## Facts

- Congress amended the Interstate Commerce Act to expand the Interstate Commerce Commission’s (ICC) authority to prescribe per diem charges for railroads’ use of one another’s freight cars in response to a national freight-car shortage.
- The ICC initiated an industry-wide rulemaking to set “incentive” per diem rates, issued notice of proposed rulemaking, and allowed 60 days for written statements of position.
- The ICC stated that any request for an oral hearing had to specify the need for the hearing and the evidence to be presented.
- Several railroads requested oral hearings; the ICC denied the requests and proceeded based on written submissions.
- Florida East Coast Railway and another railroad sued to set aside the rates, arguing the ICC was required to use APA formal procedures and that reliance on written submissions prejudiced them.
- The district court held the statute’s “after hearing” language required trial-type procedures under APA § 556(d) and found prejudice from the absence of oral hearing and cross-examination.
- The United States and the ICC appealed; the Supreme Court reversed and remanded.

## Issues

1. Whether the ICC’s rulemaking was governed by APA § 553 (informal notice-and-comment) or by APA §§ 556–557 (formal, on-the-record rulemaking) based on the Interstate Commerce Act’s “after hearing” language.
2. Whether “after hearing” entitled affected railroads to oral, trial-type hearings, including oral evidence, cross-examination, or oral argument to the agency decisionmaker.
3. Whether the railroads were prejudiced by the ICC’s decision to proceed on written submissions.

## Decision

- The Supreme Court reversed the district court and remanded for consideration of remaining challenges to the rule.
- The Court held the proceeding was governed by APA § 553, not APA §§ 556–557.
- The Court held the Interstate Commerce Act’s “after hearing” language did not require a trial-type, on-the-record hearing and did not itself confer rights to oral testimony, cross-examination, or oral argument.
- The Court concluded the ICC’s notice-and-comment process with written submissions satisfied the statutory hearing requirement for this rulemaking.
- The Court rejected the district court’s prejudice finding, noting participation through written submissions and no specific showing of evidentiary harm from the lack of live procedures.

## Legal Principles

- APA §§ 556–557 apply to rulemaking only when the governing statute requires rules to be made “on the record after opportunity for an agency hearing,” or uses equivalent language.
- Statutory language authorizing agency action “after hearing,” without “on the record” direction, does not by itself require formal rulemaking or trial-type procedures.
- In generally applicable, legislative-type rulemaking, notice-and-comment procedures under APA § 553 ordinarily satisfy statutory hearing requirements unless Congress clearly mandates more.
- An agency may rely on written submissions in rulemaking absent a statutory command for oral procedures; parties must show concrete prejudice to claim harm from proceeding without live testimony or cross-examination.

## Conclusion

The Court held that the ICC could adopt industry-wide per diem rate rules through APA § 553 notice-and-comment procedures because the statute’s “after hearing” language did not require on-the-record, trial-type hearings, and the railroads were not entitled to oral evidence, cross-examination, or oral argument as a matter of statutory procedure.


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