United States v Florida East Coast Railway Company

Abstract:

The Interstate Commerce Commission (ICC) was having a dispute regarding railroad companies borrowing one another’s freight cars rather than constructing new ones consistently leading to a shortage in the United States v. Florida East Coast Railway Company. The ICC established a rule requiring a fee for borrowing each other’s freight cars in an effort to encourage railroads to construct new ones. The East Coast Railway motioned to overturn the rule demanding a formal rulemaking as stated in APA §556-557 rather than an informal rulemaking defined in APA §553. 

INTRODUCTION

The United States v. Florida East Coast Railway Company is an underrated case despite how well known it is. The case’s notoriety is a result of its “black letter rule” in regard to the rule making procedures. There are several scholars and professionals who are not appreciative of the case for its revealing of three significant and key fundamentals of administrative law. The three fundamentals include the difference between rulemaking and adjudication, the relationship of the judicial, executive, and legislative branches of the United States in defining administrative law, and the importance of the original statute and the Administrative Procedure Act (APA) in shaping the contents of administrative law. To conclude the opinion of Justice Rehnquist’s Court is compelling illustration of the importance and inconsistency of statutory interpretations.

CASE BACKGROUND

In the year 1966, in an effort to give the Interstate Commerce Commission (ICC) the authority to resolve the national freight car shortage of railroads, the United States Congress amended the Interstate Commerce Act (7). The specific subsection that Congress amended was §1(14)(a) which states “enlarge the Commission’s authority to prescribe per diem charges for the use by one railroad of freight cars owned by another.”(8) Following the revised Interstate Commerce Act, the ICC gave a one year grace period prior to enforcing their newly obtained authority that Congress provided them. As of December 1967, railroads were required to report the demand for freight cars to the ICC, as well as the amount of freight cars over a one-year period starting in January of 1968 (9). This raised concerns from the railroads, and as a result of the ICC officials hosted an informal meeting for twenty railroad representatives (10).

The ICC delivered a report that proposed a regulation requiring railroads that use freight cars from other railroads to pay “‘incentive’ per diem charges” as of December 1969 (18). The ICC requested responses to the regulation proposal as well as informed railroads that an explanation for the need of a hearing is requested. The ICC modified multiple aspects of the December 1969 report finalizing in April of 1970, denying several railroads request for a hearing.

RULEMAKING AND ADJUDICATION

The court had contemplated the type of hearing that is required prior to the ICC could enforce per diem rates in the Florida East Coast Railway case (23). The case demonstrates that it is the nature of the hearing enforced by the constitution or a statute is determined by the nature of the agency action.

“The term ‘hearing’ in its legal context undoubtedly has a host of meanings. Its meaning undoubtedly will vary, depending on whether it is used in the context of a rulemaking-type proceeding or in the context of a proceeding devoted to the adjudication of particular disputed facts.” (24)

The most significant aspect of administrative law is that individual hearings are not required by Constitutional due process when the government is involved in general resolutions (27). Actions that are supportive and mandatory for determining individual, adjudicative matters are not required when the dispute in question by the agency is categorized as legislative that is involving broad policy decision. Protester claimed the ICC’s governing procedure in Florida East Coast Railway more exclusive in regard to its financial presence. They claimed that it should have caused action to guarantee an appropriate administrative deliberation for the individual impacts (34).

The fundamental aspect that agencies make two separate categories of decisions is established by Florida East Coast Railway. The case also proves that it depends on the characterization of the decision to make an appropriate procedure for a certain agency decision making. Rulemaking and adjudication is distinguished so well that it illustrates the nature of the hearing that congress ordered as well as the context for assessing the sufficiency of a hearing. 

STATUTE AND APA IN ADMINISTRATIVE LAW

Florida East Coast Railway is an excellent example of how administrative law content is interpreted by the specific original act in question, as well as the APA requirements. Regardless if the regulation is clear, it could be extremely significant in legal cases. After concluding that the Interstate Commerce Act did not cause the requirements of the APA for a formal hearing the Court had take into account the components of administrative law (35) stating “even though the Commission was not required to comply with § 556 and 557 of that Act, it was required to accord the ‘hearing’ specified in § 1(14) (a) of the Interstate Commerce Act. Though the District Court did not pass on this contention, it is so closely related to the claim based on the APA that we proceed to decide it now.” 

The court found that the original action did not demand hearing requirements that were not previously in place by the APA § 553 (37). Subsequently the court found that the actions performed by the ICC in the issue regarding rulemaking did not interfere with the original act or the APA (38). However, in other cases the APA requirements maybe supplemented by procedural requirements established by the original act (39). 

THE THREE BRANCHES OF GOVERNMENT RELATIONSHIP

The third aspect of administrative law that the Florida East Coast Railway demonstrated in regard to defining the law is the importance of the relationship between the judicial, legislative, and executive branches of government. Florida East Coast Railway allows for two perspectives to consider for this aspect of administrative law. The perspective of the judiciary branch having the authority to interpret what the law is. The second, Congress having the ability to effect law separate from legislation. 

In the Florida East Coast Railway case the issue in question is what procedures of the ICC’s promulgation of regulations established incentive per diem rates. The ICC’s understanding of the procedural requirements was that railroads were required to present evidence regarding the necessity for as well as the impact of incentive per diem rates at an oral hearing. The ICC took this position at the congressional hearing evaluating the per diem rates and agency actions that define them (40). In conjunction with the 1966 statutory delegation of rulemaking authority, Congress had not amended the requirement that the Interstate Commerce Act allows an agency action “after hearing” or provide a deadline for action if the agency failed to act by a certain date (43). In the end the congressional subcommittee was lawful in their attempt to change the ICC’s interpretation of the law due to the Court being the final arbiter of limitations of congressional authority over lawmaking as well as the interpretation of statutes

The Florida East Coast Railway case demonstrates the control Courts have when defining the content of the law with the use of interpretation. Originally, Justice Douglas advised deference to ICC’s belief that an oral hearing was required by the Interstate Commerce Act (54). Due to the ICC’s position that an oral hearing is required because of the agency’s understanding of the APA requirements instead of the Interstate Commerce Act the court concluded that the ICC was not owed deference. Since the ICC did not have expertise nor did they assign lawmaking authority of the APA’s requirements interpretation the majority did not defer to the ICC understanding (55). After the majority was capable of resolving the APA formal hearing action conflict in Florida East Coast Railway without deference to the ICC, the nature of the required hearing of the Interstate Commerce Act § 1(14)(a) still needed to be decided by the majority (57). 

Justice Rehnquist viewed that the 1966 Congress’ amendment of Interstate Commerce Act § 1(14)(a) to sanction imposition of incentive rates, despite not amending the language in the beginning of § 1(14)(a) (59). Justice Rehnquist utilized this interpretive strategy to claim the 1966 Congress legislation intended the necessary hearing to be appropriate for the promulgation of rulemaking legislation with an eventual effect on rulemaking procedures as defined by the APA 60. 

Justice Rehnquist’s law interpretation was reinforced by two vital perspectives. The first being at the time the majority might have overlooked the understanding of the statutory term “hearing”. His interpretation was also supported by the Courts view of the 1966 Congress would have determined that the statutory term “hearing” to express procedural requirements of rulemaking for the APA (61). 

CONCLUSION

The decision of Florida East Coast Railway case demonstrates that courts are the ultimate mediator in interpreting administrative law. The courts also have wide spread of strategies for interpreting what a law means. The Florida East Coast Railway case is famous in administrative law for the rule of causing the formal rulemaking process of the APA. Due to the simplicity of the rule in the case in limiting the function of formal rulemaking, significant insight of administrative law that is offered in the case. The Florida East Coast Railway case teaches lessons about basic structure regarding administrative law in the United States.

References

United States v. Florida East Coast Ry. Co., 410 U.S. 224 (1973). (n.d.). Retrieved February 22, 2018, from

United States v. Florida East Coast Ry. Co., 410 U.S. 224 (1973)

24 W. S., III. (1998). Briefing: Carl Grays article on Time Management http://www.bmj.com/cgi/content/full/316/7137/S2-7137 seemed to go … Administrative Law Review, 316(7149). doi:10.1136/bmj.316.7149.3a