United States v. Allegheny-Ludlum Steel Corp.

Supreme Court of the United States · 1972 · Administrative Law

Administrative LawInterstate Commerce CommissionEsch Car Service Actrulemakinglegislative rulemakingformal rulemakinginformal rulemakingsubstantial evidence

Facts

The Interstate Commerce Commission adopted two car-service rules that generally required unloaded foreign freight cars to be loaded to or via the owner’s rails or returned in the direction of the owning road. The Commission found recurring shortages of freight cars, concluded that the national car-pool system reduced incentives for individual railroads to acquire sufficient cars, and determined that mandatory enforcement of return rules would increase incentives to expand ownership over time. After hearings and submissions, the Commission promulgated the two rules and later added an exceptions procedure to alleviate inequities and hardships. The district court held the rules unreasonable under the Esch Act and procedurally deficient under the Administrative Procedure Act.

Issue

Whether the Interstate Commerce Commission’s car-service rules were reasonable and therefore within its authority under the Esch Car Service Act, and whether the Commission satisfied the Administrative Procedure Act in adopting them. More specifically, the case asked whether formal APA procedures under §§ 556 and 557 applied to this rulemaking proceeding.

Rule

When the Interstate Commerce Commission engages in legislative rulemaking under the Esch Car Service Act, a reviewing court does not weigh evidence or judge the wisdom of the regulation, but asks whether the rule is within statutory authority and rationally supported. In rulemaking of general application, the agency need not produce evidence of appropriateness as to every railroad affected and may reason from the particular to the general. APA §§ 556 and 557 apply to rulemaking only when the governing statute requires rules to be made on the record after opportunity for an agency hearing; absent such a requirement, § 553 governs, requiring notice, opportunity for participation, and a concise general statement of basis and purpose.

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One of 10 multiple-choice questions for this case. Pick an answer to see why.

The Federal Warehouse Transport Board adopted a nationwide rule requiring empty grain hoppers to be routed back toward the rail line that owns them after unloading. In a challenge filed in Denver, several shipping cooperatives argue the rule is poor policy because it will temporarily reduce flexibility and raise their costs, even though the Board identified chronic equipment shortages and explained that the rule is designed to restore incentives for carriers to acquire more hoppers.

How should a reviewing court evaluate the challenge?

Explanation. When an agency is engaged in legislative rulemaking, judicial review is narrow. The court does not weigh the evidence anew or judge the wisdom of the regulation, but asks whether the agency acted within statutory authority, whether the conclusions are rationally supported, and whether the required APA procedures were followed. The attachment of sanctions does not convert the inquiry into de novo review.