the Commission to eliminate it. The responsibility imposed by NEPA upon the Commission to "approach the maximum attainable recycling of depletable resources," 42 U.S.C. § 4331(b) (6), surely cannot be fulfilled unless this provision is complied with before rate increases on recyclable commodities are approved.
We thus conclude that not only the Commission's preparation and utilization of its impact statement but also the contents of that statement fail to comport with the obligations imposed on the Commission by Section 102(2) (C). We vacate the Commission's October 4, 1972 and May 2, 1973 orders and direct the Commission to reopen the Ex Parte No. 281 proceedings for full consideration of the proposed rate increases on recyclable commodities.
The Commission should first prepare another draft statement to be circulated as specified by Section 102(2) (C). This new statement must include an analysis of the underlying rate structure's impact on the movement of recyclable commodities. The analysis would presumably entail a determination of the elasticity of demand with respect to the price for each of several categories of recyclable commodities. The statement should also include an analysis of the effects of the rate structure on investment in manufacturing facilities which can make intensive use of scrap. Whatever impact of the rate structure on the short- and long-term demand for scrap is found should be translated into terms which meaningfully relate the environmental effects of the rates and rate increases. These effects are not necessarily limited to conservation of natural resources and elimination of solid wastes. For example, a recent EPA report states that 74 per cent less energy and 51 per cent less water are expended and 86 per cent less air pollution and 97 per cent less mining wastes are engendered when scrap iron is used in lieu of virgin ore in the production of steel.
All the environmental effects must be balanced against the costs, if any, to the national transportation policy of attempting to alleviate the effect by not increasing the rates.
Though we are aware that railroad rates are not totally cost-based, an analysis of the costs of not raising the rates would presumably include a consideration of whether the scrap shippers are now bearing more than their "fair share" of the railroads' freight expenses. A comprehensive study of the contribution to costs made by each category of recyclable commodities and the primary goods with which they compete will thus probably be necessary.
After comments are received on the draft statement, a final statement should be prepared. This detailed statement shall then "accompany the through the existing agency review processes." As we have stressed above, in this case that review process includes a hearing before the Commission. Plaintiffs have argued that this hearing must be governed by Sections 556 and 557 of the Administrative Procedure Act (APA), 5 U.S.C. §§ 556-557 (1970), and that they thus must be given the opportunity to cross-examine those staff members responsible for preparation of the statement. We cannot agree. Rate-making, involving basically legislative-type judgments, is a form of rule-making which is governed by Section 553, rather than Secions 556 and 557, of the APA. See United States v. Florida East Coast R. Co., 410 U.S. 224, 35 L. Ed. 2d 223, 93 S. Ct. 810 (1973). Section 553(c) states: "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 * * *." 5 U.S.C. § 553(c) (1970). But the Supreme Court, in United States v. Allegheny-Ludlum Steel Corp., 406 U.S. 742, 756-758, 32 L. Ed. 2d 453, 92 S. Ct. 1941 (1972), held that the words "after hearing" in another similar provision of the Interstate Commerce Act do not invoke Section 553(c) and thus Sections 556 and 557. "Sections 556 and 557 need be applied "only where the agency statute, in addition to providing a hearing, prescribes explicitly that it be "on the record."" Id. at 757. See also United States v. Florida East Coast R. Co., supra, 410 U.S. at 234-238. We also find nothing in the existing regulations of the Commission requiring a full adjudicatory hearing. And inasmuch as NEPA requires only that the impact statement be transmitted through the existing agency review processes, we follow previous courts in refraining from holding that the Act requires an adjudicatory hearing where agency procedures do not provide for one.
We think, however, that "existing agency review processes" should be interpreted to encompass not only procedures required by explicit agency regulations but also those procedures which an agency customarily employs in consideration of a proposal of the type being analyzed for its environmental impact. In this case, when the general rate increase was first being considered without an impact statement, oral hearings were held before before the Commission. This fact at least establishes a strong presumption for us that full consideration of the revised impact statement through "existing agency review processes" must entail oral hearings before the Commission.
After hearings are held, a final revised order should be issued manifesting a full reconsideration by the Commission of the rate increase on recyclables. This order should not be limited to adoption of the impact statement; it should include a reassessment of the national transportation policy supporting the original October order as well as a discussion of the final impact statement prepared by the Commission's staff and of the comments on the draft statement solicited from other concerned agencies.
This does not, however, end the case. Plaintiffs do not merely ask for a declaration that the Commission violated the prescriptions of NEPA and an order directing it to reopen Ex Parte No. 281 for reconsideration of the recyclable rate increases in accordance with these prescriptions. They also request that we enjoin the railroads from collecting the rate increments on recyclable materials until the Commission completes its full reconsideration. Such an injunction would be necessary to hold down the rates on recyclables; under the scheme established by the Interstate Commerce Act new tariffs filed by carriers are effective absent a Commission order finding the tariffs unreasonable. See 49 U.S.C. §§ 6(3), 15(1) (1970).
As stated above, on June 7, 1973 we entered a temporary injunction against the railroads restraining them from collecting the rate increases pending our review of the Commission's October 4 and May 2 orders. The Supreme Court vacated this injunction and remanded the case to this court for reconsideration in light of its decision last term in Atchison, Topeka & Santa Fe R. Co. v. Wichita Board of Trade, supra. Though it is far from clear that that decision prevents us from granting plaintiffs further injunctive relief, it raises substantial enough doubts concerning the propriety of such relief to stay our hand.
We first note that our entering an injunction against the railroads is not precluded by the Court's reversal of our first injunction in this case - the injunction entered against the 2.5 per cent surcharge pending Commission consideration of the lawfulness of rate increases. In that reversal the Court held that Section 15(7) gave exclusive jurisdiction to the ICC to suspend rates pending its final decision on their lawfulness. United States v. SCRAP, supra, 412 U.S. at 690-691. Now, however, unlike the time at which we issued our injunction against the surcharge, the Commission has issued what it at least thought was its final order on the rate increases. And in Wichita Board of Trade, decided the same day as SCRAP, a majority of the Court stated that the terms of Section 15(7) do not govern a case in which the Commission has issued what it intends to be its final order. 412 U.S. at 820, 826-828. Moreover, this Wichita majority affirmed that District Courts reviewing Commission orders must have at least some power ancillary to their general powers of review and protective of their jurisdiction to enjoin railroads from collecting new charges pending final determination of the suit. Mr. Justice Marshall, writing for four members of the majority, noted that while three-judge District Courts are only explicitly given power to enter orders against the Commission by 28 U.S.C. § 2324 (1970),
"judicial review would be an idle ceremony if the situation were irreparably changed before the correction could be made." 412 U.S. at 819, quoting Scripps-Howard Radio, Inc. v. FCC, 316 U.S. 4, 86 L. Ed. 1229, 62 S. Ct. 875 (1942).Here collection of the recyclable rate increases during the Commission's reconsideration may well cause further irreparable environmental degradation.
However, Justice Marshall proceeded to state for the Wichita plurality that the considerations which underlay the Court's interpretation of Section 15(7) demand that the courts' ancillary power be limited. Justice Marshall's definition of the ancillary power is critical, for Mr. Justice Douglas, the fifth member of the Wichita majority, would detract not at all from the general power of this court to enjoin the railroads,
while three other members of the Court argued that District Courts lack any jurisdiction whatever to enjoin rates even after a final Commission order.
Justice Marshall stressed that the most important of the considerations underlying the Court's interpretation of Section 15(7) in Arrow Transportation Co. v. Southern R. Co., supra, the case primarily relied upon by the SCRAP Court, relate to the concept of agency "primary jurisdiction." This concept directs that until the agency has provided its own views a court should demur from expressing a view on matters which have been at least in part entrusted by Congress to an agency's discretion and concerning which the agency has developed some degree of expertise. Before a court issues an injunction pending final determination of a suit, it normally either implicitly or explicitly makes an estimation of the likelihood of ultimate success on the merits of the party challenging the agency action. See Virginia Petroleum Jobbers Assn. v. FPC, 104 U.S. App. D.C. 106, 110, 259 F.2d 921, 925 (1958). The expression of such an estimation may well pronounce the views of the court on matters such as national transportation policy which are within the agency's primary jurisdiction. A court contemplating an injunction pending final determination will further make some weighing of the magnitude and irreparability of the harms which would be suffered by the parties depending on whether an injunction is issued. Ibid. This weighing may also require the court to evince its beliefs on matters concerning which the agency being reviewed has primary expertise. The danger that a reviewing court issuing an injunction would thus intrude on the primary jurisdiction of the ICC moved the Wichita plurality to state that District Courts should not enjoin rates in order to protect their jurisdiction to review Commission orders unless they entertain "substantial doubt about the consistency of the Commission's action with its mandate from Congress." 412 U.S. at 822.
Our uncertainty as to the meaning for this case of Justice Marshall's opinion has a dual origin. First, we question whether issuance of an injunction here would intrude upon the primary jurisdiction of the Commission. The injunction overturned by the Wichita Court was issued against the railroads' imposition of separate charges for inspection of grain in transit because the Commission's order approving such charges did not justify departure from a long-standing rule proscribing them. In issuing the injunction the District Court thus at least implicity had to express its view that this departure was not justified. Matters of national transportation policy are, of course, within the especial expertise of the Commission" however, we are concerned here with matters of environmental policy and there is no reason to consider the Commission especially expert on the environment. Our issuance of an injunction pending final determination would need only be a statement of our belief that a full consideration of the rate increases' environmental impact will probably lead to a conclusion that those increases must be avoided. Further, Justice Marshall stressed that the injunction in the Wichita case was perforce based on a weighing of the injunction's harm to carriers against its benefit to shippers. Not only does this weighing of the interests of carriers and shippers exclusively involve considerations of national transportation policy; it also must be done against the background of Section 15(7) which, by providing for repayment of charges ultimately found to be unreasonable, makes reparable any harms which might accrue to shippers should an injunction not issue. Our issuance of an injunction here would require consideration of environmental degradation for which the Interstate Commerce Act does not and unhappily probably could not provide reparation. We thus question the applicability Justice Marshall's Wichita analysis to this case. Our doubts are augmented appreciably by the fact that Justice Marshall dissented from the reversal of our fir SCRAP opinion, advancing the same distinctions of our case from Wichita as we have set forth above. See 412 U.S. at 724, 728-732.
But even if the analysis of the Wichita plurality is applicable to this case, we do not think it obvious that an injunction against the railroads would be inappropriate. Justice Marshall's Wichita opinion recognized that a court need not refrain from granting an injunction and thus stating its views on the merits if the court believes it would have to reverse the agency if it does not change its decision after reconsideration. We indeed do entertain "substantial doubt" about the consistency of the Commission's allowance of the rate increases with the congressional mandate that the Federal Government "use all practicable means" to "approach the maximum attainable recycling of depletable resources." 42 U.S.C. § 4331(b) (6). We indeed might well question whether the Commission can allow the recyclable rate increases without clearly giving "insufficient weight to environmental values." See Calvert Cliffs' Coordinating Committee v. USAEC, supra, 146 U.S. App. D.C. at 39, 449 F.2d at 1115. Nonetheless, out of an abundance of caution, we decline to consider further granting to plaintiffs additional injunctive relief.
The October 4, 1972 and May 2, 1973 orders are vacated and Ex Parte No. 281 is to be reopened for further proceedings consistent herewith.