Even where the statute requires that the rulemaking procedure take place on the record after opportunity for an agency hearing, thus triggering the applicability of 5 U.S.C.S. § 556, § 556(d) provides that the agency may proceed by the submission of all or part of the evidence in written form if a party will not be prejudiced thereby. 5 U.S.C.S. § 556(d). The Administrative Procedure Act makes it plain that a specific statutory mandate that the proceedings take place on the record after hearing may be satisfied in some circumstances by evidentiary submission in written form only.
Pursuant to 1(14)(a) of the Interstate Commerce Act (49 USCS 1(14)(a)), which authorizes the Interstate Commerce Commission, "after hearing," to establish compensation to be paid by a railroad for the use of cars not owned by it, the Commission issued a tentative draft, based on information compiled by railroads, of incentive per diem charges on standard boxcars, which charges were designed to spur prompt return of cars to their owners, and to make acquisition of new cars financially attractive to the railroads. The Commission gave all interested parties 60 days in which to file written statements of position, submissions of evidence, or other relevant observations, but denied certain railroads' requests for an oral hearing before the Commission promulgated its final incentive per diem rate schedule. Two of the railroads instituted an action in the United States District Court for the Middle District of Florida to set aside the rate schedule, contending that the Commission, in restricting the railroads to only written submissions of evidence and arguments, had failed to comply with the applicable hearing provisions of the Administrative Procedure Act (5 USCS 551 et seq.). The District Court held that in view of the language of 1(14)(a) of the Interstate Commerce Act, the Commission's rule-making procedure was subject to 556 and 557 of the Administrative Procedure Act, which govern when rules are required by statute "to be made on the record after opportunity for an agency hearing," and which require that interested parties be allowed to present oral evidence and to cross-examine witnesses, except where parties will not be prejudiced by restriction to written submissions. Thus, the district court held that the Commission's determination to receive submissions from railroads only in written form was a violation of § 556(d) because railroads were prejudiced by that determination.
Did the Interstate Commerce Commission fail to comply with the applicable provisions of the Administrative Procedure Act by deciding to receive submissions from railroads only in written form and without actual hearing?
The Court held that inextricably intertwined with the hearing requirement of the Administrative Procedure Act in this case was the meaning to be given to the language "after hearing" in 49 U.S.C.S. § 1(14)(a). The Court held that the term "hearing" as used § 1(14)(a) did not necessarily embrace either the right to present evidence orally and to cross-examine opposing witnesses, or the right to present oral argument to the agency's decision-maker. Thus, the Court concluded that the hearing requirement of § 1(14)(a) was met.