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Indianapolis Power and Light Co. v. Interstate Commerce Commission and

decided: September 3, 1982.

INDIANAPOLIS POWER AND LIGHT COMPANY, ET AL., PETITIONERS,
v.
INTERSTATE COMMERCE COMMISSION AND UNITED STATES OF AMERICA, ET AL., RESPONDENTS



On Petition for Review of An Order of the Interstate Commerce Commission.

Cummings, Chief Judge, Pell, Circuit Judge, and Davies, Senior District Judge.*fn* Pell, Circuit Judge, concurring in part and dissenting in part.

Author: Cummings

CUMMINGS, Chief Judge.

This case involves three rate increases that were substantially approved by the Interstate Commerce Commission (ICC). The intrastate application of each of the three increases was blocked, however, by the Public Service Commission of Indiana (state agency). On June 2, 1981, the ICC reaffirmed the increases, holding that the tariffs in question were general increases and that Section 214(b) (6) of the Staggers Rail Act, 49 U.S.C. ยง 11501(b) (6), ousted the state agency's jurisdiction. I.C.C. Docket No. 38589. On June 10, 1981, Indianapolis Power & Light Company (IPL) petitioned us to review and reverse the ICC's declaratory order. It was joined by intervenors Public Service Company of Indiana (PSI) and the National Association of Regulatory Utility Commissioners (NARUC). Respondent ICC seeks enforcement of its order. The Chessie System Railroads (Baltimore & Ohio, Chesapeake & Ohio, and Chicago, South Shore & South Bend), the Louisville & Nashville Railroad, and the Consolidated Rail Corporation (Conrail) have intervened on the side of the ICC. IPL's requests for a stay of the ICC order pending appeal have been denied both by the ICC and by this Court.

We find that the state agency's efforts to block the increases insofar as they applied to intrastate shipments are precluded by the Staggers Act's reallocation of jurisdiction between state and federal regulatory agencies. Therefore we are affirming the ICC's order permitting the carriers to continue to charge the rates in question.

I. The History of the Dispute

On November 1, 1978, the nation's railroads petitioned the ICC for and received authorization to file a master tariff (Ex Parte No. 357) that would have increased their freight rates generally by about 8%. Within the state of Indiana, however, the state agency reduced the increase on intrastate shipments of bituminous coal from 9% to 5%. On July 26, 1979, the railroads likewise sought and received ICC permission to file another 8% increase in national freight rates (Ex Parte No. 368); again the state agency held down the increase on intrastate bituminous coal rates from 15.7% to 13.7%. Both the federal authorizations and the state agency hold-downs occurred before the effective date of the Staggers Act, October 1, 1980.

In early 1981 the eastern railroads sought and obtained ICC permission to file supplements to the 1978 (Ex Parte No. 357) and 1979 (Ex Parte No. 368) tariffs to circumvent the Indiana commission's hold-downs. The theory was that these tariffs as republished would be general rate increases over which the state regulatory agencies had lost jurisdiction, effective October 1, 1980, by virtue of Staggers Act Section 214(b) (6). At about the time the Staggers Act was passed, the railroads sought, and after its effective date the ICC granted, authorization to file yet another national tariff calling for a 5% general rate increase (Ex Parte No. 386), likewise relying on Section 214(b) to insulate this tariff from state agency hold-downs. Undeterred, however, the state agency suspended the Ex Parte No. 386 tariff, insofar as it applied to intrastate bituminous coal shipments (App. F-2) and the supplemental increases in Ex Parte Nos. 357 and 368 (App. F-1). On June 2, 1981, the ICC issued a declaratory opinion holding that the state agency lacked the jurisdiction to take this action. Subsequent to the ICC's decision, the state agency invalidated the three increases (App. J [Ex Parte Nos. 357 and 368]; information supplied at oral argument [Ex Parte No. 386]).

II. The Statutory Background

The Staggers Rail Act, insofar as is relevant to this appeal, effected a basic change in the regulatory spheres of state agencies and the ICC. Congress perceived a great disparity between interstate and intrastate rail rates, caused partly by a lack of uniform standards and partly by state regulatory delay.*fn1 Its response was twofold: first it took away state jurisdiction over certain aspects of rate regulation, including "general rate increases" (Section 214(b) (6)),*fn2 and second it set up a federal certification procedure for state agencies (Sections 214(b) (1) and 214(c)) to monitor both the criteria for and the dispatch of decisionmaking in those areas remaining under state regulatory authority. The main bone of contention in this appeal is the meaning and applicability of Section 214(b) (6) of the Act, which provides:

Notwithstanding any other provision of this subtitle, a State authority may not exercise any jurisdiction over general rate increases under section 10706 of this title * * *.

No one disputes that these increases were under Section 10706.

III. The Merits of the Appeal

In our discussion of the merits of this appeal, we propose to begin by clearing away several pervasive misunderstandings, before attacking the issues relating to the particular tariffs.

A. Preliminary matters

1. Section 706

IPL, PSI, and NARUC submit that Section 706 of the Staggers Act, a savings clause, dictates that pre-Staggers Act law should be applied to any proceedings in which rate proposals were docketed with a rate bureau before October 1, 1980. Accordingly, they argue, the state agency does not lose jurisdiction at once, as Section 214(b)(6) would otherwise seem to indicate, over "general" increases; rather state agency jurisdiction will be phased out gradually as the proceedings come to involve rate proposals docketed with a rate bureau after October 1, 1980. All three of the tariffs in this appeal involve rate bureau docketing before the cut-off date, and hence -- the argument runs -- the state agency acted properly.

The construction IPL and its intervenors contend for is impossible. Section 706 (codified as a note to ...


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