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Akron, Canton & Youngstown Railroad Co. v. United States

decided: October 30, 1978.


Petition for Review of an Order of Interstate Commerce Commission

Before Sprecher, Tone and Wood, Circuit Judges.

Author: Sprecher

At issue is the Interstate Commerce Commission's determination that an individual railroad has the independent right to petition the Commission for short notice upon which to withdraw its concurrence in proposed and filed but not yet effective carrier-made joint rates, without the consent of the other parties to the joint rates.


The Commission by order of January 22, 1976, permitted the nation's railroads, including the Southern Railway Company (Southern), to jointly publish and file a 7-percent general-increase master tariff for virtual nationwide application, with certain exceptions, upon not less than 30 days' notice to the Commission and the public, subject to protest and possible suspension. After the increase tariff had been filed with the Commission on January 25, but prior to the scheduled effective date of February 24, 1976, Southern discovered that it had inadvertently concurred in the filing for its account of tariffs which would, upon becoming effective, increase joint line rates on aluminum smelter products originating on its line at Warwick, Indiana.

On January 26, Southern notified its rate bureau of its intention not to concur and instructed its tariff publishing agent to publish its nonconcurrence, insofar as the higher rates would apply on aluminum smelter products from Warwick, Indiana to various destinations. The tariff publishing agent refused to comply with the tariff publication instructions on the ground that the other joint-line connecting railroad participants were unwilling to concur in Southern's request.

On February 18, 1976, Southern requested the Commission to enter a declaratory order pursuant to the Administrative Procedure Act, 5 U.S.C. § 554(e), declaring that there had been a breach of its right of independent action to abstain from a proposed rate change before the tariff became effective.

On October 11, 1977, the Commission concluded that after a tariff has been filed, but before it has become effective, a railroad can individually withdraw its concurrence in joint-line items in the tariff. The Commission further held that Section 5c(5)(a) of the Interstate Commerce Act would be violated if a single railroad could not withdraw before the effective date of the tariff without the consent of concurring parties. The Commission filed a supplemental report on March 7, 1978, clarifying its prior order and particularly basing the prior report on Section 6(3) of the Act and on the Commission's regulation 49 C.F.R. § 1300.58(b). Petition for review of the Commission's decision was sought by 28 railroads.


Railroads may, with Commission approval, form associations and enter into rate agreements through rate bureaus which file and publish rates jointly arrived at for the account of each of the association's members. Because such concerted action in the area of ratemaking clearly falls within the proscriptions of the federal antitrust laws, Congress in authorizing such associations exempted them from the antitrust laws, but under certain statutory conditions. Ajayem Lumber Corp. v. Penn Central Transportation Co., 487 F.2d 179, 181 (2d Cir. 1973). One condition appears in 49 U.S.C. § 5c(5)(a) which provides in part:

The Commission shall not approve . . . any agreement which establishes a procedure for the determination of any matter through joint consideration, unless it finds that under the agreement there is accorded to each party the free and unrestrained right to take independent action, without fear of any sanctions or retaliatory action, at any time before or after any determination arrived at through such procedure.

The Commission was faced with the problem of correlating Southern's right of independent action with other facets of the rate-making process. Section 6(3) of the Interstate Commerce Act provides that "no change shall be made in . . . joint rates, fares, and charges which have been filed and published by any common carrier . . . except after thirty days' notice to the Commission and to the public published as aforesaid . . .." 49 U.S.C. § 6(3). The petitioning railroads have contended that Section 6(3) requires that Southern give 30 days' notice of its nonconcurrence in the joint rates.

However, a proviso in Section 6(3) provides that "the Commission may, in its discretion and for good cause shown, allow changes upon less than the notice herein specified, or modify the requirements of this section in respect to publishing, posting, and filing of tariffs, either in particular instances or by ...

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