LONG ISLAND RAIL ROAD CO. v. ABERDEEN & ROCKFISH RAILROAD CO. Et Al.

Background

The dispute involves the Long Island Rail Road, other railroads, and the federal agency that sets interstate railroad rates (the Commission). Congress changed the law in 1973 to let railroads raise interim rates or surcharges quickly to offset higher retirement taxes. A three-judge court initially allowed the Long Island Rail Road to collect a 12.5% interim terminal surcharge, the Commission later approved a permanent surcharge, but the Court of Appeals set aside that approval and ordered the surcharge proceeds held in a separate trust.

Reasoning

The central question was whether a court could require the railroad to keep interim surcharge money in trust while the Commission finishes its final rate decision. The Supreme Court said no. It explained that Congress intended interim rates to provide immediate funds and stripped the agency — and therefore courts — of power to suspend or freeze those interim collections. The Court relied on the statute’s language and the refund process Congress built in if final rates turn out lower than interim rates.

Real world impact

The decision lets the Long Island Rail Road and similar carriers use interim surcharge receipts right away instead of holding them in a court-ordered trust. It preserves the quick-access structure Congress created, while keeping the Commission’s later final rate review and any required refunds in place. The case is sent back to the lower courts and the Commission to proceed consistent with this ruling.