United States v. Allegheny-Ludlum Steel Corp., 406 U.S. 742 (1972)

UNITED STATES v. ALLEGHENY-LUDLUM STEEL CORP.

406 U.S. 742 (1972)

MR. JUSTICE REHNQUIST delivered the opinion of the Court.

[The “ICC” was an agency that regulated railroads. It was abolished after Congress passed the ICC Termination Act of 1995. After World War I, Congress passed the Esch Act to empowered the ICC to regulate railroad cars to ensure that railroad companies were using their services efficiently. In 1969, the ICC promulgated two rules that required freight cars to be returned to the lines that owned them after they were unloaded. These rules were meant to supply more freight cars to the Nation’s shippers because shippers were suffering from freight car shortages at peak loading periods. The ICC found that a major cause for the inadequate supply of freight cars was the operation of a national “car-pool” system where freight cars were shared across railroad lines and not returned immediately to their own lines. This left some lines without their empty, ready-to-use freight cars for extended periods of time.

Several railroads and shippers sued to enjoin the ICC rules, contending that the car service rules would seriously disrupt established railroad industry practices and cancel out the rules’ intended benefits, so the rules are not “reasonable” as that term is used in the Esch Act. The railroads and shippers also claimed that the ICC failed to comply with the APA by not using formal rulemaking procedures.] 

[...] Appellees claim that the Commission's procedure here departed from the provisions of 5 U. S. C. §§ 556 and 557 of the Act. Those sections, however, govern a rulemaking proceeding only when 5 U. S. C. § 553 so requires. The latter section, dealing generally with rulemaking, makes applicable the provisions of §§ 556 and 557 only “[w]hen rules are required by statute to be made on the record after opportunity for an agency hearing . . . .” The Esch Act, authorizing the Commission “after hearing, on a complaint or upon its own initiative without complaint, [to] establish reasonable rules, regulations, and practices with respect to car service . . . ,” does not require that such rules “be made on the record.” That distinction is determinative for this case. “A good deal of significance lies in the fact that some statutes do expressly require determinations on the record.” 2 K. Davis, Administrative Law Treatise § 13.08, p. 225 (1958). Sections 556 and 557 need be applied “only where the agency statute, in addition to providing a hearing, prescribes explicitly that it be ‘on the record.’” Siegel v. Atomic Energy Comm'n, 130 U. S. App. D. C. 307, 314 (1968). We do not suggest that only the precise words “on the record” in the applicable statute will suffice to make §§ 556 and 557 applicable to rulemaking proceedings, but we do hold that the language of the Esch Car Service Act is insufficient to invoke these sections [...]

This proceeding, therefore, was governed by the provisions of 5 U. S. C. § 553 of the Administrative Procedure Act, requiring basically that notice of proposed rulemaking shall be published in the Federal Register, that after notice the agency give interested persons an opportunity to participate in the rulemaking through appropriate submissions, and that after consideration of the record so made the agency shall incorporate in the rules adopted a concise general statement of their basis and purpose. The “Findings” and “Conclusions” embodied in the Commission's report fully comply with these requirements, and nothing more was required by the Administrative Procedure Act.

We conclude that the Commission's action in promulgating these rules was substantively authorized by the Esch Act and procedurally acceptable under the Administrative Procedure Act. The judgment of the District Court must therefore be 

Reversed.