Trans Alaska Pipeline Rate Cases, 436 U.S. 631 (1978)

Trans Alaska Pipeline Rate Cases

Nos. 77-452

, 77-457 and 77-602

Argued March 28, 1978
Decided June 6, 1978
436 U.S. 631

CERTIORARI TO THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

Syllabus

Anticipating completion of the Trans Alaska Pipeline System (TAPS) in mid-1977, seven of its eight owners filed tariffs for the transportation of oil over TAPS with the Interstate Commerce Commission, which at that time had jurisdiction over oil pipelines. Four protestants, respondents here, immediately asked the ICC to suspend the proposed rates, which were claimed to be prima facie unlawful for a number of reasons. Rejecting the carriers’ argument that it had no authority under § 15(7) of the Interstate Commerce Act (Act) (which provides that "[w]henever there shall be filed . . . any schedule stating a new individual or joint rate, . . . the Commission . . . may . . . suspend the operation of such schedule") to suspend TAPS’s initial rates, the ICC concluded that the rates should be suspended. It then went on to hold that the TAPS carriers could submit interim tariffs, to be effective on one day’s notice, which would be allowed to go into effect during the suspension period if the rates proposed in such tariffs were lower than levels summarily fixed by the ICC and if the TAPS carriers would agree to refund any amounts collected under either the interim or initially proposed tariffs which might subsequently (after full hearing) be held to be unlawful. The TAPS carriers petitioned for review of the ICC’s order in the Court of Appeals, which affirmed all aspects of the order.

Held:

1. Pursuant to § 15(7), the ICC is authorized to suspend initial tariff schedules of an interstate carrier subject to Part I of the Act, as it did here. As against the contention that the word "new" as used in § 15(7) was intended to refer only to increased or changed rates (i.e., rates which replace other rates previously in effect), such word must be given its literal interpretation as applying to services which have never before been offered to the public, thus embracing the initial rates in question in these cases. Pp. 642-652.

2. The ICC has power ancillary to its suspension authority under § 15(7) to establish, without an adjudicatory hearing, maximum interim rates which it would allow to go into effect during the suspension period. By so establishing such interim rates here, the ICC did not exceed its suspension power but, to the contrary, performed an intelligent and practical exercise of its suspension power in accord with Congress’ goal in § 15(7) to strike a fair balance between the needs of the public and the needs of regulated carriers. Pp. 651-654.

3. The ICC, as part of such ancillary power to establish maximum interim rates, has authority, which it properly exercised here, to condition its decision not to suspend tariffs on a requirement that the carriers refund any amounts collected under either interim or initially proposed rates that might later be determined to exceed lawful rates, notwithstanding the absence of express authority in the statute for such refunds. United States v. Chesapeake & Ohio R. Co., 426 U.S. 500. If the ICC’s approximations of what would be lawful rates are to be used to meet the carriers’ needs, such refund provisions are a necessary and "directly related," id. at 514, means of discharging the ICC’s mandate to protect the public pending a more complete determination of the reasonableness of the rates, and thus are a "legitimate, reasonable, and direct adjunct to the Commission’s explicit statutory power to suspend rates pending investigation," ibid., in that they allow the ICC, in exercising its suspension power, to pursue "a more measured course" and to "offe[r] an alternative tailored far more precisely to the particular circumstances" of these cases. Ibid. Pp. 654-657.

557 F.2d 775, affirmed.

BRENNAN, J., delivered the opinion of the Court, in which all other Members joined, except POWELL, J., who took no part in the consideration or decision of the cases.