On Appeal from the District Court of the United States for the Western District of New York.
Messrs. T. Carl Nixon and Justin J. Doyle, both of Rochester, N.Y., for appellant. [307 U.S. 125, 126] Mr. Hugh B. Cox, of Washington, D.C., for appellees.
Mr. Justice FRANKFURTER delivered the opinion of the Court.
This is an appeal, under Sec. 238 of the Judicial Code as amended, 28 U.S.C. 345, 28 U.S.C.A. 345, from a final decree by a district court of three judges, under the Urgent Deficiencies Act of October 22, 1913, 28 U.S.C. 45, 47a, 28 U.S.C.A. 45, 47a, as extended by Sec. 402(a) of the Federal Communications Act, 47 U.S.C. 402(a), 47 U.S.C.A. 402(a), dismissing on the merits a bill to review an order of the Federal Communications Commission.
At the outset a challenge to the jurisdiction of the District Court confronts us. It involves those problems of administrative law which are implied by the doctrine of 'negative orders.' Inasmuch as this phrase is shorthand for a variety of situations, sharp heed must be given to the precise circumstances-inter alia, the statutory provisions for review, the terms of the contested order, the grounds of objection to it-which in this and other cases have invoked the doctrine.
Section 2(b) of the Communications Act of 1934, 47 U.S.C.A. 152(b), provides that, with certain exceptions not here material, the Communications Commission shall not have jurisdiction over any carrier 'engaged in interstate or foreign communication solely through physical connection with the facilities of another carrier not directly or indirectly controlling or controlled by, or under direct or indirect common control with, such carrier.' The appellant, Rochester Telephone Corporation (hereafter called the Rochester), is a New York corporation maintaining a system of telephone communications in and around the City of Rochester. For present purposes the Rochester is to be [307 U.S. 125, 127] deemed as engaged in interstate communications solely because of physical connections with the facilities of the New York Telephone Company ( hereafter called the New York).
The present controversy grew out of a ruling by the Federal Communications Commission that the Rochester owed obedience to a series of orders issued by the Commission. These orders required all telephone carriers subject to the Act to file schedules of their charges, copies of contracts with other telephone carriers, information concerning their corporate and service history, their relations with affiliates, their use of franks and passes. Copies of these orders were duly served on the Rochester. No response being had, the Telephone Division of the Communications Commission, on October 9, 1935, ordered the Rochester to show cause why it should not be required to file responses to the general orders theretofore served upon it. 1 The Rochester answered, claiming to be outside the requirements of the Act except as to matters not here questioned.
To ascertain the facts in the contested issue, the Commission appointed a trial examiner. At hearings held by him the Rochester entered a special appearance, denying the Commission's jurisdiction and contending that the burden of proof was on the Commission to show that Rochester did not come within the exclusionary provisions of Section 2(b)(2). After a thorough hearing2 and the submission of briefs, the examiner filed his report, to which the Rochester duly excepted. Upon the basis of these proceedings and of argument before it, the Commission, through its Telephone Division, sustained the findings of its chief examiner, determined that the Rochester was [307 U.S. 125, 128] under the 'control' of the New York and therefore not entitled to the classification of a mere connecting carrier under Section 2(b)(2). Accordingly, the Commission ordered the Rochester classified 'as subject to all common carrier provisions of the Communications Act of 1934, and, therefore, subject to all orders of the Telephone Division.' A petition for rehearing before the full Commission was denied.
The Rochester thereupon filed the present bill, alleging that the order entered by the Commission on November 18, 1936, pursuant to its Report, was contrary to undisputed facts and erroneous as a matter of law, and that the Commission's threat to enforce it put the Rochester to the hazard of irreparable injury, and praying that the District Court 'make and enter its order and decree setting aside and annulling said orders of the Federal Communications Commission hereinbefore mentioned, and each and all of them, and enjoining the enforcement of said orders, except in so far as the provisions of said orders ... have already been complied with.'
The case was disposed of in the District Court on the pleadings and the record before the Commission.
Below, the Government made no objection to the District Court's jurisdiction, nor did that Court raise the question sua sponte. 3 It sustained the Commission's action on the merits and dismissed the bill. Here, the Government urges that under the doctrine of 'negative orders' the Commission's order was not reviewable, but, in the alternative, supports the decree on the merits.
The relation of action by the Federal Communications Commission to the reviewing power of the courts is here [307 U.S. 125, 129] for the first time. The jurisdictional objection raised by the Government in this case implicates other federal regulatory bodies as well, because the various statutory schemes for judicial review have either been carried over from the Urgent Deficiencies Act, pertaining to orders under the Acts to Regulate Commerce, or because different statutory provisions have by analogy been assimilated to the 'negative order' doctrine. That doctrine has not had wholly plain sailing in the many cases, both here and in the lower federal courts, since it first got under way in 1912, in Procter & Gamble Co. v. United States, 225 U.S. 282 , 32 S.Ct. 761
The important procedural problems with which this case is entangled therefore call for clarification.
The prior decisions involving the 'negative order' doctrine fall into three categories:4
(1) Where the action sought to be reviewed may have the effect of forbidding or compelling conduct on the part of the person seeking to review it, but only if some further action is taken by the Commission. Such a situation is presented by an attempt to review a valuation made by the Interstate Commerce Commission which has no immediate legal effect although it may be the basis of a subsequent rate order.
(2) Where the action sought to be reviewed declines to relieve the complainant from a statutory command forbidding or compelling conduct on his part. The most obvious case is a denial of permission by the Interstate Commerce Commission for a departure from the long-short haul clause. [307 U.S. 125, 130] (3) Where the action sought to be reviewed does not forbid or compel conduct on the part of the person seeking review but is attacked because it does not forbid or compel conduct by a third person. A familiar example is that of a shipper requesting the Interstate Commerce Commission for an order compelling the carrier to adopt certain rates or practices which the Commission, on the merits, declines. Another instance is where the Commission authorizes the carrier to depart from the long-short haul clause and a shipper adversely affected seeks to have the authorization set aside.
In group (1) the order sought to be reviewed does not of itself adversely affect complainant but only affects his rights adversely on the contingency of future administrative action. In view of traditional conceptions of federal judicial power, resort to the courts in these situations is either premature or wholly beyond their province. Thus, orders of the Interstate Commerce Commission setting a case for hearing despite a challenge to its jurisdiction, 5 or rendering a tentative6 or final valuation7 under the Valuation Act, 49 U.S.C.A. 19a, although claimed to be inaccurate, or holding that a carrier is within the Railway Labor Act, 45 U.S.C.A. 151 et seq., and therefore amenable to the National Mediation Board, are not reviewable. 8
The governing considerations which keep such orders without the area of judicial review were thus summarized for the Court by Mr. Justice Brandeis in denying reviewability of a 'final valuation' under the Valuations Act: 'The so-called order here complained of is one which does not command the carrier to do, or to refrain from [307 U.S. 125, 131] doing, anything; which does not grant or withhold any authority, privilege, or license; which does not extend or abridge any power or facility; which does not subject the carrier to any liability, civil or criminal; which does not change the carrier's existing or future status or condition; which does not determine any right or obligation.' United States v. Los Angeles R.R., 273 U.S. 299, 309 , 310 S., 47 S.Ct. 413, 414.
Plainly the denial of judicial review in these cases does not derive from a regard for the special functions of administrative agencies. Judicial abstention here is merely an application of the traditional criteria for bringing judicial action into play. Partly these have been written into Article 3 of the Constitution, U.S.C.A., by what is implied from the grant of 'judicial power' to determine 'Cases' and 'Controversies,' Art. 3, Sec. 2, U.S.Constitution. 9 Partly they are an aspect of the procedural philosophy pertaining to the federal courts whereby, ever since the first Judiciary Act, Congress has been loathe to authorize review of interim steps in a proceeding. 10 [307 U.S. 125, 132] Group (2) is composed of instances of statutory regulations which place restrictions upon the free conduct of the complainant. To rid himself of these restrictions the complainant either asks the Interstate Commerce Commission to place him outside the statute, or, being concededly within it, be invokes the Commission's dispensing power. In this type of situation a complainant seeking judicial review under the Urgent Deficiencies Act of adverse action by the Commission must clear three hurdles: (a) 'case' or 'controversy' under Article 3; (b) the conventional requisites of equity jurisdiction; (c) the specific terms of the statute granting to the district courts jurisdiction in suits challenging 'any order' of the Commission.
Where a complainant seeks the Commission's authority under the terms of a statute and the Commission's action is followed by legal consequences, as was the case in Lehigh Valley R.R. v. United States, 243 U.S. 412 , 37 S. Ct. 397, or where the Commission's order denies an exemption from the terms of the statute, as in the Inter-Mountain Rate Case, 234 U.S. 476 , 34 S.Ct. 986, the road to the courts' jurisdiction seems to be clear. There is a constitutional 'case' or 'controversy,' Interstate Commerce Commission v. Brimson, 154 U.S. 447 , 14 S.Ct. 1125; the requirements of equity are satisfied if disregard of the Commission's adverse action entails threat of oppressive penalties; and the suit is within the express language of the Urgent Deficiencies Act in that it is one 'to enjoin, set aside, annul' an 'order of said commission.' 28 U.S.C. Sec. 46, 47, 28 U.S.C.A. 46, 47.11 While the penal- [307 U.S. 125, 133] ties may be imposed by the statute for its violation and not for disobedience of the Commission's order, a favorable order would render the prohibitions of the statute inoperative. The complainant can come into court, of course, not to review action within the discretionary au- [307 U.S. 125, 134] thority of the Commission to render an adverse rather than a favorable decision but because he urges errors of law outside the Commission's final say-so. Such an analysis emerges from a long sequence of cases under the Urgent Deficiencies Act viewed in the setting of general doctrines of federal jurisdiction. On the other hand, the result in the Lehigh Valley case was reached in the earlier phases of modern administrative law and did not deal with its specific jurisdictional problems in the perspective of underlying principles governing federal equitable jurisdiction. In consequence, the phrase 'negative orders' gained currency as though it were descriptive of some technical doctrine of jurisdiction having peculiar relevance to judicial review of orders of the Interstate Commerce Commission and comparable regulatory bodies. 12 [307 U.S. 125, 135] This brings us to the cases in group (3). Here review is sought of action by the Commission which affects the complainant because it does not forbid or compel conduct with reference to him by a third person. This type of situation is illustrated by Procter & Gamble Co. v. United States, 225 U.S. 282 , 32 S.Ct. 761. Since this case gave rise to the notion that there is a specialized jurisdictional doctrine pertaining to 'negative orders,' it calls for re-examination. Procter & Gamble Co. filed a complaint with the Interstate Commerce Commission to set aside demurrage rules that imposed charges on private cars left unloaded for over forty-eight hours on private tracks. The Commission dismissed the complaint on the ground that the rules were within the carriers' authority to make conditions for the acceptance of private cars. Procter & Gamble then petitioned the Commerce Court to annul the Commission's action and to enjoin the carriers from enforcing the rules. The Commerce Court took jurisdiction but found the Commission's action to be within its authority. On appeal this Court held that the Com- [307 U.S. 125, 136] merce Court erred in taking jurisdiction and remanded the cause for dismissal.
Clearly Procter & Gamble was authorized under Section 13 of the Act to Regulate Commerce, 49 U.S.C.A. 13, to institute the proceedings before the Commission. Since it asserted a legal right under that Act to have the Commission apply different principles of law from those which led the Commission to dismiss the complaint, the ingredients for an adjudication-constituting a case or controversy-were present. Compare Interstate Commerce Commission v. Brimson, supra; Interstate Commerce Commission v. Baird, 194 U.S. 25, 38 , 24 S.Ct. 563, 566. Judicial relief would be precisely the same as in the recognized instances of review by courts of Commission action: if the legal principles on which the Commission acted were not erroneous, the bill would be ordered dismissed; if the Commission was found to have proceeded on erroneous legal principles, the Commission would be ordered to proceed within the framework of its own discretionary authority on the indicated correct principles. The requisites of equity have of course to be satisfied, but by the conventional criteria. They were satisfied in the Procter & Gamble case, since the bill sought to avoid a multiplicity of suits. Finally, the shipper was within the express language of Congress authorizing suits 'to enjoin, set aside, annul, ... any order of the Interstate Commerce Commission.' To be sure the opinion in the Procter & Gamble case partly yielded to the Government's main contention in that case that the jurisdictional statute only applied where the order complained of was one which was to be enforced by the Commission. More recent decisions of this Court, however, have dispensed with this requisite for review. 13 [307 U.S. 125, 137] The impelling consideration underlying the decision in the Procter & Gamble case did not concern technical procedure. It was part of the process of adjusting relations between the Interstate Commerce Commission and the courts to effectuate the purposes of the Commission. This is made abundantly clear by the general atmosphere of the opinion as well as by its language,14 particularly when regard is had to the fact that the Court's spokesman was Chief Justice White, who had such a large share in developing modern administrative law. 15 While the [307 U.S. 125, 138] Interstate Commerce Commission had been in existence since 1887, the enlargement of its powers through the Hepburn Act, in 1906,16 and the Mann- Elkins Act, in 1910,17 the establishment of similar agencies in many states following the lead of New York18 and Wisconsin,19 the widespread recognition that these specific instances marked a general movement,20 made increasingly manifest the place of administrative agencies in enforcing legislative policies and called for accommodation of the duties entrusted to them to our traditional judicial system. This Court 'ascribed' to the findings of the Commission 'the strength due to the judgments of a tribunal appointed by law and informed by experience.' Illinois Central R.R. v. Interstate Commerce Commission, 206 U.S. 441, 454 , 27 S.Ct. 700, 704. Recognition of the Commission's expertise also led this Court not to bind the Commission to common [307 U.S. 125, 139] law evidentiary and procedural fetters in enforcing basic procedural safeguards.