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Western Fuels-Illinois Inc. v. Interstate Commerce Commission

decided: July 11, 1989.

WESTERN FUELS-ILLINOIS, INC., ET AL., PETITIONERS
v.
INTERSTATE COMMERCE COMMISSION, ET AL., RESPONDENTS



On Petition for Review of a Decision of the Interstate Commerce Commission.

Bauer, Chief Judge, Wood, Jr., Circuit Judge, and Will,*fn* Senior District Judge.

Author: Will

WILL, Senior District Judge

This is a petition to review an Interstate Commerce Commission ("ICC") denial of petitioner's request for a rule-making procedure to establish mandatory procedures for revealing price terms in long-term coal transportation contracts. We deny the petition.

I. Background

Western Fuels Association, Inc. is a non-profit fuel supply cooperative which, along with its subsidiaries, helps its member-owners to obtain delivery of coal. Its members are consumer-owned utilities throughout the United States. Western Fuels and its subsidiaries are involved in a number of aspects of the coal delivery business, including owning and operating a mine and purchasing coal from other sources. Pertinent to this petition is Western Fuels' role in negotiating coal supply contracts and rail transportation contracts for its members.

On March 21, 1988, Western Fuels and its subsidiaries (herein collectively referred to as "Western Fuels") filed a petition pursuant to 49 U.S.C. § 10326(a) (1982) requesting the ICC to institute a rulemaking to create requirements for disclosure of certain economic terms of long-term railroad coal transportation contracts in order to enhance price competition. The ICC denied the petition finding that full disclosure would be inconsistent with 49 U.S.C. § 10713, which requires the disclosure of some limited information from rail transportation contracts, and that Western Fuels did not show that the Rail Transportation Policy set out at 49 U.S.C. § 10101(a) mandated such full disclosure.

II. Standard of Review

Our review of the ICC decision not to institute a rule-making is guided by the standards of the Administrative Procedure Act ("APA"): whether the decision is "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with the law." 5 U.S.C. § 706(2)(A) (1982). An agency decision not to institute a rulemaking should be overturned "only in the rarest and most compelling circumstances." WWHT Inc. v. FCC, 211 U.S. App. D.C. 218, 656 F.2d 807, 818 (D.C.Cir. 1981). Under 49 U.S.C. § 10326(b)(2), a rulemaking proceeding may be ordered only if, on the basis of "a preponderance of evidence in the record before the [ICC]," the rulemaking is "necessary" and "failure to take that action will result in the continuation of practices that are not consistent with the public interest or are not in accordance with [the Interstate Commerce Act (the "ICA")]."

III. Analysis

Western Fuels contends that both grounds of the ICC denial of its petition are erroneous and that the ICC action violated the procedural requirements of the APA.

A. Reasons Given by the ICC

1. Policy of Section 10719

In its July 13, 1988 order denying Western Fuels' petition, the ICC wrote that it could not mandate disclosure of price terms, because "it is inconsistent with [ICC] policy on contract disclosure under [49 U.S.C. § ] 10713." Ex Parte No. 387 at 3 (Sub-No. 961) (July 13, 1988). That statute and the accompanying regulations set out a two-tier system of disclosure. At the first tier, § 10713 requires rail carriers to file their contracts for rail services with the ICC "together with a summary of the contract containing such nonconfidential information as the [ICC] prescribes" and requires the ICC to "publish special tariff rules for such contracts in order that the essential terms of the contract are available to the general public in tariff format." 49 U.S.C. § 10713(b)(1) (1982). The ICC regulations prescribe the "essential terms" at 49 C.F.R. § 1313.13 (1988) which do not ...


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