344 U.S. 298 (1953), American Trucking Associations, Inc. v. United States

Citation:344 U.S. 298, 73 S.Ct. 307, 97 L.Ed. 337
Party Name:American Trucking Associations, Inc. v. United States
Case Date:January 12, 1953
Court:United States Supreme Court
 
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344 U.S. 298 (1953)

73 S.Ct. 307, 97 L.Ed. 337

American Trucking Associations, Inc.

v.

United States

United States Supreme Court

Jan. 12, 1953

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF ALABAMA

Syllabus

Under the Motor Carrier Act, 1935, as amended, the Interstate Commerce Commission promulgated rules governing the use by authorized motor carriers of equipment not owned by them but leased from the owners or obtained by interchange with other authorized motor carriers. These rules abolish trip leasing and revenue splitting with driver owners; require written contracts, carrier inspection, control and responsibility for nonowned equipment, and, for interchanged equipment, require drivers employed by the certified carrier over whose route it travels.

Held:

1. The promulgation of these rules for authorized carriers is within the Commission's power, despite the absence of specific reference to leasing practices in the Act. Pp. 308-313.

2. The rules do not violate the National Transportation Policy. Pp. 313-314.

3. The rules and the exemptions therefrom are not unreasonable. Pp. 314-316.

4. The rules do not violate § 208(a) or § 209(b), protecting the carriers' right to augment their equipment. Pp. 316-317.

5. They do not violate § 203(b)(6), which exempts from the Commission's jurisdiction vehicles used in carrying only livestock, fish, or agricultural commodities -- though they may increase the cost of operating such vehicles. Pp. 317-318.

6. Nor were the rules the product of proceedings fatally at variance with requirements of the Administrative Procedure Act. Pp. 318-320.

(a) Section 7(c) of the Administrative Procedure Act, providing that the proponent of a rule "shall have the burden of proof," is inapplicable, since these rules were promulgated under

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§ 204(a)(6) of the Motor Carrier Act, which requires no record or hearing. Pp. 318-320.

(b) Similarly inapplicable is § 8(b) of the Administrative Procedure Act, which requires that decisions shall include a statement of "findings and conclusions." P. 320.

7. In a carrier's suit to enjoin enforcement of these rules, the District Court did not err in refusing to permit introduction of evidence of "confiscation," though the rules may affect the value of some going concerns. Pp. 320-323.

101 F.Supp. 710 and 103 F.Supp. 694, affirmed.

Two federal district courts declined to enjoin enforcement of rules promulgated by the Interstate Commerce Commission governing the use by motor carriers of equipment not owned by them. 101 F.Supp. 710; 103 F.Supp. 694. On appeal to this Court, affirmed, p. 323.

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REED, J., lead opinion

MR. JUSTICE REED delivered the opinion of the Court.

These appeals attack new Interstate Commerce Commission rules governing the use of equipment by authorized motor carriers when the equipment is not owned by the carrier, but is leased from the owner or obtained by interchange with another authorized carrier. They

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were prescribed by the Commission and reported Ex Parte No. MC-43, Lease and Interchange of Vehicles by Motor Carriers, 52 M.C.C. 675. As will be seen from the portions we have quoted in the Appendix, they principally require carrier inspection; when the equipment is leased, control for a minimum of thirty days, and a method of compensation other than division of revenues between lessor and lessee; and, in the case of use of another carrier's equipment, authorization to the exchange point and actual transfer of control. Thus, the practice of using leased equipment and that obtained by interchange is brought into conformity with the regulation of carrier-owned equipment to avoid evils that had grown up in that practice.

Some six suits were instituted to test the validity of the rules in the district courts under 28 U.S.C. §§ 2321-2325. Three were stayed by orders, and one was not moved pending disposition of the instant cases.1 These came here on direct appeal from two separate judgments denying the injunctive relief prayed for, one in the Southern District of Indiana, Eastern Motor Express, Inc. v. United States, 103 F.Supp. 694, and the other in the Northern District of Alabama, American Trucking Associations, Inc. v. United States, 101 F.Supp. 710. The issues there considered and resolved against the applicants concerned the Commission's authority under the Motor Carrier Act of 1935, Interstate Commerce Act, Part II, 49 Stat. 543, as amended, 54 Stat. 919, 49 U.S.C. § 301 et seq..; the impact of the rules on agricultural trucking and on the guaranteed right of authorized carriers to augment their equipment; the application of the

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Administrative Procedure Act, 5 U.S.C. § 1001 et seq., and the right of the protestants to introduce additional evidence in the district courts. Since there were only minor differences in the content of the two cases appealed, they may be treated together.

I. Introduction. -- We consider at the outset the existing conditions of the motor truck industry and its regulation as developed during the Commissioner's hearings, because only against such a background are the rules meaningful. Commission authorization in the form of permits or certificates of convenience and necessity is a precondition [73 S.Ct. 311] to interstate service by virtue of the Motor Carrier Act. Such authorization, except under the "grandfather" clause, is granted only after a showing of fitness and ability to perform and a public need for the proffered service. And it specifically limits the scope and business of the permitted operations in the case of a contract carrier, and the routes and termini which may be served by a certificated common carrier.2

The Act waives these conditions of agency authorization and service limitations for a sizable portion of the industry, however. Most important of the exempt operations are those involving equipment used in the transportation of agricultural products. By and large, the equipment in this category is owned and operated by the same person. It falls only within the Commission's jurisdiction over drivers' qualifications, hours of service, and safety.3 And so there is no mandate on these exempt owner-operators to provide adequate and nondiscriminatory

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service, adhere to published rates, and comply with the strict insurance requirements imposed on carriers authorized for general carriage.4

Because of the limiting character of the regulatory system, authorized carriers have developed a wide practice of using nonowned equipment. They have moved in two directions. The first is interchange. This includes those arrangements whereby two or more certificated carriers provide for through travel of a load in order to merge the advantages of certification to serve different areas. In this fashion, a wholly or partially loaded trailer may be exchanged at the established interchange point, or even an entire truck travel the line without interruption, under the guise of a shift in control. The second is leasing. This relates to the use of exempt equipment in authorized operations. Carriers subject to Commission jurisdiction have increasingly turned to owner-operator truckers to satisfy their need for equipment as their service demands. By a variety of arrangements, the authorized carriers hire them to conduct operations under the former's permit or certificate. Such operators thus travel approved routes with nonexempt property, and, in the great majority of instances, sever connections with their lessee carrier at the end of the trip.5

The use of nonowned equipment by authorized carriers is not illegal, either under the Act or the rules under

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consideration.6 But evidence is overwhelming that a number of satellite practices directly affect the regulatory scheme of the Act, the public interest in necessary service, and the economic stability of the industry, and it is on these that the rules focus. It appears, for instance, that, while many arrangements are reduced to writing, oral leases are common; some were concluded after the trips were made, and, in several cases, exempt operators solicited business themselves with blank authorized carrier forms or other evidence of agency. It is strongly urged that this very informality of the contractual relationship between carrier and exempt operator creates [73 S.Ct. 312] conditions in the industry inconsistent with those which the Act contemplates. Proof was proffered during the proceedings that the informal and tenuous relationships in lease and interchange permit evasions of the limitations on certificated or permitted authority. Since the driver of the exempt equipment is not an employee of the carrier, sanctions for violation of geographical restrictions are clearly difficult to impose, especially in the case of the single trip lessor. Interchange may, as well, become a device to circumvent geographical restrictions in the certificate. The practice of authorized carriers conducting operations beyond the territory they are entitled to serve under cover of a lease from the local carrier was clearly shown in the evidence before the Commission. It appeared, in fact, that some of these operations are entirely fictional, being created ad hoc after the trip is made -- and this at times in the wake of a specific denial by the Commission of an application to serve the area.

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It was also alleged, and shown by evidence of some incidents, that the Commission's safety requirements were not observed by exempt lessors. Because of the fact that the great bulk of the arrangements cover only one trip, leasing carriers have little opportunity or desire to inspect the equipment used, especially in cases where the agreement is made without...

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