719 F.2d 1283 (5th Cir. 1983), 81-4072, American Transfer & Storage Co. v. I.C.C.

Docket Nº:81-4072.
Citation:719 F.2d 1283
Party Name:AMERICAN TRANSFER & STORAGE CO., et al., Petitioners, v. INTERSTATE COMMERCE COMMISSION and United States of America, Respondents.
Case Date:November 21, 1983
Court:United States Courts of Appeals, Court of Appeals for the Fifth Circuit

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719 F.2d 1283 (5th Cir. 1983)

AMERICAN TRANSFER & STORAGE CO., et al., Petitioners,




No. 81-4072.

United States Court of Appeals, Fifth Circuit

November 21, 1983

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Phillip Robinson, Joseph H. Hart, Austin, Tex., for American Transfer et al.

Ewell H. Muse, Jr., Austin, Tex., for Herder.

John H. Broadley, Gen. Counsel, Daniel B. Harrell, Atty., Kenneth P. Kolson, I.C.C., John J. Powers, III, Dept. of Justice, Washington, D.C., for I.C.C.

Paul D. Angenend, Austin, Tex., Charles Ephraim, Washington, D.C., for H.S. Anderson Trucking Co. et al.

Mark J. Andrews, William H. Shawn, Washington, D.C., for Motor Carrier Lawyers Ass'n.

James M. Doherty, Austin, Tex., for J.H. Rose Truck Line, Inc. et al. and C & H Transp. Co., Inc.

Thomas E. James, Dallas, Tex., for C & H Transp. Co., Inc.

Hugh T. Matthews, Dallas, Tex., for Steere Tank Lines, Inc.

Petition for Review of an Order of the Interstate Commerce Commission.

Before BROWN and RANDALL, Circuit Judges, and DUPLANTIER[*], District Judge.

JOHN R. BROWN, Circuit Judge:

Before us are numerous motor carrier petitioners and certain intervenors who protest the validity of the rules for motor carrier applications 1 promulgated by the

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Interstate Commerce Commission (the Commission) in response to the Congressional enactment of The Motor Carrier Act of 1980 (MCA). 2 The petitioners contend that the rules are invalid since they were promulgated in violation of the Administrative Procedure Act (APA) 3 because:

(i) the Commission did not comply with the notice (Sec. 553(b) and (d)) and comment (Sec. 553(c)) requirements;

(ii) although denominated as procedural, the rules are not entitled to that exemption (Sec. 553(b)(A)) since the rules have an adverse substantive impact on carriers and carrier applicants; and

(iii) the Commission did not have or adequately find good cause for its finding that notice and public comment were impracticable, unnecessary, or contrary to the public interest (Sec. 553(b)(B)).

Petitioners also seem to contend that even if promulgated properly the rules substantively are invalid under the MCA. Staunchly defending its authority to make the necessary changes in its procedures to effectuate the expressed will of Congress in enacting the MCA, the Commission urges that it was empowered to issue the rules and that their promulgation meets the bounds of both the APA and the MCA. In support of its position, the Commission urges that these rules are a procedural mechanism for control of its own calendar requiring no notice and comment. In any event, the Commission maintains it had found good cause for not following the notice and comment called for by the APA. Insofar as a substantive challenge is really made, the rules, the Commission contends, were reasonable and statutorily well founded. Because we find that the Commission had good cause (see (iii) above) and the rules adequately pass substantive muster, we uphold the determination by the Commission that its rules are valid and their issuance comports with the provisions of both the APA and the MCA. This makes it unnecessary for us to determine whether these are procedural rules entitled to the Sec. 553(b)(A) exception (see (ii) above) or the in-between variety of rules that have substantial impact on the applicants as recognized by our much criticized declaration in Brown Express, Inc. v. United States, 607 F.2d 695, 702 (5th Cir.1979). 4

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The Genesis of the Rules

The Genesis of MCA

Looking for the Genesis of the Rules under attack is simple: they came from the MCA. The more basic inquiry is what is the Genesis of the MCA?

The MCA became effective July 1, 1980. 5 It was the most comprehensive piece of legislation 6 affecting the surface non-rail transportation industry since 1935. But what brought on the MCA is a mixture of a number of factors. Primarily it was the dissatisfaction of Congress--then well into its new era of deregulation--with the delays which it regarded as interminable and unreasonable in the Commission's processes in motor carrier matters, such as: the granting or broadening of operating rights, or the elimination or addition of traditional but costly restrictions as to commodities, gateways, routes or dead backhauls. These delays were, so Congress legitimately thought, the result if not the cause of traditional practices likening many motor carrier applications to the now "Big" District Court case with applications, protests, witnesses, hearings, briefing, formal arguments, proposed reports, exceptions, briefs, rearguments, issuance of final reports, petitions for reconsideration, motions for stay and, at the end, a petition for review to either the former three-judge District Court and later to a Court of Appeals. 7

Added to this were the Commission's substantive, significant changes lessening restrictions and liberalizing standards, especially for entry into the business of a certificated motor carrier. 8

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Prior to the changes just detailed, the Commission took other serious steps to further streamline its procedures. For example, the Commission required persons seeking operating authority to submit with their applications sufficient information to support grants of such authority if those applications were not opposed. Ex Parte No. 55 (Sub-No. 25), 42 Fed.Reg. 62486 (December 1, 1977). The Commission also adopted rules restricting the right of intervention in motor carrier licensing cases. Ex Parte No. 55 (Sub-No. 26), 43 Fed.Reg. 50908 (November 1, 1978) aff'd sub nom American Trucking Associations, Inc. v. United States, 627 F.2d 1313 (D.C.Cir.1980).

As a result of these changes liberalizing entry into certificated motor carrier status, the number of motor carrier cases increased drastically. 9 As though this flood of new cases was not enough, the Commission suffered not an inadequate increase in staff, but actually a decrease. 10

Despite the Commission's serious efforts even with the insufficient employees to stem the tide, the result had to be the plague of ever-growing backlogs. Worse, the Commission's backlog failed to disappear. Congress recognized this fact. See H.R.Rep. No. 1069, 96th Cong., 2d Sess. 37, reprinted in 1980 U.S.Code Cong. & Ad.News

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2283, 2319: "To deal with [its case backlog] the Commission has made serious attempts to streamline its procedures within the confines of the present statute. However, the Commission's backlog of cases has continued to grow."

It was then obvious that if legislation--then in the offing--were passed making it even easier for applicants to obtain operating authority while simultaneously mandating procedural reform, the Commission would have to amend substantially its application rules to accommodate both the large number of new filings that could be expected and the new statutory time limits. Further, if such legislation were to become effective on or shortly after its enactment date, the Commission would have to revise its application procedures immediately or risk frustrating the intent of Congress that those reforms be implemented without delay.

Contemplating this eventuality, and constitutionally and organically unable to take official affirmative action prior to the passage of the legislation, the Commission did the next best thing. On June 6, 1980 it served an "Advance Warning to Prospective Applicants of Interim Application Procedures," informing the public that if the proposed legislation were passed, interim rules and applications would be necessary and the public would have little advance notice of the change in procedures. The Commission also advised that it expected to have the necessary procedures in place and the forms available on the date the legislation became effective or shortly thereafter. 11 45 Fed.Reg. 39317 (June 10, 1980).

The Commission's prescience was soon made good, for on July 1, 1980, the MCA was signed into law by the President. Immediately thereafter, on July 3, 1980, the Commission promulgated Interim Rules Governing Applications for Operating Authority. These interim rules were effective upon date of their publication in the Federal Register. See Ex Parte No. 55 (Sub-No. 43), 45 Fed.Reg. 45534 (July 3, 1980).

Impact of MCA

The MCA revised and reduced the burden of proof on the applicant for operating authority. It eliminated altogether the traditional outset burden on the applicant to establish that issuance of the certificate was required by the public convenience and necessity. 12 (See 49 U.S.C. Sec. 10922(b)(1)(B).

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By reducing the burden of proof on persons supporting an application, section 5 of the MCA makes it easier for (i) trucking companies to enter the market and (ii) existing companies to expand their operations. 13 The new 49 U.S.C. Sec. 10922(b) "creates a presumption that the grant of the application is consistent with the public convenience and necessity if the applicant demonstrates that the proposed service will serve a useful public purpose." H.R.Rep. 1069, supra note 13, at 15 and 2297. Section 5 also limits which motor carriers can protest applications for operating authority, precluding all protestants but those with demonstrated and defined interests in such proceedings. See 49 U.S.C. Sec. 10922(b)(7), (8).

Section 25 of the MCA makes it quite clear that the Congress deemed it "absolutely vital that the Commission be able to process these applications in a fair and expeditious manner." See H.R.Rep. No. 1069, supra note 13, at 37-39 and 2319-20. 14 Consequently, among the many changes enacted to accomplish this Congressional goal was the establishment of statutory deadlines for Commission action on motor carrier entry cases. See 49 U.S.C. Sec. 10322. Section 10322 was amended to require that (i) in any case in which an oral hearing is held the Commission...

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