United States v. Federal Maritime Commission

Before MacKINNON, ROBB and WALD, Circuit Judges.

Opinion for the Court filed by Circuit Judge MacKINNON.

Opinion filed by Circuit Judge WALD, concurring in part and dissenting in part.Page 796

MacKINNON, Circuit Judge:

The Antitrust Division of the Department of Justice (hereafter also referred to as the Department, or Justice) petitions under the Hobbs Act¹for review of an order entered by the Federal Maritime Commission (hereafter referred to as the Commission or Maritime). The order approved a shipping rate agreement among six ocean carriers that, for two of the carriers, covers intermodal routes which involve movement by rail or motor vehicle as well as by sea. The Department contends that the Commission has no jurisdiction to approve rates pertaining in part to land carriage and that in any event it failed to hold an adequate hearing. Joining the Commission in resisting these contentions are intervenors who dispute that the Department has standing to challenge the Maritime order.²We conclude the Department does have standing, but also conclude that the Commission had statutory authority to pass upon the rate agreement. Because the Commission failed to secure sufficient information on which to base an informed judgment, however, we remand the order for further consideration by the Commission. Under section 15 of the Shipping Act of 1916, 46 U.S.C. § 814, a broad variety of anticompetitive agreements between persons who are subject to the Act must be filed with Maritime.³Section 15 directs the Commission to approve such an agreement, "after notice and hearing," if the Commission concludes the agreement is neither "unjustly discriminatory or unfair" as between specified classes, "detriment[al] [to] the commerce of the United States," in violation of some other provision of the Act, nor "contrary to the public interest." The agreement is unlawful if implemented prior to approval, but, once approved, it is "excepted from the provisions of [the antitrust laws]." 46 U.S.C. § 814;FMC v.Pacific Maritime Association,435 U.S. 40,45,98 S.Ct. 927,931,55 L.Ed.2d 96(1978);Volkswagenwerk v. FMC,390 U.S. 261,271,88 S.Ct. 929,935,19 L.Ed.2d 1090(1968). The Shipping Act further provides that no part of it shall be construed "to confer upon the [Commission] concurrent power or jurisdiction over any matter within the power or jurisdiction of [the] Interstate Commerce Commission [ICC]. . . ." Shipping Act § 33, 46 U.S.C. § 832.

This proceeding arose out of Commission Agreement No. 10140, which was filed with the Commission and received its approval on May 1, 1975.⁴The Agreement was entered into by six of the thirteen ocean carriers that regularly transport goods from the United States Gulf Coast to the United Kingdom.⁵Under the Agreement carriers may "confer" and "agree" upon "any subject of common interest," including "rates,Page 797charges, . . . and related tariff matters."⁶Four of the six carriers are members of the Gulf/U.K. Conference⁷and operate exclusively on all-water routes. Each of the other two carriers — Seatrain International, S.A. (Seatrain) and United States Lines (USL) — provides a competing service that carries containers of goods overland by rail or motor vehicle from Gulf Coast ports to Atlantic Coast ports and thence by ocean vessel to United Kingdom ports.⁸This rail or motor vehicle and water carriage is known as "intermodal" service.⁹For each of their respective intermodal minibridge routes Seatrain and USL each publish one overall rate, known as a "joint through rate," which is published by the ocean carrier and concurred in by connecting inland carriers, with each participating carrier retaining a "division" of the overall rate.¹⁰

The basic object of Agreement 10140 is to reduce or eliminate rate competition for Gulf/U.K. traffic between intermodal carriers Seatrain and USL, on the one hand, and the four members of the all-water Gulf/U.K. conference, on the other. The Agreement concomitantly reduces rate competition between Seatrain and USL. Each intermodal carrier, however, retains the right to deviate from any agreed-upon rate by giving 48 hours' notice.¹¹

Thus, to give an example of how the Agreement works, consider the carriage of raw cotton from Houston, Texas to Northern Europe. The conference carriers transport the cotton by water from Houston to Northern Europe. However, each of the intermodal ocean carriers secures the services of an inland carrier to transport containers of the shipper's cotton by rail or motor vehicle from Houston to some Atlantic Coast port, say Charleston, South Carolina, where the goods are placed on a container ship and carried to Europe. The all-water carriers' price is set under their own conference agreement, see note 7supra,and the intermodal carriers may agree to charge the same price under Agreement 10140. The intermodal carrier may deal directly with the shipper, treating the inland carrier's "division" as an expense.

The instant proceeding began in January 1978, when the parties to the Agreement petitioned the Commission for approval of an amendment that would extend the Agreement from April 1, 1978 for an indefinite period or until a date fixed by thePage 798Commission. Three prior requests for extension had been approved without protest from any affected party.¹²In this instance, however, the Antitrust Division of the Justice Department filed a protest in response to the notice in the Federal Register of the petition's filing and of the opportunity for filing comments and requesting a hearing. See App. at 83.¹³

The protest of the Anti-Trust Division advanced three major contentions: first, the Commission's section 15 authority covers only agreements that pertain exclusively to ocean carriage; second, and alternatively, the Agreement warrants summary disapproval as unduly violative of the antitrust principles inhering in section 15's "public interest" standard; last, in any event, the Agreement cannot be approved with a full evidentiary hearing.¹⁴

The Commission rejected these contentions in an Order of Approval dated August 30, 1978.¹⁵As to its jurisdiction, the Commission noted that the Agreement authorizes price-fixing and that its members are common carriers by water subject to Shipping Act regulation.¹⁶The Commission further noted that although the Agreement sets rates for through intermodal transportation, which includes carriage by inland carriers regulated by the ICC, the Agreement does not control the rates those inland carriers are to receive: those rates are determined by negotiation between individual inland and intermodal ocean carriers, and the lawfulness of the inland rate division is to be determined by the ICC, not the Federal Maritime Commission. On this basis the Commission concluded that asserting jurisdiction over the Agreement would not impermissibly encroach upon ICC jurisdiction.¹⁷

The Commission then rebuffed Anti-Trust's alternative argument that the Agreement was infirm under section 15's "public interest" standard. The Commission balanced the Agreement's anticompetitive consequences against its benefits and concluded that it "is not more restrictive of competition than is reasonably necessary to accomplish [its] legitimate objectives."¹⁸Page 799Observing that no private party had ever objected to the Agreement over its three years of existence, and concluding that the DOJ "protest raise[d] no issues of law or fact that require further examination in an evidentiary hearing," the Commission held the Agreement met all the section 15 standards and approved it through February 29, 1980.¹⁹This petition for review followed. In the typical case a petition to review a Maritime Commission order is brought by a private party, usually a shipper or ocean carrier whose economic interests are affected. Here, however, the petitioner is the Department of Justice, in its role as enforcer of the antitrust laws. Before addressing the substantive issues we therefore must address the claim of intervenors²⁰that we lack appellate jurisdiction under these unusual circumstances. The Department submits it may seek review under the Administrative Orders Review (Hobbs) Act,28 U.S.C. §§ 2341-2351, but intervenors dispute that contention. They argue the Hobbs Act does not authorize this petition for review and further contend that, notwithstanding statutory authorization, the Department's petition does not present the "case or controversy" that the Constitution makes a prerequisite to federal jurisdiction. This requires a brief review of the relevant statutory provisions.

A. Scope of the Hobbs Act

Section 4 of the Hobbs Act provides that "[a]ny party aggrieved by ["a final order reviewable under [the Act]"] may . . . file a petition to review the order in the court of appeals wherein venue lies."Id.§ 2344. The section also contains some of the provisions that for convenience we shall collectively refer to as the "Attorney General provisions" of the Act. These are that "[t]he action shall be against the United States," and that a copy of the petition is to be served both on the agency and on the Attorney General.Id.The remainder of the Attorney General provisions are in section 8:

The Attorney General is responsible for and has control of the interests of the Government in all court proceedings under this [Act]. The agency, and any party in interest in the proceeding before the agency whose interests will be affected if an order of the agency is or is not enjoined, set aside, or suspended, may appear as parties thereto of their own motion and as of right . . . . The Attorney General may not dispose of or discontinue the proceeding to review over the objection of any party or intervenor, but any intervenor may prosecute, defend, or continue the proceeding unaffected by the action or inaction of the Attorney General.Id.§ 2348. There is no dispute but that the Commission's approval of Agreement 10140 was a final order reviewable under the Act,see id.§ 2342(3), and that the Department has complied with the requirements of timely notice, etc. The only statutory question going to justiciability is whether the Act affords the Department of Justice the status of a "party aggrieved" entitled to seek review under the Act.

On several occasions this court has passed on agency orders that were challenged in petitions for review brought by the Justice Department.²¹On none of those occasions, however, was there raised the issue nowPage 800before us — whether a judicial review provision authorizes the Justice Department, acting in its law enforcement capacity, to bring such a petition.²²The question therefore appears to be one of first impression.

Beginning our analysis with the language of the Hobbs Act, we consider whether, but for the Department's statutory involvement in the defense of agency orders, it would qualify in this instance as a "party aggrieved." Concluding that it would, we then determine whether Congress in providing for that involvement meant to preclude the Department from challenging agency orders.

1. Is the Department of Justice a party aggrieved?

If the Department were challenging the Commission order on behalf of the United States' interests as a shipper adversely affected by the operation of Agreement 10140, its qualification as a party aggrieved under the Hobbs Act would not be in doubt.²³But does the Act authorize the Department to seek review when the Department is seeking to vindicate, not the nation's proprietary interest, but the nation's sovereign interest in law enforcement? The Department argues that it is so authorized for the reason that it is a "party aggrieved by the [Commission's] final order,"28 U.S.C. § 2344, in the ordinary meaning of those words. The Department participated and was thus a party in the instant proceeding before the Commission²⁴and the Department was aggrieved by the final order inasmuch as "the agency action urged by the [Department] on behalf of the public's interest in competition was not adopted." Petitioner's Reply Brief (Pet. Rep.Br.) at 3. Intervenors ignore the "party aggrieved" language and concentrate on other aspects of the Hobbs Act. We find neither approach satisfactory.²⁵Rather, we think analysis must begin with applicationPage 801of what still seem to be the leading cases on standing to seek judicial review of agency action:Association of Data ProcessingService Organizations v. Camp,397 U.S. 150,90 S.Ct. 827,25 L.Ed.2d 184(1970) andBarlow v. Collins,397 U.S. 159,90 S.Ct. 832,25 L.Ed.2d 192(1970).

UnderData ProcessingandBarlow,a person may invoke judicial review under a statute as one "aggrieved by agency action within the meaning of a relevant statute" if he alleges (1) "injury in fact, economic or otherwise," and (2) an "interest arguably within the zone of interests to be protected or regulated by the statute or constitutional guarantee in question."397 U.S. at 152-54,90 S.Ct. at 829-30;id.at 164-65,90 S.Ct. at 836-37. We conclude the Department can meet those requirements here: it can claim injury in fact in the sense that Commission approval of Agreement 10140 directly interferes with the Department's responsibility to enforce the antitrust laws; and it can claim to assert interests protected by the Shipping Act in the sense that the Department, as public enforcer of the antitrust laws, represents the consumer and shipping interests which are protected by the statutory constraints placed on the Commission's ability to shield anticompetitive schemes from antitrust attack.

a. Injury in fact

An injury in fact need not be economic; it may be an injury to one's interest in health, safety, recreation, or aesthetics.See, e.g., Sierra Club v. Morton,405 U.S. 727,738,92 S.Ct. 1361,1367,31 L.Ed.2d 636(1975). But the injury alleged must be one that "fairly can be traced to the challenged action of the [respondent],"Simon v. Eastern Kentucky Welfare RightsOrganization,426 U.S. 26,38,96 S.Ct. 1917,1924,48 L.Ed.2d 450(1976), and thus "likely to be redressed by the relief requested,"id.at 43,96 S.Ct. at 1926;accord, Duke PowerCo. v. Carolina Environmental Study Group, Inc.,438 U.S. 59,74,98 S.Ct. 2620,2630,57 L.Ed.2d 595(1978). The purpose of the injury in fact requirement is to "give specificity and concreteness to the controversy and [to] assure [ ] its presentation with adversarial vigor."Washington UtilitiesTransportation Commission v. FCC,513 F.2d 1142,1149(9th Cir.),cert. denied,412 U.S. 836,96 S.Ct. 62,46 L.Ed.2d 54(1975). AlthoughData Processing, Barlowand other leading Supreme Court cases on standing involved individuals and private organizations, nothing in their analysis precludes its application to public agencies. The purpose of the injury in fact requirement is achieved when agency action interferes directly and specifically with the governmental responsibilities of the public agency.Washington Utilities, supra,513 F.2d at 1149-51.²⁶As the Supreme Court noted long ago inColemanv. Miller,Page 802307 U.S. 433,441-42,59 S.Ct. 972,976-77,83 L.Ed. 1385(1939): "there has been recognition of the legitimate interest of public officials and administrative commissions, federal and state, to resist the endeavor to prevent enforcement of statutes in relation to which they have official duties." We therefore consider in what manner, if any, Commission approval of Agreement 10140 interferes with the Department's statutory responsibilities.

The Department is charged with the responsibility for enforcing the antitrust laws,²⁷which, but for Commission approval, would proscribe agreements such as Agreement 10140.²⁸In contending that Agreement 10140 is beyond Commission jurisdiction insofar as it affects land carriage, and that the Agreement should have been disapproved in any event, the Department submits that shippers who deal with the intermodal ocean carriers subject to Agreement 10140 are being deprived of the competition the antitrust laws are designed to effect: such shippers cannot bargain for the best inland carrier rate from a Gulf Coast port to an Atlantic port, but must accept a price that includes the price of inland transport. Unhindered by the obstacle of Shipping Act immunity, the Department would attack the Agreement and prevent the ocean carriers from collectively establishing a single overall rate for intermodal traffic. This action, the Department believes, would increase competition among inland carriers for Gulf/U.K. traffic and thus promote a goal of the antitrust laws the Department is charged to enforce. Under these circumstances, we conclude there is a sufficiently direct line of causation between the allegedly invalid Commission order and an interference with the Department's discharge of its statutory duties,cf., e.g., United States v. S.C.R.A.P.,412 U.S. 669,688-89n. 14,93 S.Ct. at 2405,2416n. 14,37 L.Ed.2d 254(1973), and that such interference is "likely to be redressed by a favorable decision."Simon v. Kentucky Welfare RightsOrganization,426 U.S. 26,38,96 S.Ct. 1917,1924,48 L.Ed.2d 450(1970).

b. Zone of interests

A party alleging injury in fact and requesting relief that would redress it must also show that the interest asserted is arguably within the zone of interests protected by the relevant statute.Association of Data Processing Service Organizations v.Camp, supra,397 U.S. at 152-53,90 S.Ct. at 829-30.²⁹The relevant statute in this case is the Shipping Act, which not only confers but also limits the power of the Commission to legalize anticompetitive agreements between persons subject to the Act, who are defined in Shipping Act § 1, 46 U.S.C. § 801. Section 33, 46 U.S.C. § 832, provides the Act shall not be construed to affect the power of the ICC, and section 15, 46 U.S.C. § 814, forbids the Commission to approve agreements without properly considering principles of antitrust that inherePage 803in the section's "public interest" standard, seeFMC v.Aktiebolaget Svenska Amerika Linien,390 U.S. 238,243,88 S.Ct. 1005,1008,19 L.Ed.2d 1071(1968). These provisions protect shippers both from the approval by the Commission of agreements beyond its jurisdiction and from its improper approval of agreements within its jurisdiction.

The Justice Department is entitled, once injured by interference with its own interest in fulfilling its mandate to promote the policies of the antitrust laws, to assert the shipping public's interest in the proper administration of the Shipping Act. "[T]he fact of . . . injury is what gives a person standing to seek judicial review under the statute, but once review is properly invoked, that person may argue the public interest in support of his claim that the agency has failed to comply with its statutory mandate."Sierra Club v. Morton,405 U.S. 727,737,92 S.Ct. 1361,1367,31 L.Ed.2d 636(1972). Absent clear indication of a contrary congressional intent, we will not hold that the Attorney General, whose title is used to describe the broad standing rights of injured private litigants invoking the public interest,³⁰cannot rely on that doctrine himself.

2. Did Congress intend to bar Justice Department review?

Having concluded that the Department as required by the Hobbs Act otherwise has the essential attributes of a party aggrieved, we now consider intervenors' contention that the "Attorney General provisions" in sections 4 and 8 of the Act mean that Congress intended to preclude the Department from assuming the role of a petitioner for review. These provisions (quoted at p. 799supra) provide (1) that the United States is a party respondent, (2) that notice of a petition for review shall be served upon the Attorney General, and (3) that the Attorney General has responsibility for and control of the Government's interests in any court proceedings under the Act.

Examining the language and structure of the Act, we note that it neither requires the Attorney General to defend agency orders nor precludes an independent agency defense. Section 8 provides that the agency may "appear as a party . . . of its own motion and of right," and that the Attorney General may not "dispose of the proceeding for review over the objection of any party."28 U.S.C. § 2348. We interpret this language to contemplate that the Department may choose to (1) defend the order, solely or in conjunction with the agency,³¹(2) remain completely passive, or (3) confess error, and attack the order, even though a statutory co-respondent.³²In no instance is the agency left defenseless; the agency can always defend itself, as the Commission has done here. Thus, whatever theoretical difficulty may attend a petition brought by the Justice Department against the United States as a statutory respondent, we note nopracticalproblem with an interpretation that the Hobbs Act in some circumstances entitles the Justice Department to seek review.

It is in fact the intervenors' view of the Hobbs Act that presents practical difficulty. If intervenors are correct, only parties with proprietary interests can seek review of a Maritime Commission order: the AttorneyPage 804General could not challenge a Commission approval order that exceeded its statutory authority absent the fortuity that a proprietary party, with sufficient resources and a sufficient individual stake in the controversy, filed a petition for review.³³We find no evidence of such an intent in the language or structure of the Act and will not impute to Congress the intent to achieve such result.

Intervenors, however, would take us beyond the Act's language to the legislative history of the Hobbs Act, which, they argue, "makes clear that Congress was unswerving in its conviction that on petitions for review the role of the Department on behalf of the United States, was to defend the actions of the agencies." Brief of Intervenors Sea-Land Service, Inc. and Gulf/U.K. Conference at 4. Our reading of the legislative history compels the contrary conclusion: Congress was aware that the Justice Department on occasion had been and would be an adversary of the agency — both as a co-respondent and as a petitioner — and yet evinced no intent to preclude the Department from assuming that role.

The Hobbs Act is the third in a line of statutes to provide for judicial review of certain agency orders.³⁴Its first progenitor, the Commerce Court (Mann-Elkins) Act of 1910, 36 Stat. 539, codified the right to seek judicial review of ICC orders. The Act placed the petition for review within the exclusive jurisdiction of a single tribunal, the Commerce Court, from whose judgment the aggrieved party could appeal directly to the Supreme Court.Id.§§ 1, 2, 36 Stat. 540, 542. The Commerce Court was abolished in 1913 under the Urgent Deficiencies Act, 38 Stat. 219, which transferred the Commerce Court's subject matter jurisdiction to three-judge district courts from which the aggrieved party could, as before, appeal directly to the Supreme Court.Id.at 220. The Hobbs Act, 64 Stat. 1129 (1950), made two basic changes in this scheme: it placed the petition for review within the exclusive jurisdiction of the courts of appeals; and it reduced the Supreme Court's appellate caseload by replacing appeals as of right in some instances with review upon writ of certiorari.³⁵

Important as these provisions are to an understanding of the background of the Hobbs Act, our focus here is on another set of provisions, whose substance has remained essentially the same since 1910. Those provisions concern the role of the Justice Department in the defense of agency orders. Prior to the Commerce Act, the ICC defended its own orders solely with its own counsel.³⁶The Act modified this practice by providing that petitions for relief from ICC orders would be brought against the United States instead of the ICC, Commerce Act §§ 3, 4, 36 Stat. 542, 543, and that a copy of the petition would be served upon not only the ICC but also the Department of Justice,id.§ 1, 36 Stat. 542. In connection with this change it was also provided that "the Attorney General shall have charge and control of the interests of the Government in all cases and proceedings in the commerce court, and in the Supreme Court . . . upon appeal from the commerce court. . . ."Id.§ 5, 36 Stat. 543. The Urgent Deficiencies Act, although abolishing the Commerce Court, continued these provisions relating to the Attorney General in effect by providing that the "procedures in the district courts . . . shall be the same as that heretofore prevailing in the commerce court." 38 Stat. 220. The Attorney General provisionsPage 805then reappeared in substantially their original form in sections 4 and 8 of the Hobbs Act, 64 Stat. 1129 (1950) (quoted at p. 10supra), which were intended to "retain the present law." H.R. Rep. No. 1619, 80th Cong., 2d Sess. 2 (1948).

In light of this historical development, intervenors contend that the rationales offered for the Attorney General provisions in 1910 are relevant to an interpretation of the corresponding provisions in the Hobbs Act, and that these rationales demonstrate Congress did not intend to permit the Department to attack an agency order in exercise of its law enforcement role. Those rationales were (1) an agency defending its own orders appears to create a conflict of interest between its role as an adjudicatory body and its role as a prosecutorial body,seeS.Rep. No. 355, 61st Cong., 2d Sess. 6 (1910); and (2) the defense of ICC orders is a matter affecting "the whole country, and the conduct of such matters should be vested where the conduct of all the legal affairs of Government is vested, namely, in the Department of Justice."Id. Accord,45 Cong.Rec. 4574 (1910) (remarks of Congressman Mann).³⁷

According to intervenors, these rationales demonstrate that the Attorney General provisions of the Hobbs Act were meant merely to substitute the Justice Department for the ICC, and gave the Department no more rights than the agency into whose shoes it was placed. We have concluded, however, that the Department under the instant circumstances has the attributes of a "party aggrieved" under the Act.³⁸In light of that conclusion, the question here is not whether Congress specifically intended to entitle the Department to seek review; as a party aggrieved the Department is presumptively so entitled. The question instead is whether Congress by enacting the Attorney General provisions intended toprecludethe Department from seeking review. We have concluded that neither the language nor the structure of the statute supports an interpretation that challenging an agency order as a petitioner is irreconcilable with the Justice Department's role under the Hobbs Act and we find no persuasive evidence for a contrary interpretation in the legislative history.

Much of intervenors' purported support for their theory of the Hobbs Act consists of congressional colloquies between sponsors of the Commerce Court legislation and critics who wished to maintain the ICC's traditional right to defend its own orders. The former sought to assure the latter that placing the defense of agency orders under the control of the Justice Department would not compromise the integrity of such orders. One such colloquy ran as follows:

Mr. BRISTOW. Suppose that the commission should make an order and the railroad should attack it, do I understand that the Attorney-General would have the discretion as to whether or not he should defend that order? Suppose he believed that the order of the Commission was not justified?

Mr. ROOT. Mr. President. I will answer that without any hesitation or doubt. The Attorney-General would be bound upon all and the highest considerations of his professional honor and his official duty to defend the order of the Interstate Commerce Commission in all courts having jurisdiction to review it.

Mr. BRISTOW. Then, he would not have any supervisory authority as to whether or not it should be defended?

Mr. ROOT. Certainly not. It is his business to defend. He is no judge; he is no legislator; he is no reviewing authority.Page 806

45 Cong.Rec. 4104 (1910) (remarks of Senators Bristow and Root). Intervenors' reliance on this and similar exchanges is not persuasive inasmuch as the proposed statutory language to which those colloquies refer then read:

the Attorney-General shall have charge and control of the interests of the Government in all cases and proceedings in the court of commerce and in the Supreme Court of the United States upon appeal from the court of commerce.The Interstate CommerceCommission and its attorneys shall take no part inthe conduct of any such litigation.

45 Cong.Rec. 7275 (1910) (emphasis added). Had this language been enacted, intervenors' point that the Justice Department cannot be "on both sides of the same case" would be well taken, for this language makes the Department the sole defender of an agency's order. But such is not the language of the statute. The bill was amended before passage to provide that the ICC shall receive notice of any commerce court action and may appear as a party of its own motion and as of right.See id.at 7276; Commerce Court Act § 5, 36 Stat. 543. As amended and enacted, the bill — and the corresponding language in the present Hobbs Act — is consistent with an interpretation that permits the Justice Department and an agency to take inconsistent and even hostile positions on review of an agency order, for the agency has the right to take independent action in its own interest.

Intervenors also rely on the testimony of Judge Orie L. Phillips in the congressional hearings on bills incorporating the language that eventually became the Hobbs Act. Judge Phillips represented the members of the Judicial Conference who prepared the Act's original draft. He testified that its chief controversy concerned whether the law should be changed to make the agency the party respondent (with the Department intervening as of right) or whether the law should retain the practice of making the United States the party respondent (with the agency intervening as of right). The testimony from which intervenors cull extracts is as follows:³⁹

MR. WALTER [doubting whether the Attorney General should have the power to control the agency's defense].

. . . .

. . . Have you thought of the possibility that the Maritime Commission, for example, would insist on an appeal where the Attorney General might be fearful that, if the case is decided in accordance with what he believes the law will be, it might very seriously affect another case involving the Communications Commission that the Attorney General is about to take to the Supreme Court [?].

JUDGE PHILLIPS. Mr. Walter, these cases under these acts are not cases brought by the United States. They are petitions to review.

MR. WALTER. I understand.

MR. PHILLIPS. An order which has adversely affected a private litigant. The private litigant files the petition for review. Then the question comes in, shall we defend the agency's order. [In the vast majority of cases, in substantially all the cases, I would say, the Department of Justice and counsel for the agency will be together.There are rareinstances, and that is the history of the litigation,where the agency took one view, the Attorney Generaltook another view.It ultimately had to be determined by the Supreme Court. In a number of those instances, four or five, the views of the agency were sustained, and the views of the Attorney General did not prevail. I think the agency should have that protection.]

The Attorney General has not asked for anything further than to preserve the existing law in his amendment. I understand that satisfied him, and I think it should.Page 807Providing for the Review of Orders of Certain Agencies: Hearingson H.R. 2915, 2916 Before Subcomm. No. 2 of the House Comm. onthe Judiciary, 81st Cong., 1st Sess. 118 (1949)(emphasis added).⁴⁰

Intervenors would have us construe this passage to mean that, as far as the Judicial Conference was concerned, the Department's role was solely to defend agency orders and there was no intent to permit the Attorney General himself to petition for review of an agency order. Viewed in context, the testimony indicates otherwise. The question put to Judge Phillips concerned the situation where there was disagreement between the Department and the agency as to whether to seek certiorari from the Supreme Court. The question thus assumed the Department and the agency were already on the same side of the case. Judge Phillips' comment that "these cases . . . are not cases brought by the United States" naturally follows. Judge Phillips was not saying that the Department and the agency would never be antagonists on appeal from an agency order. Indeed, as indicated by the testimony we have placed in brackets above, Judge Phillips expressly contemplated that the Department and an agency, although nominal co-respondents, may take differing viewpoints, and each may present its own viewpoint to the court.

Judge Phillips made his understanding of the Department's role under the Hobbs Act even more clear in other testimony that intervenors also ignore. Judge Phillips spoke of the situation in which the Department thought the agency's position was wrong:

JUDGE PHILLIPS . . . . I do not think that it is incumbent upon the Attorney General to remain silent. He may say to the court of appeals — he may say to the Supreme Court — I think the law is this way; I think the position taken by the Commission is wrong.

But, likewise, the Commission through its counsel may say we think the Attorney General is wrong; we think the law is this way; we think the case should be decided this way for these reasons.

MR. WALTER. Do you think it is wise to find ourselves in a position where two agencies of the Government are taking an opposite position in the court of last resort?

JUDGE PHILLIPS. I do. And I think history demonstrates it is wise.In a number of instancesthe Department of Justice and the Interstate CommerceCommission have differed as to their views, and theviews of the Interstate Commerce Commission haveprevailed in the Supreme Courtof the United States.

MR. KEATING. Is it not a fact that the interest of the Commission in sustaining its own order, and the interests of the Attorney General in representing, as he sees it, the United States of America, are sometimes in conflict?

JUDGE PHILLIPS. Yes.

MR. KEATING. In other words, it is essential — is it not — that the two points of view be presented?

JUDGE PHILLIPS. I think it is, andthere areinstances where the United States with one hand issupporting the order of the Commission, and in behalfof another agency of the Government is contesting theaction of the Commission. I think that unavoidablywill arise from time to time,not often but it will.

MR. KEATING.That would arise in almost any instancewhere the Interstate Commerce Commission decidedtheir case against the Government.

JUDGE PHILLIPS. Well, for example,we had a casehere in the District last year or so where that verysituation arosePage 808with respect to some charges that were made during the war.Id.at 115 (emphasis added).

The "number of instances" in which the Department and the ICC "differed as to their views" was detailed in a report on one of the bills incorporating the language that became the Hobbs Act, H.R. Rep. No. 1619, 80th Cong., 2d Sess. 9-12 (1948) (Additional Views).⁴¹An example of the seven cases cited in the report isMcLean Trucking Co. v. United States,321 U.S. 67,64 S.Ct. 370,88 L.Ed. 544(1944), an appeal from a three-judge court which upheld an ICC order that authorized the consolidation of seven large motor carriers. There, as here, the Antitrust Division of the Justice Department presented arguments to the agency which the agency rejected. Then:

A suit was brought by a protesting motor carrier to enjoin the order, and the United States was named as defendant. The United States answered, and confessed error in the Commission's decision, and prayed for a decree setting aside the Commission's order. The same counsel who had appeared before the Commission for the Antitrust Division of the Department of Justice appeared in the Supreme Court on behalf of the [intervening] Secretary of Agriculture in an attempt to invalidate and enjoin the Commission's order.

H.R. Rep. No. 1619,supra,at 10.

Nor didMcLeanrepresent the clearest case of Department-agency conflict prior to enactment of the Hobbs Act. In the testimony we have quoted Judge Phillips also referred to a case in which the ICC and the United States were adversaries in respect to "some charges that were made during the war." Report 1619 described the case more fully:

This was a complaint to the Commission by the United States, filed to secure an award of money damages on account of numerous shipments made by the War Department. The issue was whether the refusal by the defendant railroad companies for an allowance to the United States as a shipper for wharfage [cost, etc.] . . . was unjust and unreasonable. . . . [The Commission held for the railroads.] The United States then sued itself and the Commission, to enjoin the Commission's order. . . . [T]he Commission, as defendant in the case answered the petition of the United States. Shortly thereafter, the United States, as the other defendant in the case, by the Department of Justice, filed an answer to its own petition. . . . The answer alleges in substance that, as provided by the law, the United States "is a defendant" in the proceeding, that the Commission is a defendant, and is authorized by law to appear by its own attorneys and to defend its order without regard to the position which the United States, as a statutory defendant, may take in the case [.]" . . . The Department evidently looks to the Commission to develop what is to be said for the order attacked.Id.at 11-12.

This case came to final fruition inUnited States v. ICC,337 U.S. 426,69 S.Ct. 1410,93 L.Ed. 1451(1949), decided the year before the Hobbs Act was passed. In their argument before the Supreme Court the Commission and the intervening railroads took the position that the Urgent Deficiencies Act, under which the petition for review was brought, neither contemplated nor permitted the bringing of such petitions by the United States, because the Act made thePage 809United States an indispensable defendant.See93 L.Ed. at 1454,1455. The Court unanimously rejected that proposition,⁴²finding no congressional purpose to amend the Attorney General's "statutory duty . . . to seek judicial redress for the Government":

Although the formal appearance of the Attorney General for the Government as statutory defendant does create a surface anomaly, his representation of the Government as a shipper does not in any way prevent a full defense of the Commission's order. . . . For, whether the Attorney General defends or not, the Commission and the railroads are authorized to interpose all defenses to the Government's charges . . . .337 U.S. at 431,432,69 S.Ct. at 1413,1414.

In light of the cases featuring Department-agency conflicts and of the committee hearing and committee report references to such cases, we presume Congress was aware of interpretations that recognized the Department's independent role — both as a co-respondent and as a petitioner — under the scheme of review created by the Urgent Deficiencies Act. We further conclude that Congress adopted those interpretations by carrying forward relevant prior law into the Hobbs Act.⁴³

Intervenors would distinguishICCon the basis that Justice Department standing there was mandated by the need to give the United States access to the courts on a basis equal to that of private shippers. Although that need was undoubtedly a consideration, the Court's rationale was broader: Congress did not intend, by making the United States a statutory respondent, to modify the Justice Department's prior "statutory duty" to vindicate government interests. The Court did not distinguish, as intervenors would wish, between proprietary interests and other governmental interests which are equally the duty of the Justice Department to pursue.

B. Case or Controversy

Intervenors' final contention with respect to the Department's ability to sue is that, notwithstanding the Department's statutory authorization to petition for review, the case or controversy that art. III, § 2 of the Constitution makes a prerequisite to federal jurisdiction is absent here because "the United States is suing itself." Brief of Intervenors Sea-Land and Gulf/United Kingdom Conference at 23. We believe, however, that the structure of the government of the United States permits cases and controversies to arise between separate agencies. This is another issue the Supreme Court addressed inUnited States v.ICC.InICCthe Court, noting that the United States was both the party bringing the action and a named defendant thereto, acknowledged that

a suit filed by John Smith against John Smith might present no case or controversy which courts can determine. But one person named John Smith might have a justiciable controversy with another John Smith.337 U.S. at 430,69 S.Ct. at 1413. The Court looked behind the names of the nominal parties to determine the real parties in interest, and discovered there was a justiciable controversy over "who is legally entitled to sums of money, the Government or the railroads."Id.Page 810

Intervenors would distinguishICCon the ground that the actual dispute inICCwas between the United States as shipper and certain railroads, whereas the actual dispute here is between the United States as sovereign and an agency of the United States. SeeUnited States v. Easement and Right of Way OverCertain Land in Bedford County, Tennessee,204 F.Supp. 837(E.D.Tenn. 1962) (no justiciable controversy between Tennessee Valley Authority, a governmental agency bringing land condemnation suit, and Farmers Home Administration, a governmental agency holding security interest in the subject land). The Department responds thatUnited States v. ICCis on point because the actual dispute is between itself and the ocean carriers whose agreement, absent valid Commission approval, violates the antitrust laws. The Department contends in the alternative that there is sufficient adversity between it and the Commission, an independent agency with an interest in upholding its own orders.

Assuming arguendo that the real parties in interest are the Department and the Commission, as intervenors contend, we hold thatUnited States v. Nixon,418 U.S. 683,94 S.Ct. 3090,41 L.Ed.2d 1039(1974) disposes of this issue in favor of the Department. TheNixonCourt held justiciable a controversy between (1) a Special Prosecutor, who was empowered by regulation to contest the invocation of executive privilege and who sought material he deemed to be admissible in a pending criminal case, and (2) the President, who resisted a subpoena for the material on the ground of his duty to preserve confidential presidential communications. The Court ruled that although the dispute was between officials of the same branch of government, the issues presented were "of a type which are traditionally justiciable,"418 U.S. at 697,94 S.Ct. at 3102(quotingUnited States v. ICC,supra,337 U.S. at 430,69 S.Ct. at 1413), and were raised in a setting that assured "concrete adverseness" of the parties.Id.The Court concluded that a justiciable controversy was presented for decision. Much the same can be said of the issues presented here. The Department of Justice is the authorized and traditional advocate of antitrust policies in agency litigation,see, e.g.,McLean Trucking Co. v. United States, supra,321 U.S. 67,64 S.Ct. 370,88 L.Ed. 544, which policies are implicated by the "public interest" standard of section 15 of the Shipping Act, and the Commission obviously has a role before this court as an advocate of its own perception of the public interest. See28 U.S.C. § 2348(agency's right to appear as party). This dispute over the validity of a Commission order raises issues that courts traditionally resolve and the setting assures the concrete adverseness on which sharpened presentation of the issues is thought to depend. The parties' controversy is justiciable. The Shipping Act of 1916 permits ocean carriers to agree among themselves to moderate the competition that Congress thought was destructive. As we explained inUnited States Lines v. FMC,189 U.S.App.D.C. 361,584 F.2d 519(1978):

the Shipping Act of 1916 represents a compromise between the established national antitrust policy and the potential public benefits to be derived from allowing ocean carriers to restrict or eliminate competition among themselves. An extensive congressional study of the practices of carrier conferences and their advantages and disadvantages was made in 1914, culminating in what has come to be known as the Alexander Report. H.R. Doc. No. 805, 63d Cong., 2d Sess. (1914). While the report found that there were substantial advantages to conference arrangements, it also identified various abuses in which conferences had engaged. Consequently, it was the recommendation of the report, adopted by Congress, that shipping conferences be allowed to continue only under government regulation.Page 811Id.at 527.⁴⁴To that end section 15, "the heart of the Shipping Act,"⁴⁵makes the Commission "the public arbiter of competition in the shipping industry,"⁴⁶generally requiring ocean carriers to file for FMC approval or disapproval any agreement that limits competition between them. 46 U.S.C. § 814.⁴⁷Any such agreement not approved is unlawful to implement.Id.

The issue at this point in the analysis is whether section 15 extends to Agreement 10140, which contemplates that intermodal ocean carriers and all-water competitors of these carriers may fix rates to be charged shippers for using their services, which in the case of intermodal carriers would include inland transportation. The law controlling that issue is best understood if we first examine the operation of Agreement 10140 against the background of related shipping practices.

Carriage of goods by sea is, and always has been, intermodal in nature. Cargo rarely originates at, or has a final destination alongside, an ocean carrier's pier. Hence, connecting carriage by rail, by motor, or, in earlier days, by horse drawn inland transport has always been necessary. Similarly, rates to cover the constituent transportation elements of this through movement have always been required. These rates appear in many forms. Although only one form — the joint through rate — is directly at issue here, two others are relevant — the local through rate and the proportional through rate. Relying on the discussion inPennsylvania v. ICC,182 U.S.App.D.C. 280,561 F.2d 278,281-83(1977), we note the similarities and differences among those rates as follows.

Athrough rateis the total rate charged by a carrier or group of carriers for providing transportation from a point of origin to a point of destination. When only one carrier is involved, the rate charged the shipper is alocal through rate.When transport requires a series of two or more connecting carriers, the total rate may be the sums of the carrier's local rates, the sums of their proportional rates, or a single joint rate. Aproportional rateis the rate that a carrier charges for shipping goods that have a subsequent or prior movement over the line of another carrier. This charge is almost always lower than the carrier's purely local rate between the same two points on its line. The shipper relying on multi-carrier transportation, then, will often sum up proportional rates in arriving at his total rate. The shipper may also look for ajoint through rate,a single rate expressing the total through carriage cost. This rate is published by one of the participating carriers, which negotiates with the other carriers the divisions of the total rate that they are to receive. These divisions closely resemble proportional rates, i.e., a joint through rate is "similar in purpose and effect" to a combination of proportional rates.Id.at 283. Because the joint rate is expressed in a single tariff, however, it simplifies routing, documentation, and billing, and often makes possible a rate lower than the corresponding combination of proportional rates.

The use of joint and proportional rates is more complicated in the intermodal context, where an inland carrier connects with an ocean carrier. Rail-ocean joint through rates were filed with the ICC until 1908, when the ICC decided it had no jurisdiction to accept such filings.⁴⁸After passage ofPage 812the Shipping Act of 1916 and thereafter until 1969, through rail/motor vehicle-ocean rates were in the form of combinations of proportional rates filed separately by inland carriers with the ICC and by ocean carriers with the Commission.⁴⁹In 1969, the ICC reversed itself and decided to accept the filing of joint through intermodal rates, a decision we affirmed inPennsylvaniav. ICC, supra,561 F.2d at 278.⁵⁰

The Federal Maritime Commission asserted jurisdiction over joint through rates at about the same time,⁵¹and has since issued a rule expressly providing for the filing of such rates, 46 C.F.R. § 538.6 (1979), which implicitly contemplates both rail/motor vehicle-ocean tariffs and section 15 agreements concerning same.⁵²This assertion of jurisdiction is consistent with section 18(b)(1) of the Shipping Act, which provides that conferences or individual carriers inPage 813foreign commerce shall file tariffs "for transportation to and from United States ports and foreign ports between all points on its own routeand on any through routewhich has been established." 46 U.S.C. § 817(b)(1) (emphasis added). Joint through rate tariffs and ocean/inland bills of lading were developed in 1972, when Seatrain filed the first intermodal tariff with the Commission.⁵³Since that time, the Commission has approved a number of intermodal rate-making agreements under section 15.⁵⁴

As it now stands, insofar as the FMC is concerned, an individual carrier is free to operate a through intermodal service by filing an overall tariff that sets out separately the ocean carrier's division. And, under Section 15 and 46 C.F.R. § 536.8, groups of carriers can apply for Commission approval of their intermodal rate-making, as the members of Agreement 10140 did here.See Seatrain, International, S.A. v. FMC,189 U.S.App.D.C. 388,584 F.2d 546,548(1978) (noting Commission practice of approving intermodal rate-making by conferences).⁵⁵Although agency jurisdiction is ultimately a matter of statutory construction by the courts,FMC v. SeatrainLines, Inc.,411 U.S. 726,745-46,93 S.Ct. 1773,1784-85,36 L.Ed.2d 620(1973), Commission's consistent and long-standing assertion of its statutory authority in this context is entitled to great deference,see United States v. National Association ofSecurities Dealers,422 U.S. 694,719,95 S.Ct. 2427,2442,45 L.Ed.2d 486(1975);Saxbe v. Bustos,419 U.S. 65,74,95 S.Ct. 272,278,42 L.Ed.2d 231(1974), and the validity of section 536.8, considered by the Commission a "regulation . . . necessary to carry out the provisions of the [Shipping Act]," 46 U.S.C. § 841a, should be sustained if reasonably related to the purposes of the Act.Mourning v. Family Publications Service,Inc.,411 U.S. 356,369,93 S.Ct. 1652,1660,36 L.Ed.2d 318(1973).

In challenging the FMC decision to take jurisdiction over Agreement 10140, the Department of Justice raises two major objections. The first, and broadest, is that section 15 simply does not reach "agreements among ocean carriers regarding rates which are themselves beyond its authority to regulate." Pet.Br. at 24. The second objection is that the Commission in approving the fixing of intermodal rates is approving the fixing of inland rates and thus violating the Shipping Act's limitation provision in favor of ICC jurisdiction. We shall examine these contentions in turn.

A. Scope of Section 15

The Justice Department does not object to individually-filed intermodal tariffs or to the agreements between ocean and inland carriers that occur in connection with those tariffs. Pet.Br. at 12 n. 9. Nor does the Department quarrel with cases⁵⁶upholding the FMC's section 15 authority to approve a conference's fixing of the proportional ocean rates that will apply on intermodal routes.Id.What the Department does object to is assertion of Commission jurisdiction over an agreement among competingPage 814ocean carriers "regarding the rates to be charged shippers using . . . intermodal services,"id.,i.e., an agreement permitting the collective fixing ofjointintermodal through rates. The Commission and the intervening conferences respond that combinations of ocean/inland proportional rates are identical in purpose and effect to joint through rates which state separate ocean and inland divisions. To treat the two forms of rates differently for section 15 jurisdictional purposes, they contend, elevates form over substance, Commission Brief at 24-27; Intervening Conferences Brief at 12-14, 25, and creates a substantial loophole in section 15 that unjustifiably hampers the Commission's ability to promote a workable conference system,id.at 14.

With the issue thus framed, we turn to an examination of the principal cases that bear on the scope of the Commission's jurisdiction under section 15. Most of these cases⁵⁷involve ocean carrier agreements that are related to collective bargaining contracts. Although arising in a different context than that before us here, these maritime labor cases offer persuasive guidance on the scope of the Commission's authority over rate agreements generally.

The Supreme Court first addressed the maritime labor issue inVolkswagenwerk Aktiengesellschaft v. FMC,390 U.S. 261,88 S.Ct. 929,19 L.Ed.2d 1090(1968). At issue inVolkswagenwerkwas whether an agreement among employers subject to the Shipping Act had to be filed and approved under section 15 before it could be implemented. The agreement allocated among the employers the costs of creating a fund used to mitigate the impact upon employees of technological unemployment. The fund was the price of union acquiescence in the elimination of certain restrictive work practices. A shipper aggrieved by the operation of the allocation formula contended the agreement was unlawful because it was not first filed with the Commission. The Commission, although conceding the agreement was subject to section 15's literal terms, concluded the section covered only agreements that "affect competition" in the maritime trade and that the allocation agreement did not so affect competition because there was no agreement to pass on the costs of the agreement to the members' customers. The court of appeals affirmed, but the Supreme Court reversed, criticizing this "extremely narrow view of a statute that uses expansive language."390 U.S. at 273,88 S.Ct. at 936. The Court noted in effect that the agreement did "affect competition" in any realistic sense of that phrase because the agreement "necessarily affected the cost structures of, and the charges levied by, individual . . . members."Id.

The Court again applied section 15 to a maritime labor agreement inFMC v. Pacific Maritime Association,435 U.S. 40,98 S.Ct. 927,55 L.Ed.2d 96(1978). The agreement in this case was a collective bargaining agreement authorizing the members of a multiemployer bargaining unit — employers who were subject to the Shipping Act — to impose certain labor practices and costs on nonmember employers with whom the members dealt. Although the Commission held the agreement subject to filing because it aimed to "control or affect competition between members and nonmembers" by eliminating the members' competitive disadvantage in terms of labor cost, and thus had "a potentially severe and adverse effect upon competition," see435 U.S. at 52,98 S.Ct. at 934, the court of appeals held the agreement beyond the Commission's section 15 jurisdiction on the ground that national labor policy would be frustrated by requiring preimplementation filing of a collective bargaining agreement.

The Supreme Court reversed, holding that neither labor policy nor antitrust policy warranted a departure from "the plain terms of the § 15."Id.at 56,98 S.Ct. at 936. Rejecting the argument that anticompetitive collective bargaining agreements should be left to the courts and the antitrust laws, the Court statedPage 815

Congress has made the Commission the arbiter of competition in the shipping industry; and if there are labor agreements so anticompetitive that they are vulnerable under the antitrust laws, it is difficult to explain why the Commission should not deal with them in the first instance and either approve or disapprove them under the standards specified in § 15.Id.at 63,98 S.Ct. at 940.

The Commission relied on the maritime labor analogy in finding certain absorption and bargaining practices subject to section 15 inInvestigation of Overland and OCP Rates and Absorptions,12 F.M.C. 184 (1969),aff'd sub nom. Port of New York Authority v.FMC,429 F.2d 663(5th Cir. 1971),cert. denied,401 U.S. 909,91 S.Ct. 867,27 L.Ed.2d 806(1971). The respondents inOverlandOCP Rateswere Pacific Coast ocean carrier conferences who were competing with Atlantic and Gulf carriers for Midwest traffic by,inter alia,offering special ocean rates (proportional rates) for cargo destined for or originating in the Midwest. Atlantic and Gulf port interests protested to the Commission that certain Pacific conference practices were unauthorized by the Commission and were thus unlawful. Necessary to this argument, of course, was a preliminary finding that the practices were subject to section 15.

The Commission made this finding with respect to two of the challenged practices.⁵⁸The first involved agreements between each conference and the transcontinental railroads, which allocated between them the absorption of the shipper's Pacific port terminal costs on traffic to and from the Midwest.Id.at 215. The second practice involved

transactions among representatives of the respondent conferences and of the transcontinental railroads which might conceivably be considered understandings concerning the setting of rail or overland ocean rates; and since the two [rates] are interdependent in setting [the overall rate], any understanding concerning one might affect the other. There were no binding agreements . . . yet the purpose was quite clearly to bring about action necessary to achieve an effective aggregate of rail and ocean rates.Id.at 216. The Commission found both the absorption practice and the negotiation concerning the ocean and rail portions of the overall rate to be subject to section 15, reasoning as follows:Since the agreement affects ocean rates, they[sic] may be subject to section 15. The agreement issomewhat analogous to a multiemployer agreement witha labor union concerning wages."The signatories to a collective bargaining agreement are frequently, by the very act of signing, agreeing with their own competitors on matters such as labor costs, certain nonlabor costs, service to be provided to the public, and (indirectly) price increases."Volkswagenwerk v.FMC,390 U.S. 261,284,88 S.Ct. 929,941,19 L.Ed.2d 1090(1968) (concurring opinion of Mr. Justice Harlan). So the respondent conferences, in collectively agreeing with the railroads on the allocation of terminal costs absorptions, orreaching an understanding as to the proportion of athrough overland charge which it is desirable to havecovered by the rail or ocean rate,[7] are, by the act of entering into such agreement or understanding, agreeing with each other as conference members on matters more or less directly related to their own rates and charges.[8]

[7] This is putting it as strongly as possible; essentially the relevant transactions between conferences and railroads involved only the exchange of information. Any direct requests for railroad rate action were made only by individual ocean carriers, in the same way that shippers and individual rail carriers made such requests.

[8] There is no need to consider any agreement among the ocean carriers to enter into a joint agreement with third parties, as an agreement separate from the joint agreement itself, any more than it is appropriate to consider thePage 816arrival at an agreement to enter into an agreement among themselves; in either case the ultimate agreement is normally the one requiring sec. 15 consideration. The existence of parties thereto not subject to the Act does not affect Commission jurisdiction of the agreement as one among parties who are subject to the Act.Id.at 216 (emphasis added). The Commission went on to rule that the absorption agreement and "any joint action of record among conferences and railroads toward the establishment of rail or ocean rates which would produce a competitive oceanrail combination" were incidental to the ratemaking the Commission had previously approved. The Fifth Circuit affirmed on this point.429 F.2d at 667-68.

We think that the maritime labor cases and the Commission's decision inOverland OCP Ratescontrol the question of section 15's application here. The gravamen of the Department's complaint is that "FMC jurisdiction to approve agreements among water carriers regarding through intermodal rates in their totality gives those carriers substantial concerted control over the inland as well as the water portions of those rates." Pet.Rep.Br. at 14-15. Assuming, without deciding, that such is the case, we find Agreement 10140 analogous to a multiocean carrier labor agreement, with the divisions of inland carriers representing an expense to the intermodal carriers analogous to labor costs. Section 15 applicability to Agreement 10140 also follows fromOverland OCP Rates,for there ocean carriers collectively bargained with railroads as to matters affecting rates, including the inland portion of the overall rate, whereas the corresponding bargaining here is only between individual carriers. The Department would distinguishOverland OCP Ratesby emphasizing that the ocean carrier-railroad contracts were "actually mere exchanges of information, not agreements. See 12 F.M.C. at 216 n. 7." Pet.Rep.Br. at 20 n. 16. Yet this distinction cuts onlyin favorof Commission jurisdiction. If the FMC can take section 15 jurisdiction over "mere exchanges of information" (so long as they "affect ocean rates," as the Commission found), section 15 jurisdiction over agreements followsa fortiori.If the purpose of the agreement is to affect competition among persons subject to the Act in connection with ocean transportation, then it is subject to section 15's filing requirement and thus to the Commission's approval or disapproval.See FMC v. Pacific Maritime Association, supra,435 U.S. at 53,53-63,98 S.Ct. at 935,935-940(1978) ("any contract between carriers `controlling, regulating, preventing, or destroying competition' . . . is within the reach of § 15");Volkswagenwerk v. FMC, supra,390 U.S. at 273-77,88 S.Ct. at 936-38;New York Shipping Association v. FMC,495 F.2d 1215,1221(2d Cir.),cert. denied,419 U.S. 964,95 S.Ct. 224,42 L.Ed.2d 178(1974) (section 15 triggered by "agreement [that] would necessarily affect persons subject to the Shipping Act and ultimately would alter relations among shippers of various types of cargo").⁵⁹Page 817

We are also persuaded that an adoption of the Department's position would eviscerate a basic policy of the Shipping Act — to promote the effectiveness of the ocean carrier conference system. All here agree that individual ocean carriers may post and charge joint intermodal through rates. The only question is whether carriers should be permitted to set such ratescollectively.The only way this rate-setting can occur, without inviting the antitrust liability that fastens upon price fixing, is by getting Commission approval of a ratemaking agreement under section 15. If the Department is correct, however, such an agreement is beyond the Commission's power even to consider, much less approve. We find the Department's desired result anomalous: it would create a large loophole in section 15 that would destroy the effectiveness of conference ratemaking by permitting conference members routinely to shed their conference obligations as to any particular cargo movement simply by filing an individual rate in a joint rate form. That such a development might be desirable solely from an antitrust viewpoint we do not doubt. But antitrust considerations are essentially irrelevant to any outline of section 15's jurisdictional scope. They are considered in the decision whether to approve, a step that occurs only after jurisdiction is assumed.See FMC v. Pacific MaritimeAssociation, supra,435 U.S. at 63,98 S.Ct. at 940.

B. Effect of the ICC Limitation Provision

It is not enough, however, to conclude that Agreement 10140 falls within the literal language and implicates the central policies of section 15; we must also be satisfied that our interpretation of section 15 does not violate Section 33 of the Shipping Act, which provides:

This [Act] shall not be construed to affect the power or jurisdiction of the [ICC], nor to confer upon the [FMC] concurrent power or jurisdiction over any matter within the power or jurisdiction of such [ICC].

46 U.S.C. § 832. The question, therefore, is whether FMC authority to approve ocean carrier agreements that contemplate the fixing of joint through intermodal rates will interfere with the exercise of ICC jurisdiction in violation of section 33.⁶⁰

The Department's argument here parallels its argument that section 15 simply does not reach the approval of joint intermodal through rates, see Part III.A.supra.It is in one respect an improvement, however, for the present argument has the virtue of relying on a statutory provision — section 33 — that under certain factual considerations can operate to limit the Commission's jurisdiction.⁶¹On the facts before us, however, we find no indication that the Commission has transgressed that limit. To explain that conclusion we must briefly review ICC and Commission regulatory practice with respect to joint through intermodal ratemaking.

Both the ICC and the Commission accept the filing of joint intermodal through rates by carriers subject to their respective jurisdictions, with the requirement that the filing carrier set forth the division of the total rate it is to receive.⁶²Neither agency, however,Page 818claims the authority to disprove or suspend the rates charged by carriers subject to the jurisdiction of the other. InPennsylvaniav. ICC, supra,we specifically upheld the ICC's decision to require that the inland portion of the joint rate be set out separately and to limit its substantive regulation to the inland rate.561 F.2d at 291. We noted that any attempt by the ICC to regulate the foreign segment of the joint rate would "plainly usurp the FMC's jurisdiction under the Shipping Act."Id.

Because the ICC specifically allows inland carriers to participate with individual ocean carriers and conferences of such carriers,⁶³and because the ICC asserts substantive regulatory jurisdiction over only the inland portion of an overall intermodal through rate, we are not convinced that Commission approval of joint through rates invades ICC jurisdiction or otherwise interferes with the exercise of ICC power. The Department, however, suggests that

the power to approve agreements fixing both the overall rate and the ocean carrier division necessarily entails the power to approve fixing the inland division as well.[11] It further follows that the existence of such a power conflicts with the ICC's authority to regulate the inland carriers, and cannot be reconciled with section 33 of the Shipping Act.

[11] If a + b = c, then c — a = b. Once "c", the through rate, and "a" the carrier division, are fixed, then "b" the inland division is merely a remainder, and determined by the others.

Pet.Br. at 13. We would work the formula differently. The object of Agreement 10140 is to reduce the differential between intermodal and all-water rates for Gulf/U.K. traffic. Common sense would suggest, and at oral argument counsel for the Justice Department agreed, that ratemaking proceeds in this order: First, the all-water conference carriers publish a tariff under their own conference agreement, see note 7supra,for a particular cargo movement. Then, pursuant to Agreement 10140, the intermodal carriers decide whether to adopt that rate. For each carrier that decision will depend upon its ability to obtain a favorable rate from an inland carrier. In the Department's symbols this process is best described by the equation ofc(total joint rate) minusb(inland division) equalsa(ocean division). Agreement 10140 does not fix inland rates.

Even if it could be said that the ocean carriers somehow do collectively determine inland rates, it remains thatno inlanddivision of a joint rate can exist without ICCPage 819approval."Divisions of joint rates by carriers subject to ICC jurisdiction . . . must be reasonable,"49 U.S.C. § 10701(a), and the ICC has power to "prescribe . . . the division of joint rates, and the conditions under which those routes must be operated,"49 U.S.C. § 10705.

Unable to point to any specific ICC regulatory function that FMC approval of joint through intermodal rates would impede, the Department argues that such approval frustrates the ICC's ability to "protect the interests of the public." Pet.Br. at 21. The fixing of through intermodal rates, the argument runs, deprives Gulf/U.K. shippers of price competition between inland carriers, whereas if the Commission were limited to approval of proportional ocean rates, shippers could negotiate their own inland rate and get a better overall price. We agree with the Commission and intervenors that this contention exalts form over substance. The Department acknowledges that the Commission could take jurisdiction over an agreement that eliminated intermodal transit's price advantage over all-water transit if such an agreement were limited to the fixing of the intermodal carriers' proportional ocean rates.SeePet.Br. at 20, Pet.Rep.Br. at 19-20. Assuming the Department is right in saying this arrangement would permit Gulf/U.K. shippers to drive a better bargain withinland carriers,we fail to see how the shipper's lot would be improved with respect to the overall rate, for the intermodal ocean carriers can then agree to charge a correspondingly higher ocean rate to advance the goal of reducing price competition between intermodal and all-water carriers.Seegenerally Overland OCP Rates, supra,12 F.M.C. at 216.

In light of the above we conclude that Agreement 10140 was an agreement subject to section 15 filing and approval or disapproval by the Commission. Moreover, nothing in section 33 would counsel a different interpretation, for there is no practical conflict between ICC and Commission jurisdiction over the filing of the joint intermodal through rates; the Commission's approval of the Agreement leaves the ICC's jurisdiction over inland carriers and inland rates unimpaired. Two issues remain: whether the Commission's decision not to hold an evidentiary hearing was an abuse of discretion and, given the absence of such a hearing, whether under the applicable standard of judicial review its approval of Agreement 10140 was justified.

We consider these issues against the background of section 15's directive that the Commission "disapprove, cancel, or modify any agreement . . . contrary to the public interest."⁶⁴This language requires that the Commission consider the antitrust implications of all agreements submitted to it for approval.⁶⁵Once it appears that an agreement entails an antitrust violation, "this alone will normally constitute substantial evidence that the agreement is `contrary to the public interest,' unless other evidence in the record fairly detracts from the weight of this factor."FMC v. AktiebolagetSvenksa Amerika Linien, supra,390 U.S. at 246,88 S.Ct. at 1010. The proponents of an anticompetitive agreement must therefore show it is "required by a serious transportation need, necessary to securePage 820important public benefits, or in furtherance of a valid regulatory purpose of the Shipping Act,"id.at 243,88 S.Ct. at 1008, and the Commission must "`scrutinize the agreement to make sure that the conduct . . . legalized [through section 15 approval] does not invade the prohibitions of the antitrust laws any more than is necessary to serve the purposes of the regulatory statute.'"United States Lines v. FMC, supra,189 U.S.App.D.C. at 370,584 F.2d at 528(quotingVolkswagenwerk v. FMC,supra,390 U.S. at 274n. 21,88 S.Ct. at 936n. 21).

A. Procedural Adequacy

In the administrative proceeding, the proponents of Agreement No. 10140 submitted affidavits and memoranda in support of an extension of the Agreement. The Department's protest was filed in response to these submissions and in response to the Commission's notice in theFederal Register.The notice directed persons submitting comments and requests for hearing to set forth "with particularity" facts and arguments concerning approval, modification, or disapproval of the Agreement. See note 13supra.⁶⁶

The Department did not deny or otherwise respond to the factual showing made by the proponents of the Agreement. The Department's request for hearing proceeded not on the claim that proponents' factual assertions were in any respect inaccurate, then, but on the theory thatanyagreement amounting to a "serious, per se violation" of the antitrust laws requires a pre-approval evidentiary hearing, and that price-fixing, clearly an object of Agreement 10140, was of that serious nature. App., at 102-03.

The Commission acted well within its discretion in deciding "[t]he [Department's] protest raises no issues of law of fact that require further examination in an evidentiary hearing."⁶⁷Although section 15 indicates that approval of an agreement can occur only "after notice and hearing" (see note 64supra), this requirement may be satisfied by "something less time-consuming than courtroom drama."Marine Space Enclosures,Inc. v. FMC,137 U.S.App.D.C. 9,420 F.2d 577,589(1969). The formal evidentiary hearings that the Administrative Procedure Act requires in instances where the agency must have "a hearing on the record" are not required in Commission hearings inasmuch as Shipping Act § 15 lacks that stipulation.United States Lines v.FMC,189 U.S.App.D.C. 361, 378,584 F.2d 519,536(1978) (citingUnited States v. Florida East Coast R. Co.,410 U.S. 224,234-38,93 S.Ct. 810,815-17,35 L.Ed.2d 223(1973)). The Commission thus enjoys "flexibility in structuring Section 15 hearings in light of the circumstances of the case and the nature of the issues involved."Id.at 378-79,584 F.2d at 536-37. It need only "conduct whatever proceedings are necessary to secure sufficient information so that its final decision will reflect `a consideration of the relevant factors.'"Seatrain International,S.A. v. FMC,189 U.S.App.D.C. 388, 392,584 F.2d 546,550(1978) (quotingCitizens to Preserve Overton Park, Inc. v. Volpe,401 U.S. 402,416,91 S.Ct. 814,823,28 L.Ed.2d 136(1971)).

The Justice Department's comments, while placing the Commission on notice of some of the antitrust questions raised by the Agreement, gave no promise that the Department would make any contribution toward the case's factual development. Moreover, no shipper affected by the Agreement in its nearly three years of operation had objected to it, even though the Agreement was placed under Commission review on several prior occasions. See note 12supra.And the Agreement was extended only temporarily, for the relatively short term of 18 months, seeUnited StatesLines v. FMC, supra,189 U.S.App.D.C. at 371-72,584 F.2d at 529-30. We do not doubt that a full-blown evidentiary hearing conceivably might have sharpened the issues orPage 821otherwise have contributed to reasoned decisionmaking. But the costs of any adversary hearing loom large in contrast to these speculative benefits. In view of these circumstances, we cannot say the Commission abused its discretion in deciding to dispose summarily of the Department's legal and policy arguments.⁶⁸

B. Substantive Adequacy

The final question is whether, given the absence of an evidentiary hearing, the Commission was justified in concluding on the record before it that the proponents of Agreement 10140 had shown that their anticompetitive agreement was required by a serious transportation need, necessary to secure important public benefits, or in furtherance of a valid regulatory purpose of the Shipping Act.FMC v. Aktiebolaget Svenska Amerika Linien,supra,390 U.S. at 243,88 S.Ct. at 1008. The agency's decision to treat the Department's antitrust objections summarily requires that we "closely scrutinize" its conclusions,Gulf StateUtilities Co. v. FPC,411 U.S. 747,763,93 S.Ct. 1870,1880,36 L.Ed.2d 635(1973), and "examine the supporting findings and assumptions with especial care,"United States v. FCC, supra,96-97. We thus examine in some detail the links in the Commission's chain of reasoning, recognizing, of course, that the agency's findings and conclusions must be affirmed unless "arbitrary, capricious, an abuse of abuse of discretion, or otherwise not in accordance with law,"5 U.S.C. § 706(2)(A), i.e., we are not to supplant the agency's judgment with our own.New York Shipping Association, Inc. v. FMC,202 U.S.App.D.C. 253, 258,628 F.2d 253,258(1980);United States Lines v. FMC,189 U.S.App.D.C. 361, 368,584 F.2d 519,526(1978).

1. Judgmental conclusions

The Commission has concluded that Agreement 10140 merited an extension for another 18 months because it "is not more restrictive of competition than is reasonably necessary to accomplish proponents' legitimate objectives":⁶⁹

"[w]ithout the stabilizing influence of [Agreement 10140,] uncontrolled rate cutting is likely to develop which would result in service disruptions and the probable elimination of some carriers from the trade — conditions which the Shipping Act was intended to eliminate."⁷⁰

The Commission saw no anticompetitive effect of "major significance" to counteract this "stabilizing influence":⁷¹The Agreement's members faced competition from six independent all-water liner services and one independent minibridge service as well as from a number of unregulated "tramp operators."⁷²Moreover, the Commission noted that the intermodal carriers' right to pursue independent action on 48 hours' notice (see TAN 11supra)

permits some rate competition to exist between Proponents. Although Seatrain and USL have generally maintained ratePage 822parity with the conference carriers, they have and will

. . . adjust [their] rates as [they deem] necessary to meet the demands of shippers, competition from independent lines, or competition from members of the Gulf/United Kingdom Conference.⁷³

The Department contends the Commission's reasoning is arbitrary for failing to pay adequate heed to the Agreement's effect on prices and for treating the survival of ocean carriers as a legitimate objective under the Shipping Act. Pet.Br. at 35, 37-38a. Neither argument is persuasive. The Commission was aware that proponents carry about 65% of the goods moving in the traditional liner cargo market and that they quote prices 10-15% above those of the independent carriers.⁷⁴We are not in position to quarrel with the Commission's judgment that Agreement 10140's prevention of "uncontrolled rate cutting" and its consequences would justify the higher prices that customers of Agreement members must pay. Nor can we say the Commission was wrong in considering the importance of preserving carrier capacity, which it could relate to adequate service and, in turn, to the public interest factors of a serious transportation need, an important public benefit, or a valid regulatory purpose of the Shipping Act. The Commission has rationally related its judgmental conclusions to its factual finding that absent the Agreement "uncontrolled rate cutting is likely to develop." SeeBurlington Truck Lines, Inc. v. United States,371 U.S. 156,168,83 S.Ct. 239,245,9 L.Ed.2d 207(1962). In these instances we perceive the Commission exercising an expert judgment to which we must defer.⁷⁵But we must also be satisfied, before we affirm the Commission's order, that the factual predicate of its conclusion is also adequate. It is to that inquiry we now turn.

2. Factual conclusions

Although Commission orders are not subject to the provision of the Administrative Procedure Act requiring that agency decisions be supported by substantial evidence on the record considered as a whole,United States Lines, supra,189 U.S.App.D.C. at 368,584 F.2d at 526, courts have routinely assumed that Commission orders are subject to some kind of substantial evidence standard,⁷⁶presumably on the theory that an agency decision that is not based on substantial evidence should be overturned as arbitrary and capricious or as an abuse of discretion. SeePacific Legal Foundation v. DOT,193 U.S.App.D.C. 184, 189, n. 35,593 F.2d 1338,1343n. 35,cert. denied,444 U.S. 830,100 S.Ct. 57,62 L.Ed. 2d 38(1979).⁷⁷Substantial evidence generally has meant "such relevant evidence as a reasonable mind might accept as adequate to support a conclusion." But this "does not go so far as to justify orders without a basis in evidence having rational probative force."Consolidated Edison Co. v.NLRB,305 U.S. 197,229,230,59 S.Ct. 206,216,217,83 L.Ed. 126(1938). Another way of stating this standard is to ask whether the record contains data sufficient to support an informed conclusion. We thus examinePage 823the record support for FMC's factual conclusions.

The central premise of the Commission's ultimate finding that Agreement 10140 is not contrary to the public interest is that there is a need to alleviate "disruptive pressures" in the Gulf/U.K. trade. That such pressures exist was inferred from the practices of the Baltic Shipping Company, "a Soviet flag controlled carrier with a demonstrated policy of predatory pricing."⁷⁸There is record evidence to support the Commission's finding that Baltic Shipping Company does indeed undercut its competitors' prices by as much as 25-30%.⁷⁹There is a dearth of evidence, however, to support the Commission's related prediction that absent a rate agreement it would be

especially difficult for Seatrain and USL to resist lowering their rates to meet the aggressive pricing policies of Baltic Shipping Company on high value container cargo in the absence of a rate agreement. Such cargo is incremental to Seatrain and USL's intermodal service, but it is the mainstay of the conference carriers' operation. If a rate war developed between intermodal carriers and the all-water carriers, it is unlikely that the conference could survive.⁸⁰

"These recitations are ample in rhetoric, but `sparing in detail.'"⁸¹The supporting evidence consists solely of the unsubstantiated opinion of the proponents' affiant, the Secretary of Agreement 10140.⁸²As we said inUnited States v. CAB,supra,511 F.2d at 1326:

questions as to probable competitive behavior and its probable effects are susceptible to determination in the light of business and economist testimony and exhibits, and cross-examinations concerning analyses and underlying assumptions. Such matters are not to be determined exclusively by reasoning in the abstract, based upon logical speculation.

This is not to say that a full-scale evidentiary inquiry was required in this case. We have already held that the Commission did not err in failing to hold a formal hearing on the Department's written submissions. But it was incumbent upon the Commission to secure an adequate data base for its predictions as to trade disruptions in the absence of Agreement 10140. It was not entitled to accept at face value the conclusory predictions of the Agreements' proponents. "While we recognize that agency expertise is to be accorded deference and that the Commission can correct present errors, neither of these principles can substitute for the adequate evidentiary basis upon which the Commission's findings must rest."⁸³Page 824

We therefore remand the case to the Commission so that it can reconsider, in light of sufficient data, its prediction that the absence of Agreement 10140 would result in trade disruption sufficiently serious to justify the Agreement's anticompetitive effects.⁸⁴The Commission should elicit from proponents whatever specific evidence there may be to support that prediction, and should permit the Department an appropriate opportunity to evaluate that evidence.⁸⁵We leave it to the judgment of the Commission to determine the form of the procedures to be employed on remand.City of Huntingburg,Indiana v. FPC,162 U.S.App.D.C. 236,498 F.2d 778,789(1974). The Commission has jurisdiction under section 15 of the Shipping Act to review a rate agreement between all-water carriers and rail/ocean carriers who service the same trade. This falls within the scope of section 15 as an agreement between persons subject to the Act that affects competition in connection with ocean transportation. Commission jurisdiction over the agreement does not conflict with ICC jurisdiction over land carriage, for the ICC retains power over inland rates.

The Department of Justice, suing in its law enforcement capacity, may challenge the order approving this agreement by invoking the Hobbs Act's judicial review provision in favor of a "party aggrieved." The Department qualifies as such a party because it participated below and because the Commission approval of the rate agreement directly interferes with the Department's statutory duty to enforce the antitrust laws. The Department's simultaneous statutory involvement in the defense of Commission orders is at most a surface anomaly that does not materially interfere with an effective agency defense. Nor is there otherwise any persuasive indication that Congress meant to preclude the Department from seeking judicial review of the orders of Hobbs Act agencies. And, this case is constitutionally justifiable inasmuch as there is concrete adverseness between the parties and the controversy is of the sort traditionally resolved by courts.

Although the Commission was not required to hold an adversarial evidentiary hearing in this case, it was required to marshal sufficient data to support its factual, predictive conclusions. Because the Commission did not base its expert judgment on a set of sufficient and specific facts, but instead relied solely on the unsubstantiated conclusions of the Agreement's proponents, we remand to the Commission for elicitation of pertinent facts and reconsideration of the factors relevant to the public interest.Judgment accordingly.