the agency shall give interested persons an opportunity to participate in the rule making through submission of written data, views, or arguments with or without opportunity for oral presentation. After consideration of the relevant matter presented, the agency shall incorporate in the rules adopted a concise general statement of their basis and purpose. When rules are required by statute to be made on the record after opportunity for an agency hearing, sections 556 and 557 of this title apply instead of this subsection.”
The Interstate Commerce Act, although requiring that ratemaking orders be made “after hearing,” 49 U.S.C. § 316(g), does not trigger a requirement that the Commission provide a hearing fulfilling all the requirements of Sections 556 and 557 of Title 5. See United States v. Florida East Coast Railway Co., 410 U.S. 224, 234-238, 93 S.Ct. 810, 815, 35 L.Ed.2d 223, 232 (1973).
.See Pederson, Formal Records and Informal Rulemaking, 85 Yale L.J. 38, 45-50 (1975); Note, Judicial Review of the Facts in Informal Rulemaking: A Proposed Standard, 84 Yale L.J. 1750 (1975).
. Our review is guided by the Supreme Court’s formulation in Citizens to Preserve Overton Park v. Volpe, 401 U.S. 402, 416, 91 S.Ct. 814, 823, 28 L.Ed.2d 136 (1971):
“Section 706(2)(A) requires a finding that the actual choice made was not ‘arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.’ 5 U.S.C. § 706(2)(A) (1964 ed., Supp. V.) To make this finding the court must consider whether the decision was based on a consideration of the relevant factors and whether there has been a clear error of judgment. . . . Although this inquiry into the facts is to be searching and careful, the ultimate standard of review is a narrow one. The court is not empowered to substitute its judgment for that of the agency.”
. Petitioners’ brief, 23-31. Petitioners clearly have pressed their objection to required consignee unloading from 1969 (e. g., NAFC Statement, February 21, 1969, App. 354-358: “Many of the receiving locations of NAFC members are totally unable to furnish unloading services for a vast variety of reasons including the inexact scheduling of motor vehicles. It would be impractical and unreasonably burdensome to require a food chain to have a crew available to unload motor carriers immediately upon arrival. It is NAFC’s position that the unloading of meats at destination is a service already properly included under line haul rates and in no circumstances could NAFC agree to tariff publications providing otherwise.”) through argument on the motions for reconsideration of the October 18th decision (e. g., EMPA Reply to Petitions for Reconsideration, February 3, 1975, App. 203-206: “Refrigerated contends that, as far as it is concerned, this proceeding should only determine what rate reduction is necessary in order to discontinue carrier unloading. EMPA cannot agree with Refrigerated’s interpretation of the purpose of this proceeding. . . . The proper solution to this problem is a dual rate level whereby one rate level (the current rate level) is maintained wherein the carriers provide the unloading service and a second, lower rate level is maintained wherein the carriers do not unload.”).
. “The main thrust of this evidence is that there is a commercial need for carrier unloading since consignee unloading is not feasible, costwise, and cannot be undertaken by small receivers of these commodities. A significant point is raised in the evidence submitted by Colonial Stores. It switched from rail to motor service for 60 percent of its shipments when respondents serving this consignee represented they would haul the products in specialized service directly to consignee’s docks in mechanically refrigerated vehicles equipped with rails and hooks and the carriers’ drivers would be willing and able to unload. Since the consignee unloading rule became effective in 1968, Colonial has diverted 95 percent of its 40 truckloads a week to rail piggyback or motor carriers in other territories which do not have the consignee-unloading rule.” 346 I.C.C. at 793.
. As our decision is grounded on the Commission’s failure to provide a rational basis for its action, we do not reach the question whether the statutory obligation of the carriers to provide a complete transportation service includes a requirement that unloading services be offered. See n. 5, above.
Reference
- Full Case Name
- NATIONAL ASSOCIATION OF FOOD CHAINS, INC. and Eastern Meat Packers Association v. INTERSTATE COMMERCE COMMISSION, Colonial Refrigerated Transportation, Inc., Intervenors
- Cited By
- 39 cases
- Status
- Published