Atlantic City Electric Co. v. United States

PETITIONER: Atlantic City Electric Co.
RESPONDENT: United States
LOCATION: Interstate Commerce Commission

DECIDED BY: Burger Court (1970-1971)

CITATION: 400 US 73 (1970)
ARGUED: Nov 12, 1970
DECIDED: Dec 08, 1970

Charles J. McCarthy - for the appellants in 106
Deputy Solicitor General Springer - for the appellee
James O’malley - for the appellants in 78

Facts of the case

The Interstate Commerce Commission (ICC) issued an order increasing freight rates on several commodities, including bituminous coal. The increases were issued at the request of several railroads because of a need for revenue to offset increased operating costs. Seven public utilities, who use large amounts of bituminous coal, sued to enjoin and set aside the order, claiming that the rates were unreasonable and the ICC’s order deprived them of due process of law. Several state departments of agriculture intervened as parties plaintiff, and several railroads intervened in support of the ICC. The district court granted the ICC’s motion to dismiss, holding that the utilities failed to exhaust the administrative remedies available under the Interstate Commerce Act. This case was heard by the U.S. Supreme Court on direct appeal.


Did the ICC act arbitrarily and capriciously in deciding to allow the rate increases?

Media for Atlantic City Electric Co. v. United States

Audio Transcription for Oral Argument - November 12, 1970 in Atlantic City Electric Co. v. United States

Warren E. Burger:

We'll hear arguments in number 78, Atlantic City Electric Co against the United States and others and Alabama Power Company and others against the United States number 106.

We'll wait just a moment or two Mr. McCarthy.

Mr. McCarthy.

Charles J. McCarthy:

Mr. Chief Justice, may it please the Court.

The issue in this case is the reviewability of an order of the Interstate Commerce Commission which authorizes the nation's railroads to raise their freight rates an average of 5% or nearly a half billion dollars a year.

I think it's important to have in mind just how this case arose.

The usual procedure followed by a railroad when it wishes to change a rate is to file the new rate with the commission, 30 days before its effective date.

During that 30 day period, the rate is subject to protest and to suspension and investigation.

If the commission determines not to suspend or investigate, the rate goes into effect, the commission's action is discretionary, not reviewable and one who wishes to complain of the rate must file a formal complaint.

On the other hand, if the commission decides to investigate the final order in the investigation proceeding is subject to judicial review.

In a general increase case, the procedures that must be followed are a little different.

There are three reasons for this.

There are outstanding orders of the Interstate Commerce Commission which prescribe rates.

Those rates can't be changed without commission authorization.

Then in every general increase, situations arise in which there is a lesser rate for a longer distance that applies for a shorter distance included within the longer, and that of course is a violation of Section 4 of the Act, unless the commission authorizes.

Finally there's the mechanical problem.

It's just not feasible to file increases in all the myriad railroad rates.

In a preferred procedure is to file a master tariff which includes all the increases and what are known as connecting link supplements.

These are supplements in each individual tariff which simply say that all of the rates in this tariff are subject to the increases in master tariff.

The commission's tariff filing rules don't permit that so in order to follow that procedure, it's necessary to get authority to depart from those rules.

The proceeding of which we seek review was initiated by the railroads by filing a petition asking for all three of these forms of relief.

The commission immediately granted the tariff filing authority requested and it modified outstanding orders and granted fourth section relief, only to the extent necessary to permit the tariffs to be filed.

At this point, the situation is similar to what it would have been had no such authority been required.

The rates are filed, they're subject to protest; they're subject to investigation and suspension.

There is one major difference though.

That is that the railroad -- that the commission could not at this point, simply say we won't investigate and that the rates going to affect because the commission has -- or the railroads have an obligation to get a modification of outstanding orders and fourth section relief before they can legally put these rates into effect.

And that's recognized by the railroads in their petition.

They ask that the rates be authorized only after hearing and after a finding at the general level will not be more and is just unreasonable.

The rates were protested.

The commission did suspend and the commission did initiate an investigation.