United States v. Florida East Coast Railway

Supreme Court of the United States · 1973 · Administrative Law

Administrative LawRulemakingAdministrative Procedure ActAPA § 553APA §§ 556 and 557after hearingon the recordrulemaking

Facts

The Interstate Commerce Commission, acting under § 1(14)(a) of the Interstate Commerce Act, undertook a nationwide rulemaking to establish incentive per diem charges for use of standard boxcars owned by other railroads. After collecting industry data, issuing an interim report with tentative conclusions and a proposed rule, and inviting verified statements, briefs, and statements of position, the Commission gave interested parties 60 days to respond and required any request for oral hearing to state specifically the need and evidence to be adduced. Appellee railroads filed written objections and requested oral hearing, but the Commission issued a supplemental report and final order without further oral proceedings. The railroads challenged the order on procedural and substantive grounds, and the district court vacated it on procedural APA grounds alone.

Issue

Whether the ICC's incentive per diem rulemaking was governed only by APA § 553 or instead by APA §§ 556 and 557 because § 1(14)(a) required action "after hearing." Also, whether the Commission nonetheless failed to provide the statutory "hearing" required by § 1(14)(a) when it proceeded through written submissions without oral testimony, cross-examination, or oral argument.

Rule

For agency rulemaking, statutory language requiring action "after hearing" does not by itself trigger APA §§ 556 and 557; those sections apply only when the statute requires rules to be made "on the record after opportunity for an agency hearing" or uses equivalent language. In a legislative-type, prospective rulemaking proceeding, a statutory "hearing" requirement may be satisfied by APA § 553 procedures consisting of notice of the proposed rule and a fair opportunity to submit written data, views, arguments, and objections.

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

Congress authorizes the National Freight Safety Board to issue industrywide equipment standards for cargo trailers "after hearing." The Board publishes a proposed nationwide rule in the Federal Register, explains the data it relied on, and gives carriers 45 days to submit written comments, but it refuses requests for cross-examination.

If several carriers challenge the rule on the ground that the statute required formal rulemaking under APA §§ 556 and 557, how should a court rule?

Explanation. The majority held that in rulemaking, statutory language requiring action "after hearing" does not by itself trigger APA §§ 556 and 557. Those sections apply only when the governing statute requires rules to be made "on the record after opportunity for an agency hearing" or uses equivalent language. Because this is a generally applicable prospective rule and the statute says only "after hearing," the Board could proceed under APA § 553. (Derived from United States v. Florida East Coast Railway (n.d.).)