United States v. Florida East Coast Railway Company

PETITIONER: United States
RESPONDENT: Florida East Coast Railway Company
LOCATION: Allegheny County District Court

DOCKET NO.: 70-279
DECIDED BY: Burger Court (1972-1975)

CITATION: 410 US 224 (1973)
ARGUED: Dec 07, 1972
DECIDED: Jan 22, 1973

A. Alvis Layne - for appellee Florida East Coast Railway Co
Richard A. Hollander - for appellee Seaboard Coast Line Railroad Co
Samuel Huntington - for appellants

Facts of the case


Media for United States v. Florida East Coast Railway Company

Audio Transcription for Oral Argument - December 07, 1972 in United States v. Florida East Coast Railway Company

Warren E. Burger:

We’ll hear arguments next in 70-279, United States against Florida East Coast Railway.

Mr. Huntington, you may proceed whenever you’re ready.

Samuel Huntington:

Mr. Chief Justice and may it please the Court.

This case is here on direct appeal from a three-judge District Court sitting in the Middle District of Florida.

The District Court enjoined the enforcement of Interstate Commerce Commission Rules prescribing an incentive element to be added to the daily rentals that one railroad pays to another for the use of its boxcars.

The basic question presented is whether the Commission should have afforded the appellee, Railroads, in oral hearing prior to promulgating the rules.

The incentive per diem rules here in issue were promulgated under Section 114 (a) of the Interstate Commerce Act.

That section authorizes the Commission, after hearing, to establish reasonable rules with respect to car service including the compensation to be paid for the use of freight cars.

Under a 1966 amendment to that section, the Commission may, in fixing that compensation, prescribe an incentive element to improve the use of existing cars and to encourage the acquisition of new cars.

Freight car shortages have been a serious and recurring problem throughout most of this century.

In recent years, the Commission, with the strong encouragement and support of Congress, has been moving on a number of fronts to combat this problem.

Just last term in the Allegheny-Ludlum case, this Court upheld two car service rules promulgated by the Commission under Section 114 (a).

Those rules governed the return of unloaded freight cars to their owners.

The instant rule making proceeding was initiated by the Commission in 1967 after an earlier proceeding had been dismissed for warrant of sufficient evidence.

In initiating this proceeding, the Commission ordered the railroads to participate in a nationwide study of freight car shortages.

During an 11-month period in 1968, over 32,000 reports were filed from state stations throughout the country-- no, it were filed from about 2,600 freight stations throughout the country.

Each report listed for a given day at a given station: (1) the freight cars ordered by shippers for delivery on or before that day, (2) the number of cars available at that station for placement to shippers, and (3) the number of cars actually delivered to shippers during that day.

Extensive field audits were conducted by Commission personnel to assure that the reports were filed and filled out directly and, also, to assure that they did not reflect over-auditing of cars by shippers.

The collective data were put on magnetic tapes and were available to the railroads.

In December 1969, the Commission issued an interim report containing an analysis of the data collected from the study and proposing a rule establishing a scale of incentive per diem charges for plain boxcars.

In appendices to the report, the Commission described in detail the methodology employed by the study and set forth a series of tables and graphs showing the results of the studies-- the study for plain boxcars.

The study showed that there were deficiencies in placements of freight cars with shippers throughout the year, but that the deficiencies were most severe during the heavy traffic months from September through February each year.

The study also revealed that, at the same time the deficiencies were reported by some freight stations, surpluses of cars would be reported by other stations frequently on the same railroad.

Analyzing these data, the Commission included that, at least during the peak period from September through February each year, the surpluses were not sufficient so that the railroads could be expected to eliminate the deficiencies simply by using their boxcars more efficiently.

The Commission, thus, concluded that the existing supply of plain boxcars was inadequate.

It does propose the incentive per diem rules to be applicable during the six-month heavy loaded-- heavy traffic period of each year.

Now, the proposed incentive rules were designed by the Commission to do two things.

First, they were designed to improve the utilization of existing cars and, second, they were designed to provide funds to those railroads who earned per diem income than they paid out with which to purchase new freight cars to augment the national supply.

William H. Rehnquist:

Purchasing railroads own the new freight cars outright?

Samuel Huntington:

Yes, they would.