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NATIONAL MOTOR FREIGHT TRAFFIC ASSN., INC. v. UNIT

May 15, 1967

National Motor Freight Traffic Association, Inc., et al. Plaintiffs,
v.
United States of America et al., Defendants



The opinion of the court was delivered by: MCGOWAN

Plaintiffs and intervening plaintiffs, who are associations of motor freight carriers and freight forwarders subject to regulation by the Interstate Commerce Commission, seek nullification of the Commission's action in establishing an informal procedure for the restoration to shippers of past charges which are currently agreed by the carrier and shipper to have been illegal. Certain shippers' associations have intervened as party defendants with the Commission and the United States. All parties have stipulated that we should dispose of the case without evidentiary hearing and upon the pleadings, briefs, and oral arguments. The stipulation also identified the issues in the case as four in number: (1) The standing of the complainants to seek relief, (2) the ripeness of the Commission's action for review, (3) the statutory authority for that action, and (4) the reach of the Administrative Procedure Act with respect to it.

We have concluded, in respect of the first two of these issues, that plaintiffs are rightfully before us and in due season. We do not reach the third, because we have resolved the fourth in favor of the applicability of Section 4 of the APA. Since any effort at compliance with Section 4 is expressly disclaimed by the Commission, we hold that the complainants are entitled to the relief they seek.

 I

 This case has its roots in T.I.M.E., Inc. v. United States, 359 U.S. 464, 79 S. Ct. 904, 3 L. Ed. 2d 952 (1959), and the Congressional response to that decision. The Supreme Court there held that there was neither a statutory nor a common law right in the shipper by motor freight to assert the illegality of past charges under legally effective tariffs, either to recover allegedly excessive charges already paid or to defend against efforts to collect at the filed rate for service rendered under it. In reaching this result, the Court was strongly motivated by the circumstance that Congress had omitted from the Motor Carrier Act of 1935 the grant of reparations power to the Commission which it had made in the case of the railroads and water carriers. The Court did not, however, merely recognize the undisputed lack of a solely statutory administrative proceeding for reparations of past motor carrier rates. It proclaimed as well a legislative purpose that there should be no common law right to litigate past rates in a judical setting. *fn1"

 T.I.M.E. set off a swirl of legislative activity which issued in essentially identical amendments to Parts II and IV of the Interstate Commerce Act in 1965. *fn2" these operated to recognize a judicially-enforceable right to reparations in respect of past charges. Congress continued to withhold from the Commission any power to compel reparations by administrative action, although the scheme of the amendments was such as to vest in the Commission the determination of the issue of whether the rates charged were illegal. In this latter respect, the Congress was, of course, following the pattern which has characterized the procedure followed by courts in entertaining reparations suits against railroads. *fn3"

 This action was taken by the Commission, and announced to the public, without prior notice of any kind and without the provision of opportunity to any interested party to be heard with respect to it. After the "Notice" was issued on December 17, 1965, plaintiffs petitioned the Commission for reconsideration. This petition was denied by the Commission in an order served June 9, 1966.

 II

 The threshold issues of standing and ripeness are not as separate and distinct as their consecutive enumeration in the stipulation might perhaps imply. They are, at most, variant aspects of the essential question we confront at the outset, namely, have the plaintiffs brought to us a firm and significant determination by the Commission which has a ponderable impact upon interests of substance of the plaintiffs and which can meaningfully be considered by us without awaiting its application to the facts of a particular case? We think they have, and that, conversely, a turning away of the plaintiffs at this juncture would not comport with the values implicit in the rule-making requirements of the Administrative Procedure Act. It will not do for the courts to invite greater resort by the agencies to general rule-making, *fn5" and at the same time to rebuff at the courthouse door those affected by the rule who seek an appropriate, albeit early, test of its validity.

 The interest of the plaintiffs is clear. As organizations they have standing to pursue the concerns of their members. National Motor Freight Traffic Ass'n v. United States, 372 U.S. 246, 247, 9 L. Ed. 2d 709, 83 S. Ct. 688 (1963). And those concerns seem to us neither insubstantial nor wholly sheltered from adversities latent in the Commission's action. The Commission's principal contention on this matter of aggrievement is that plaintiffs overlook the limitation of the new procedure to the case where the formerly effective rate has been changed. It insists that this means that plaintiffs will have had an opportunity to protest the filing of the altered rate and to be heard in opposition to it. Therefore, concludes the Commission, plaintiffs cannot pitch their present claim of aggrievement upon the loss of a chance to defend a rate which they believe to be reasonable.

 The difficulty with this position, as plaintiffs pertinently point out, is that, when a new and lower rate is filed, it may be within a range of reasonableness which comprehends the old rate as well. As to a competing carrier, the issue presented by the new filing is whether the new rate is too low, not whether the old was too high; and approval by the Commission of the new rate does not embrace a determination by it that the old one was illegal. But it is this latter determination which is precisely the object of the new procedure. Where shipper and carrier agree that an old rate was illegal, the mere meeting of their minds does not make it so; and there is very real danger that, rightly or wrongly, their agreement may be suspect as involving a discriminatory rebate. This is why that agreement is to be subjected to Commission scrutiny under the informal procedure; and we have the Commission's own word for it, in its order denying plaintiffs' petition for reconsideration, that "each application will be thoroughly investigated to make certain that the applicable rates were in fact unlawful under the principles of the Act." Thus, a rate filed by Carrier A, which it has not changed, may, upon an application under the informal procedure by Carrier B who has filed a new and lower rate, be found by the Commission to be illegal. And all this would be without notice to Carrier A or any provision for its being heard on the question. It does not take too much familiarity with the realities of competitive transportation to believe that, although it be assumed for the moment that the informal procedure is within the Commission's power, plaintiffs have at least the kind of interest which entitles them to mount in court a challenge to the existence of that power.

 As to the timeliness of this attack, Judge Friendly has recently illumined the relevant considerations with the usual perceptivity which he brings to bear in this field. In Toilet Goods Ass'n Inc. v. Gardner Secretary of Health, Education and Welfare, 360 F.2d 677, 684-685 (2d Cir. 1966), he said:

 
The appropriateness of passing judgment on the validity of an administrative regulation prior to its application to particular facts depends on such factors as how far the rule represents the definitive position of the agency and the extent to which the challenge raises a clearcut legal issue susceptible of judicial solution without reference to fact variables arising in its implementation. Cf. Northeast Airlines, Inc. v. CAB, 345 F.2d 662, 664 (1 Cir. 1965). Review might be considered premature where an agency rule had not received substantially as full consideration in its formulation as it would have in subsequent application, or where future experience would be likely to result in significant modifications as to its precision or scope. Judicial determination might also be deemed inappropriate where the controversy ...

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