Opinion for the court filed by Circuit Judge TAMM.
TAMM, Circuit Judge:
This case concerns the reviewability and lawfulness of the Interstate Commerce Commission's (Commission) refusal to institute a declaratory order proceeding. Petitioners assert that the Commission's action was an unexplained departure from precedent as well as an arbitrary and capricious exercise of discretion. The Commission contends that its decision was a nonfinal action committed to agency discretion by law and is therefore unreviewable. Although we find that refusals to institute declaratory order proceedings are subject to judicial review, we conclude that in this case the Commission adequately explained its decision and reasonably exercised its discretion.
This appeal arises out of a dispute between a carrier, Intercity Transportation Company (Intercity), and its shipper, Exide Safety Systems (Exide).
After an unsuccessful attempt to resolve this dispute informally, Intercity petitioned the Commission to institute a declaratory order proceeding to determine the proper classification. Petition for Declaratory Order, Joint Appendix (J.A.) at 1a-4a. The Commission declined to institute such a proceeding and suggested that Intercity and Exide pursue other remedies. Intercity Transportation Co., ICC Decision No. 37476 (Sept. 16, 1980) (1980 Decision), J.A. at 5a. The Commission subsequently denied a petition for administrative review, Intercity Transportation Co., ICC Decision No. 37476 (Apr. 8, 1981) (1981 Decision), J.A. at 43a-45a, and a petition to reopen the proceedings regarding Intercity's request for a declaratory determination. Intercity Transportation Co., ICC Decision No. 37476 (Aug. 23, 1983) (1983 Decision), J.A. at 71a-75a. In its 1983 Decision, the Commission again suggested pursuit of other remedies and asserted that it had discretion to reserve declaratory order proceedings for disputes of wider industry significance. 1983 Decision, J.A. at 72a-74a.
Petitioners assert before this court that the Commission failed to explain an abrupt departure from its past policy of routinely issuing declaratory relief. Petitioners also contend that the Commission's decision, even if explained, was arbitrary and capricious. The Commission responds that its denial of Intercity's petition was not a final action and accordingly is unreviewable. Alternatively, the Commission contends that its decision is not reviewable because it is committed by law to agency discretion. Finally, the Commission argues that if refusals to institute declaratory order proceedings are reviewable, its decision in this case was not arbitrary and capricious and accordingly must be affirmed. We conclude that the Commission's decision is a final agency action not committed to agency discretion by law. Although the decision at issue is therefore reviewable, we
Only final Commission actions are reviewable by this court under the Administrative Procedure Act (APA), 5 U.S.C. § 704 (1982), and the Hobbs Act, 28 U.S.C. § 2342(5) (1982).
First, the Commission's decision not to initiate a declaratory order proceeding is not subject to alteration. Intercity unsuccessfully petitioned the Commission on three separate occasions for the relief it now seeks in this court. Without question, the Commission's denials are not "tentative, provisional, or contingent, subject to recall, revision, or reconsideration ...." National Treasury Employees Union, 712 F.2d at 671.
Second, the Commission's refusal to issue a declaratory order has legal consequence. Section 554(e) of the APA guarantees petitioners a right to considered review of their request for declaratory relief:
5 U.S.C. § 554(e) (1982) (emphasis added). The phrase, "sound discretion," limits the manner in which an agency may determine whether to initiate declaratory order proceedings.
In sum, since petitioners have presented a cognizable legal claim arising out of an unalterable Commission decision, we find that decision "final" for the purpose of judicial review.
2. Committed to Agency Discretion by Law
Final agency action may nonetheless be exempt from judicial review where the action "is committed to agency discretion by law." 5 U.S.C. § 701(a)(2) (1982). The Commission asserts that decisions concerning the initiation of declaratory order proceedings are entirely discretionary and therefore unreviewable. We begin consideration of the Commission's argument by noting there is a strong presumption in favor of judicial review of final agency action. WWHT, Inc. v. FCC, 656 F.2d 807, 815 (D.C.Cir.1981); National Ass'n of Postal Supervisors v. United States Postal Service, 602 F.2d 420, 430 (D.C.Cir.1979). See also Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402, 410, 91 S.Ct. 814, 820, 28 L.Ed.2d 136 (1971). In Natural Resources Defense Council, Inc. v. SEC, 606 F.2d 1031 (D.C.Cir.1979), this court outlined three criteria for identifying those cases in which this presumption of reviewability is overcome. Actions are committed to agency discretion where there is little need to safeguard petitioner's interests, review would impair the effectiveness of agency administration, and the disputed issue is not appropriately drawn for judicial review. Id. at 1044. The case at hand fulfills none of these criteria and is accordingly reviewable.
First, petitioners have asserted a violation of a statutorily defined legal right and have identified a concrete injury resulting from that violation. Petitioners contend
Second, review in this case will not hinder the effectiveness of agency administration. The scope of our review is necessarily narrow. We may examine the Commission's exercise of discretion, not to evaluate the wisdom of its policy judgment, but only to guard against arbitrary and capricious decisionmaking. See WWHT, Inc. v. FCC, 656 F.2d 807, 817 (D.C.Cir.1981). Such limited review of Commission refusals to institute declaratory order proceedings will not unduly hinder the Commission's regulation of interstate commerce. See Natural Resources Defense Council, Inc., 606 F.2d at 1044.
Third, the issue before us is entirely appropriate for judicial review. Section 706(2)(A) of the APA expressly authorizes this court to ensure that the exercise of agency discretion is not without a rational basis. 5 U.S.C. § 706(2)(A) (1982); WWHT, Inc. v. FCC, 656 F.2d at 815-16. Moreover, the APA provides this court with the means to determine whether the Commission's discretionary decision is arbitrary and capricious. Section 555(e) commands the Commission to provide a brief statement of the grounds for denial of any written petition made in connection with any agency proceeding. 5 U.S.C. § 555(e) (1982). Such statements in other contexts routinely provide the basis for judicial review of agency action. Estate of French v. FERC, 603 F.2d 1158, 1162 (5th Cir.1979). See also Roelofs v. Secretary of the Air Force, 628 F.2d 594, 599-601 (D.C.Cir.1980).
Because review in this case is necessary to protect petitioners' interests, will not impair agency administration, and is expressly authorized by the APA, the strong presumption of reviewability applicable to final agency action is not overridden. Accordingly, we conclude that the Commission's refusal to institute a declaratory order proceeding is not committed to agency discretion and is thus reviewable.
B. The Commission's Exercise of Discretion
Petitioners assert that the Commission radically departed from its prior policy of regularly granting declaratory relief without adequately explaining its change in policy. We recognize the familiar principle that "[r]easoned decisionmaking requires an agency to explain changes of policy from past decisions ...." Continental Air Lines, Inc. v. CAB, 551 F.2d 1293, 1303 (D.C.Cir.1977). See Baltimore & Annapolis Railroad v. Washington Metropolitan Area Transit Commission, 642 F.2d 1365, 1370 (D.C.Cir.1980). In this case, however, we believe the Commission sufficiently explained the reasons for the change in policy alleged by petitioners.
The Commission plainly stated that its refusal to issue declaratory relief was due to a judgment that its limited resources are better allocated to other areas:
1983 Decision, J.A. at 72a. The Commission further explained that it will reserve declaratory order proceedings for those disputes with industry-wide significance and noted alternative remedies currently available to Intercity and Exide. 1983 Decision, J.A. at 71a, 73a, 75a; see also 1981 Decision, J.A. at 45a. Given the Commission's discussion of the grounds for its decision in this case and the guidance it offered for future cases, we cannot say the Commission failed to explain adequately its alleged departure from past policy.
Petitioners alternatively argue that the Commission's exercise of discretion, even if explained, was arbitrary and capricious. They contest the Commission's decision, in large part, because they find remedies other than declaratory relief unsatisfactory.
Petitioners' claim thus challenges the wisdom, not the lawfulness, of the Commission's decision. The Commission has made a judgment that the institution of a declaratory order proceeding to resolve this private classification dispute would be an imprudent and inefficient allocation of agency resources. In making this policy judgment, the Commission has articulated coherently those circumstances where it
For the foregoing reasons, we affirm the Commission's decision not to institute a declaratory order proceeding to resolve Intercity's classification dispute.
5 U.S.C. § 704 (1982).
28 U.S.C. § 2342(5) (1982).
Neither party asserts, nor do we find, any difference between the meaning of "final" agency action as used in the APA and in the Hobbs Act. See generally New York Dock Railway v. United States, 696 F.2d 32, 34 (2d Cir.1982).
S.7, 79th Cong., 1st Sess. § 5(d) (1945), reprinted in LEGISLATIVE HISTORY OF THE ADMINISTRATIVE PROCEDURE ACT, S.Doc. No. 248, 79th Cong., 2d Sess. [hereinafter cited as LEGISLATIVE HISTORY] 11, 157 (1946).
Comments were received from administrative agencies and private organizations regarding the original text of S.7. See H.R.REP. No. 1980, 79th Cong., 2d Sess. 14 (1946), U.S.Code Cong.Serv. 1946, p. 1195. In June 1945, the Senate Committee on the Judiciary published a committee print setting forth a tentatively revised text of S.7 with an explanation of its provisions. STAFF OF SENATE COMM. ON THE JUDICIARY, 79th Cong., 1st Sess., reprinted in LEGISLATIVE HISTORY at 11 (Comm. Print 1945). The section on Declaratory Orders of the revised text of S.7 included the phrase "sound discretion," apparently in response to concern about unfettered agency discretion:
LEGISLATIVE HISTORY at 25.
The revised text of § 5(d) of S.7 remained unchanged through the enactment of S.7 on June 11, 1946. See 92 CONG.REC. 5,789, 5,791, 5,881, 6,706 (1946). Although both the Senate and House Reports are silent on whether "sound discretion" was meant specifically to prevent agencies arbitrarily from withholding declaratory orders, they do note that the phrase limits the agencies' authority to improvidently grant such orders. S.REP. No. 752, 79th Cong., 1st Sess. 18 (1945); H.R.REP. No. 1980, 79th Cong., 2d Sess. 31 (1946). Though we recognize that the legislative history does not conclusively resolve the issue before us, we believe the development of S.7, when considered in its entirety, supports our reading of § 554(e).
We do not believe petitioners have fairly characterized the Commission's suggestion. The Commission, with unassailable clarity, suggested not that shippers and carriers transgress § 10761(a), but that they adopt a cooperative, instead of an adversarial, posture in determining the most accurate classification for a given commodity. 1983 Decision, J.A. at 73a & n. 4. We find no reason here to criticize the Commission for promoting informal, cooperative, and good-faith dispute resolution.