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BAKER v. UNITED STATES

February 16, 1972

George P. BAKER et al.
v.
UNITED STATES of America and Interstate Commerce Commission



The opinion of the court was delivered by: GORBEY

Plaintiffs, a number of railroads servicing the Northeastern part of the United States, ask us to deny enforcement of certain orders entered by the Interstate Commerce Commission (Commission) in Increased Waterborne Charge, North Atlantic, Pacific and Canadian Ports. 337 I.C.C. 534 (1970). *fn1" Specifically, the Commission found that a proposed increase, as set out in tariff schedules published by plaintiffs, had not been shown to be just and reasonable. Plaintiffs had proposed an increase in the charge from 12 cents to 16 cents per hundredweight on waterborne traffic moving through the North Atlantic ports. *fn2"

The plaintiffs were originally opposed by the United States and the Interstate Commerce Commission. Certain North Atlantic port interests *fn3" and certain shippers *fn4" sought and were granted leave of court to intervene as defendants under 28 U.S.C. § 2323 and Fed. R. Civ. P. 24(a).

 Preliminarily, we shall examine the history of the waterborne charge. In 1958, as part of the general rate proceeding, the railroads proposed a new charge of 6 cents per hundredweight to the line-haul rates on export, import, coastwise and intercoastal freight moving through all United States ports. The Commission concluded that the respondent railroads had met their burden of proof and that the new charge and the resulting line-haul rates on such waterborne traffic were just and reasonable and otherwise lawful. Increased Freight Rates, 1958, Ex Parte 212, 304 I.C.C. 289 at 356. The waterborne charge has been increased three times since 1958. In 1960, as part of a general rate proceeding, the Commission, finding no probable cause for suspension or investigation, permitted a proposed 1 cent increase in the waterborne traffic charge to become effective. In 1965 and 1967, increases of 2 cents and 3 cents respectively were permitted to become effective, the Commission filing no reports, making a grand total of 12 cents per hundredweight in the waterborne charge.

 Since the general rate increase in 1960, there have been five general increases in the total line-haul rate. *fn5"

 Broadly, the issue before us is whether the Commission's report and order can withstand the court's scrutiny under 5 U.S.C.A. § 706. *fn6" The scope of judicial review of administrative decisions is commonly described as being limited to the requirement that there be substantial evidence on the record to support agency findings. Substantial evidence has been characterized as "such relevant evidence as a reasonable mind might accept as adequate to support a conclusion." Consolidated Edison Co. v. NLRB, 305 U.S. 197, 229, 59 S. Ct. 206, 83 L. Ed. 126 (1938). Even if we should find the weight of the evidence against the Commission's decision, this would not, in itself, be sufficient for reversal. Consolo v. Federal Maritime Commission, 383 U.S. 607, 620, 86 S. Ct. 1018, 16 L. Ed. 2d 131 (1966). A finding of substantial evidence must, however, be based on the record as a whole and not merely on that part which happens to be favorable to the agency's finding. Universal Camera v. NLRB, 340 U.S. 474, 71 S. Ct. 456, 95 L. Ed. 456 (1951).

 However, this court's function in reviewing the Commission's determination is sharply restricted. The judicial function is exhausted when there is found to be a rational basis for the conclusions approved by the administrative body. Mississippi Valley Barge Line Co. v. United States, 292 U.S. 282, 286-287, 54 S. Ct. 692, 78 L. Ed. 1260 (1934). Particularly compelling is this restrictive standard when the order the court is asked to review concerns the justness, reasonableness and lawfulness of railroad tariffs. Eastern Express, Inc. et al. v. United States et al. (S.D. Ind. 1961), 198 F. Supp. 256, aff'd 369 U.S. 37, 82 S. Ct. 640, 7 L. Ed. 2d 548. Such judgments and the economic considerations necessarily entailed therein have been entrusted by Congress to the Commission subject to our limited review.

 Statute mandates that the burden of proving the reasonableness of a change in rates is on the parties proposing the change. 49 U.S.C. § 15(7).

 It is the Commission's duty under law to set forth the basic or essential findings to support its ultimate conclusion. *fn7" Where the ultimate conclusion is, as here, a negative one, that the railroads have not sustained their burden, that determination need only be supported by such basic findings of fact to warrant a reviewing court to conclude that the Commission was not without rational grounds for refusing to find the proposed tariffs just and reasonable within the meaning of the Interstate Commerce Act. *fn8" New York Central R. Co. v. United States, 99 F. Supp. 394, 401 (D.C. Mass. 1951), aff'd, I.C.C. v. New York Central R. Co., 342 U.S. 890, 72 S. Ct. 201, 96 L. Ed. 667 (1961).

 The Commission determined that port terminal services associated with waterborne traffic had substantially decreased since the additive had been approved in 1958. 337 I.C.C. 534, 540-541. The record amply supports this basic finding. Certain marine terminal facilities owned by the plaintiff carriers in 1958 at the ports of Baltimore, Boston and Philadelphia have been sold, leased out, or are inactive at the present time. (Exhibit no. 6, p. 2; Exhibit no. 30, pp. 2-3; Exhibit no. 31, p. 31) As compared to 1958, the performance of certain terminal services associated with waterborne traffic has decreased. *fn9" In Ex Parte 223, supra, at 416, the Commission permitted the proposed 1 cent increase to become effective finding "there has been no change in their port operations, but the costs of performing the services have risen substantially by reason of increased wages of railroad employees, increased rates paid to contract stevedores and increased port facility maintenance expenses." The record demonstrates that at least with regard to port operations this is not the situation at present. *fn10"

 While it may be admirable that the carriers have attempted to reduce costs associated with waterborne freight, it does not appear from the record they considered that fact in their cost presentation to the Commission. That adjustments for changing conditions should be made was recognized in Cancellation of Wharfage Absorption, 335 I.C.C. 477, 526-527 (1969) where the Commission stated:

 
"For respondents now to eliminate absorption of wharfage, which, among other port terminal expenses was a factor found to warrant the additive, without adjustment of the latter, would not be just and reasonable."

 The carriers argue that the increase in stevedore costs alone is sufficient to establish need for the proposed increase. The Commission concluded that this as well as other data presented by the carriers was "inconclusive" and found an "absence of clear and precise representative cost evidence demonstrating a need for additional revenues," Increased Waterborne Charge, supra, at 541. This finding is amply supported by the record or, to be more precise, from the absence thereof. For example, the carriers did not present the Commission with the unit costs of waterborne tonnage; nor was there a showing of the revenues received by the carriers for waterborne traffic services. The Commission could have been informed to what extent costs could have been reduced by the savings resulting from cancelled services. Furthermore, there was no attempt by the carriers to identify revenue accruing through assessment of the 12 cent additive increased by the general additives. *fn11"

 Generalizing, the Commission could have rationally found from the record before it that there was no showing, that total revenues received on waterborne freight were inadequate, nor, that the total expense of providing all terminal operations on waterborne traffic had increased. We do not deem it the Commission's duty under 5 U.S.C. § 556(c) to set forth in ...


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