INTERSTATE COMMERCE COMMISSION AND THE UNITED ATATES OF AMERICA, PETITIONERS V. TRI-STATE MOTOR TRANSIT CO., ET AL. No. 84-1515 In the Supreme Court of the United States October Term, 1984 The Solicitor General, on behalf of the Interstate Commerce Commission and the United States, petitions for a writ of certiorari to review the decision of the United States Court of Appeals for the Eighth Circuit in this case. Petition for a Writ of Certiorari to the United States Court of Appeals for the Eighth Circuit PARTIES TO THE PROCEEDINGS Respondents here include, in addition to Tri-State Motor Transit Co., the American Trucking Associations, Inc. and the International Brotherhood of Teamsters, Chauffeurs, and Warehousemen of America, Inc., and intervenor below. The Denver & Rio Grande Western Railroad Company also participated below as an intervenor. TABLE OF CONTENTS Opinions below Jurisdiction Statutes involved Statement Reasons for granting the petition Conclusion Appendix A Appendix B Appendix C Appendix D Appendix E Appendix F OPINIONS BELOW The opinion of the court of appeals (App., infra, 1a-8a) is reported at 739 F.2d 1373. The decisions of the Interstate Commerce Commission (App., infra, 11a-15a, 16a-21a) are unreported. JURISDICTION The judgment of the court of appeals (App., infra, 9a) was entered on August 3, 1984. A petition for rehearing was denied on October 26, 1984 (App., infra, 10a). On January 15, 1985, Justice Blackmun entered an order extending the time for filing a petition for a writ of certiorari to and including March 25, 1985. The jurisdiction of this Court is invoked under 28 U.S.C. 1254(1) and 2350(a). STATUTES INVOLVED Pertinent provisions of the Administrative Orders Review Act of 1950 (or Hobbs Act), 28 U.S.C. 2341 et seq., are set forth at App., infra, 22a-28a. QUESTION PRESENTED Whether the Hobbs Act, 28 U.S.C. 2341 et seq., bars relitigation of the validity of an angency rule after the rule has been upheld by another court of appeals and the statutory 60-day period for seeking judicial review has expired. STATEMENT 1. The Administrative Orders Review Act of 1950, 28 U.S.C. 2341 et seq., known as the Hobbs Act, vests jurisdiction to review orders of six federal agencies, /1/ including the Interstate Commerce Commission (ICC), in the courts of appeals (28 U.S.C. 2342). /2/ The Act also provides that a party aggrieved by a final order by one of the specified agencies "may, within 60 days after its entry, file a petition to review the order in the court of appeals wherein venue lies." 28 U.S.C. 2344. The agency is directed to "file in the office of the clerk the record on review as provided in section 2112." 28 U.S.C. 2346. The act then provides, as follows, 28 U.S.C. 2349(a): The court of appeals has jurisdiction of the proceeding on the filing and service of a petition to review. The court of appeals in which the record on review is filed, on the filing, has jurisdiction to vacate stay orders or interlocutory injunctions previously granted by any court, and has exclusive jurisdiction to make and enter, on the petition, evidence, and proceedings set forth in the record on review, a judgment determining the validity of, and enjoining, setting aside, or suspending, in whole or in part, the order of the agency. 2. In January 1983, the ICC issued a final policy statement in Ex parte No. MC-156, Motor Carrier Operating Authority -- Railroads, 132 M.C.C. 978 (served Jan. 6, 1983), abolishing the so-called "special circumstances" doctrine in the licensing of rail-affiliated motor carriers. /3/ The American Trucking Association, Inc. (ATA) (and several of its affiliated conferences and associations), and the International Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America (Teamsters) sought review of the ICC's decision in the United States Court of Appeals for the Fifth Circuit. On January 20, 1984, the court of appeals affirmed the ICC's decision in all respects. American Trucking Associations, Inc. v. ICC, 722 F.2d 1243. The ATA and the Teamsters filed a petition for a writ of certiorari that was denied by this Court. No. 83-2117 (October 29, 1984). While the Fifth Circuit was considering the challenge to the agency's policy statement, the Denver & Rio Grande Western Railroad Company (D&RGW), a rail carrier, filed an application for a motor carrier license pursuant to the Ex parte No. MC-156 policy. Only one motor carrier, Tri-state Motor Transit Co. (Tri-State), opposed D&RGW's application. A Commission employee review board, relying upon the new Ex parte No. MC-156 policy, granted the application in a decision styled The Denver & Rio Grande W.R.R., ICC Docket No. MC-166474 (Sub-No. 1) (App., infra, 11a-15a). The ATA and the Teamsters then sought to intervene in an appeal to the full Commission to assert that D&RGW's application should have been denied because the ICC's new policy was invalid. The Commission affirmed the review board (App., infra, 16a-21a) and refused to entertain the ATA's and the Teamsters' arguments, noting that those parties merely sought to relitigate the validity of Ex parte No. MC-156, which was then under consideration by the Fifth Circuit (App., infra, 18a). The ATA, the Teamsters, and Tri-State then petitioned for review under the Hobbs Act in the Eighth Circuit, now some 11 months after the Ex parte No. MC-156 rule had been issued. The only substantive issue raised was the validity of ICC's abolition of the special circumstances doctrine -- the same question then pending before the Fifth Circuit. /4/ Prior to the filing of briefs in the Eighth Circuit, the Fifth Circuit affirmed Ex parte No. MC-156. American Trucking Associations, Inc. v. ICC, supra. The Commission and the United States then argued in the Eighth Circuit that the court lacked jurisdiction to review the substantive validity of the Ex parte No. MC-156 policy because the Hobbs Act limits a court's jurisdiction to petitions filed within 60 days of the issuance of an ICC order, and because the Fifth Circuit had exclusive jurisdiction to review the validity of the ICC policy. /5/ 3. The court of appeals rejected the government's jurisdictional argument. /6/ It held (App., infra, 4a n.2) (emphasis added) that the Hobbs Act "precludes an attack on the procedure by which the policy was adopted," but "does not bar judicial review of the substantive validity of the rule, even if more than sixty days have elapsed since its issuance." Having concluded that it had jurisdiction, the court of appeals proceeded to affirm the Ex parte No. MC-156 policy and to affirm the issuance of D&RGW's license. REASONS FOR GRANTING THE PETITION The decision below incorrectly expands the jurisdiction of the courts of appeals by disrupting the repose and centralized review procedure the Hobbs Act was designed to provide. The result will be substantial and wholly unnecessary burdens on the courts, the Hobbs Act agencies, and numerous other agencies with comparable review statutes. In addition, the decision below conflicts with decisions of the Second, Fifth, Seventh and District of Columbia Circuits. Accordingly, this case presents questions of recurring and practical importance that warrant this Court's review. 1. The purpose of the Hobbs act is to ensure prompt, centralized and authoritative final review of agency rulemaking by a single court of appeals. See H.R. Rep. 93-1569, 93d Cong., 2d Sess. 9 (1974) ("The problem of multiple suits challenging a single ICC order in different locations before different courts, would disappear and with it the potential for disparity in results and nonuniformity. (The statute) vest(s) exclusive jurisdiction in the court of appeals in which the agency record is first filed.") /7/ See also H.R. Rep. 2122, 81st Cong., 2d Sess. 4 (1950) (the Hobbs Act "represents an important improvement in judicial procedure -- one that will make for economy and expedition in the disposition of a considerable class of business in the Federal courts"). Among the devices employed by Congress to achieve those objectives, two are of principal importance to this case: (1) the 60-day time limit on petitions for review, and (2) the vesting in the court "in which the record on review is filed" of "exclusive jurisdiction to make and enter * * * a judgment determining the validity of * * * the order of the agency" (28 U.S.C. 2349(a)). The statute also creates a transfer procedure so that all review of an agency order may be centralized in the court of first filing (or another court selected by that court, 28 U.S.C. 2112(a)). See Western Coal Traffic League v. ICC, 735 F.2d 1408, 1411 (D.C. Cir. 1984). The court of appeals' decision has a clear potential for mischief. By opening the door for parties to challenge administrative rules long after they were promulgated, the decision below poses a threat to the principle of finality, not only for the Hobbs Act agencies, but also for the numerous other federal agencies that operate under statutes with comparable review provisions. E.g., EPA, 7 U.S.C. 136n(b); Board of Governors, Federal Reserve System, 12 U.S.C. 1848; SEC, 15 U.S.C. 77i, 78y(b); FDA, 21 U.S.C. 346a(i), 348(g); National Credit Union Administration, 12 U.S.C. 1786(j)(2); OSHA, 29 U.S.C. 655(f); Secretary of Labor, 30 U.S.C. 811(d); Federal Mine Safety and Health Review Commission, 30 U.S.C. 816(b). Once the prescribed statutory period has expired without a petition for review having been filed, an agency is entitled to rely on its new rule in future operations. Moreover, those who are regulated by the agencies, and who often make substantial investments in order to comply with new rules, should have some certainty to guide their conduct. The statutory scheme affords that repose; the Eighth Circuit's contrary view does not. /8/ The justification for insulating an administrative rule from belated judicial challenge is even more apparent where, as here, the agency has successfully defended its rule in a court of appeals. /9/ In contrast to the orderly scheme Congress established, the court of appeals encourages tardy, duplicative litigation. Indeed, a literal reading of the Eighth Circuit's opinion suggests there would be nothing to stop these same parties -- or anyone else -- from launching exactly the same challenge the next time the ICC grants an application for rail-affiliated trucking operations. That would, of course, impose on the Commission, and on the courts of appeals, a burden Congress sought to avoid. Moreover, if that were the law, it would be more likely that a subsequent court could, upon reaching the merits, create a conflict among the circuits calling for resolution by this Court. That, too, is a result contrary to Congress's intent. /10/ It is, of course, immaterial that respondents' challenge was nominally to the D&RGW licensing order rather than to Ex parte No. MC-156. Their sole argument in opposition to the D&RGW order was that the Commission had invoked the policy announced in Ex parte No. MC-156. The attack was on the policy itself and merely recapitulated arguments that had been rejected by the Fifth Circuit. Accordingly, respondents' petition for review in the Eighth Circuit was in fact if not in form an attempt to obtain indirectly the untimely, repetitive review the Hobbs Act precluded them from seeking directly. See Natural Resources Defense Council v. NRC, 666 F.2d 595, 601-602 (D.C. Cir. 1981). Nor can we appreciate the basis for the court of appeals' distinction between challenges to the "procedural" and "substantive" validity of agency rules, and its holding that the latter were not subject to the Hobbs Act's restrictions. The statutory language provides no support for such a distinction. Likewise, the legislative history gives no hint of a congressional intent to limit the carefully-crafted system for judicial review exclusively to "procedural" issues, while "substantive" challenges are subject to no such restrictions. In addition, the procedure/substance distinction has no support in the case law. For example, in Asphalt Roofing Manufacturing Ass'n v. ICC, 567 F.2d 994, 1005 (D.C. Cir. 1977), the court squarely held that petitioners seeking review of certain ICC general rate increase decisions were barred from "actually challenging the validity of the Commission's rules" adopted earlier. And again in Seacoast Anti-Pollution League v. NRC, 690 F.2d 1025 (D.C. Cir. 1982), /11/ petitioners challenged the substantive validity of previously-adopted regulations in the context of reviewing the agency's decision not to institute a hearing to revoke a construction permit. The court rejected petitioners' invitation to review the rules, noting that "(p)etitioners could have directly challenged the regulations after their promulgation, or they can petition the Commission to amend the regulations." 690 F.2d at 1029 n.14. It therefore held that Seacoast's petition for review "is not a proper mechanism for attacking regulations on substantive grounds." Ibid. See also id. at 1031. Accord, Atchison, T. & S. F. Ry. v. ICC, 687 F.2d 912, 918 (7th Cir. 1982). 2. Besides condoning untimely challenges to agency rules in violation of the 60-day limitation, the decision below is also at odds with the statutory scheme establishing "exclusive jurisdiction" in the court of appeals in which the record on review is filed. 28 U.S.C. 2349(a). Under the procedure prescribed in 28 U.S.C. 2346 and 2112, the court of appeals in which the first petition for review is filed has exclusive jurisdiction to pass on the validity of the challenged rule. With respect to Ex parte No. MC-156, that court was the Fifth Circuit, and, accordingly, no other court could entertain a like attack on the rule. To be sure, the Eighth Circuit had jurisdiction to hear any claim that the new rule was misapplied in granting a certificate to D&RGW. But that was not the complaint. Respondents asked the Eighth Circuit to consider the same question already presented to the Fifth Circuit: the substantive validity of the new rule announced in Ex parte No. MC-156. That is what the Hobbs Act forbids. 3. The ruling below conflicts with decisions of other courts of appeals that have held the Hobbs Act's time limit to be jurisdictional. Natural Resources Defense Council v. NRC, 666 F.2d 595, 601-602 (D.C. Cir. 1981); Geller v. FCC, 610 F.2d 973, 977-978 (D.C. Cir. 1979); New York v. United States, 568 F.2d 887, 892 (2d Cir. 1977); Chem-Haulers, Inc. v. United States, 536 F.2d 610, 613-614 (5th Cir. 1976); Microwave Communications, Inc. v. FCC, 515 F.2d 385, 389-390 (D.C. Cir. 1974). See also Marine Terminal Ass'n. v. Rederiaktiebolaget Transatlantic, 400 U.S. 62, 72 (1970). The better view, and one more consistent with Congressional intent, was recently stated by the Fifth Circuit: an agency "should not be compelled to defend the same regulation against identical attacks in successive enforcement actions, when those challenges could and should have been asserted in the period for pre-enforcement review." RSR Corp. v. Donovan, 747 F.2d 294, 301 (1984). The mechanism for judicial review prescribed in the Hobbs Act provides parties with due process (cf. Yakus v. United States, 321 U.S. 414, 431-443 (1944)), while ensuring the efficient operation of administrative agencies. Parties against whom subsequent enforcement proceedings are brought are not bereft of defenses: they may challenge the application of a rule to the particular facts and they may challenge the constitutionality of the statute upon which the rule is based (see Johnson v. Robinson, 415 U.S. 361 (1974)). In addition, should circumstances warrant, parties may petition the agency to reconsider its rule in light of subsequent developments, such as recent legislation. E.g., Investment Co. Institute v. Board of Governors, 551 F.2d 1270, 1281-1282 (D.C. Cir. 1977). All that the Hobbs Act precludes are untimely challenges to the validity of the rule itself, challenges that could and should be brought within 60 days in the court of appeals with exclusive jurisdiction. Any other procedural regime would promote delay and piecemeal litigation -- all to the detriment of the finality and certainty Congress intended. 4. In this case, the Eighth Circuit ultimately rejected respondents' substantive contentions and upheld the agency orders. It can therefore be expected that respondents will urge the Court not to grant our petition because the government generally prevailed in the court of appeals. /12/ The judgment of the court of appeals -- "affirming" the Commission -- was incorrect. It should have entered a dismissal of the petition for lack of jurisdiction. Nor is the change we seek in the judgment solely academic. Even in this case, there is a risk of further improper proceedings if the jurisdictional holding remains undisturbed, i.e., review of the merits by this Court on a petition filed by respondents. Moreover, if the ruling of the court below stands, there is the real prospect that other courts of appeals will feel free to entertain challenges to the substantive validity of this same ICC rule. /13/ And, for the indefinite future -- until every court of appeals has sustained the rule -- uncertainty will prevail and litigation will abound. The resulting burdens, for the government and for the courts, warrant this Court's intervention without further delay. CONCLUSION The petition for a writ of certiorari should be granted. Respectfully submitted. REX E. LEE Solicitor General J. PAUL MCGRATH Assistant Attorney General JERROLD J. GANZFRIED Assistant to the Solicitor General JOHN J. POWERS, III JOHN P. FONTE Attorneys ROBERT S. BURK Acting General Counsel HENRI F. RUSH Acting Deputy General Counsel LAURENCE H. SCHECKER Attorney Interstate Commerce Commission MARCH 1985 /1/ In addition to those specified in the statute, orders of several other federal agencies are covered by the judicial review provisions of the Hobbs Act. 8 U.S.C. 1105a(a) (Immigration and Naturalization Service deportation orders), 39 U.S.C. 3628 (Postal Rate Commission orders), 50 U.S.C. 167h(b) (Department of Interior orders), 31 U.S.C. 755 (Personnel Appeals Board of the General Accounting Office orders). /2/ The orders of the Interstate Commerce Commission were, prior to 1975, reviewed by three-judge district courts, with appeals directly to this Court, under the Urgent Deficiencies Appropriation Act of 1913, ch. 32, 38 Stat. 208 et seq., and the Expediting Act of 1903, ch. 544, 32 Stat. 823 et seq. In 1975, Congress amended the Hobbs Act to bring the ICC under that system of judicial review. Pub.L.No. 93-584, 88 Stat. 1917 et seq. /3/ The "special circumstances" doctrine was a longstanding exception to the national policy to protect motor carriers from encroachment by railroads. Under that exception, the ICC could grant to a railroad unrestricted motor carrier operating authority if it was shown that (1) the grant would not restrain competition, and (2) the public interest required the proposed service which existing carriers had not offered except where it suited their convenience. See American Trucking Association, Inc. v. United States, 364 U.S. 1 (1960). Following enactment of the Motor Carrier Act of 1980, Pub.L. No. 96-296, 94 Stat. 793 et seq., and the Staggers Rail Act of 1980, Pub.L. No. 94-448, 94 Stat. 1895 et seq., which loosened regulatory strictures on the trucking and rail industries, the ICC opened a rulemaking proceeding to reevaluate its policies governing rail-motor operating rights. After full public participation (including the American Trucking Associations (ATA)), the Commission announced the end of the "special circumstances" doctrine in licensing proceedings. No longer would a rail-affiliated motor carrier, or a railroad, need to make such a showing to obtain unrestricted motor carrier operating authority. Ex parte No. MC-156. /4/ The ATA and the Teamsters also challenged the ICC's denial of their petition to intervene in the D&RGW administrative proceedings. /5/ The government also argued that petitioners were collaterally estopped from challenging the merits of the Commission's new policy in the guise of a challenge to the D&RGW licensing proceeding because the very same petitioners had previously, and unsuccessfully, challenged the policy in another court. /6/ Although it apparently agreed with the government's contention that petitioners were collaterally estopped from attacking the substantive validity of the policy statement, the court refused to dispose of the petition for review on that basis (App., infra, 2a n.1). /7/ This legislative history relates to the 1975 amendment to the Hobbs Act that added ICC orders to the list of agency actions covered. Pub. L. No. 93-584, 88 Stat. 1917 et seq. /8/ The decision below could encourage noncompliance with administrative rules. If firms know that if and when enforcement actions are brought against them, they will be free to challenge not only the application of the rule, but its validity as well, it will inevitably reduce any incentive to comply promptly. This is particularly so where compliance would generate substantial costs that could be deferred by delay. See, e.g., RSR Corp. v. Dovovan, 747 F.2d 294, 301-302 (5th Cir. 1984). /9/ Indeed, the present case is more compelling still because it involves parties who participated in the initial challenge in the Fifth Circuit. Two of the three petitioners in the Eighth Circuit, ATA and the Teamsters, were parties in the prior Fifth Circuit case. The third petitioner, Tri-State, is a member of the ATA and such, should be barred from relitigating the issue. See Western Coal Traffic League v. ICC, 735 F.2d 1408, 1411 (D.C. Cir. 1984). Because the court of appeals did not resolve the collateral estoppel issue, and because in the more typical case subsequent challenges are made by new parties, we do not raise the collateral estoppel issue as a separate question in this Court. /10/ The Hobbs Act created certiorari jurisdiction over agency orders in place of the direct appeal mechanism that existed previously. 28 U.S.C. 2350. The House Report stated that such a change "will save the members of the Supreme Court from wasting their energies on cases which are not important enough to call for their attention." H.R. Rep. 2122, supra, at 4. /11/ The District of Columbia Circuit overruled its decision in Seacoast on other grounds in Lorion v. NRC, 712 F.2d 1472 (1983), and that latter decision was itself reversed by this court, No. 83-703 (Mar. 20, 1985). Neither decision in Lorion disturbs the proposition in Seacoase upon which we rely. /12/ This Court has jurisdiction to grant this petition for a writ of certiorari. The present case is indistinguishable in principle from Harrison v. PPG Industries, Inc., 446 U.S. 578 (1980) and NRC v. Lorion, No. 83-1031 (Mar. 20, 1985), in which the court granted certiorari although the petitioners had "prevailed" in the courts below, in that the court had rebuffed a challenge to an administrative action, albeit on the erroneous ground that it lacked jurisdiction. See 28 U.S.C. 1254(1) (petition may be filed by "any party" in lower court); Director, OWC v. Perini North River Associates, 459 U.S. 297, 304 & n.13 (1983); United States v. Nixon, 418 U.S. 683, 692 & n.7 (1974); see also Menominee Tribe v. United States, 391 U.S. 404, 407 (1968) (petitioners as well as the government sought affirmance). /13/ See Texas v. United States, 730 F.2d 409, 415 (1984), amended on reh'g, 749 F.2d 1144 (5th Cir. 1985); cf. Arizona Public Service Co. v. United States, 742 F.2d 644, 648-649 (D.C. Cir. 1984); Montana v. Clark, 749 F.2d 740, 744 n.8 (D.C. Cir. 1984). APPENDIX