Trailways, Inc. v. I.C.C.
| Decision Date | 21 February 1984 |
| Docket Number | Nos. 83-1070,83-1528,s. 83-1070 |
| Citation | 727 F.2d 1284 |
| Parties | TRAILWAYS, INC. et al., Petitioners, v. INTERSTATE COMMERCE COMMISSION and United States of America, Respondents, Greyhound Lines, Inc. and American Bus Association, Intervenors. TRAILWAYS, INC., Petitioner, v. INTERSTATE COMMERCE COMMISSION and United States of America, Respondents, Greyhound Lines, Inc., Intervenor. |
| Court | U.S. Court of Appeals — District of Columbia Circuit |
Betty Jo Christian, Washington, D.C., with whom George W. Hanthorn, Dallas, Tex., and Robert Lewis Thompson, Washington, D.C., were on the brief, for petitioners.
Richard J. Osterman, Jr., Atty., I.C.C., Washington, D.C., with whom John Broadley, Gen. Counsel, and Lawrence H. Richmond, Deputy Associate Gen. Counsel, I.C.C., Washington, D.C., and Robert B. Nicholson and Edward T. Hand, Atty., Dept. of Justice, Washington, D.C., were on the brief, for respondents.
Charles A. Webb, Washington, D.C., was on the brief for intervenor American Bus Ass'n.
Robert Ehrenbard and Michael A. Butterworth, New York City, were on the brief, for intervenor Greyhound Lines, Inc.
Before WRIGHT, WILKEY and WALD, Circuit Judges.
Opinion for the court filed by Circuit Judge J. SKELLY WRIGHT.
This consolidated proceeding brings before the court two related cases concerning the scope of Section 7 of the Bus Regulatory Reform Act of 1982 (BRRA), Pub.L. No. 97-261, 96 STAT. 1102, 1108, 49 U.S.C.A. Sec. 10922(i)(4) (1983). In No. 83-1070 petitioner Trailways alleges that the Interstate Commerce Commission exceeded its statutory authority in adopting a rule implementing Section 7. In No. 83-1528 Trailways challenges the Commission's first application of its newly-adopted rule. For the reasons that follow we hold that the rule is an appropriate interpretation of Section 7 and therefore affirm in No. 83-1070. However, we vacate a part of the Commission's order applying the rule in No. 83-1528 because that portion of the order exceeded the Commission's statutory authority.
Under the pre-BRRA statute, as re-codified by Congress in 1978, see Pub.L. No. 95-473, 92 STAT. 1466, a bus carrier who desired to provide intercity passenger service over regular routes was required to obtain a certificate from the ICC. 49 U.S.C. Sec. 10921 (Supp. V 1981). A carrier could obtain such a certificate if it proved, inter alia, that the proposed service was required by the "public convenience and necessity," id. Sec. 10922(a)(2). The Commission could issue the certificate only for operations "over a regular route and between specified places." Id. Sec. 10922(d)(3). A bus company that obtained a certificated route had the responsibility of maintaining "continuous and adequate" service to all communities listed on the certificate, see id. Sec. 11101(b).
This case involves "intermediate point restrictions," which prohibited the carrier from serving some or all intermediate points between the two endpoints of a certificated route. Intermediate point restrictions apparently were imposed as a result of two factors. First, the bus company in making its "public convenience and necessity showing" often had to demonstrate that there was a need for the service it was offering on that route--i.e., that service offered by other carriers was inadequate and that the additional service it offered would not jeopardize the ability of other carriers to continue to offer their services on the route. Because a bus company often could not make the requisite showing for an entire route including destination points and all intermediate stops, it would obtain the certificate only at the cost of including restrictions against serving intermediate points. Second, because a bus company had the responsibility of providing "continuous and adequate" service on its route, the company would seek restrictions on intermediate point service because it did not want to be obligated to serve all possible intermediate points.
As time went on new roads were built, enabling bus companies to offer improved service to the communities on their routes. The statute provided that "[u]nder regulations of the Commission, a motor common carrier may occasionally deviate from the regular routes, or the places specified in the certificate, or both." Id. Sec. 10922(d)(2). Under the authority of this provision the Commission established several kinds of "alternative" routes, two of which are relevant for present purposes.
In 1955 the Commission promulgated regulations permitting bus companies to use "deviation routes," which were alternate roads used to service the points for which a carrier already held certificated authority. See 49 C.F.R. Sec. 1042.2(c)(9)(i) (1982) (). The carrier could obtain a deviation route by merely filing for authority with the Commission and publishing a notice in the Federal Register. Id. The only ground for denying the application was if a protestant showed that the use of the alternate route would "materially change the competitive situation." Id. The purpose of a deviation route was for the carrier's "operating convenience only." Id. The Commission issued no certificate for a deviation route, and the grant of a deviation route in what was called a "letter notice" was entirely parasitic on the underlying certificated route: a carrier could operate on a deviation route only so long as it maintained adequate service as specified on its underlying certificate, id. Sec. 1042.2(d)(2), and a carrier could not sell, lease, or otherwise sever a given deviation authority from its underlying certificated authority. Id. Sec. 1042.2(d)(7).
In 1969 the Commission established another category of new routes to permit bus carriers to take advantage of the rapid completion of the interstate highway system. Motor Service on Interstate Highways--Passengers, 110 M.C.C. 514 (1969). The rules governing these "superhighway routes," see 49 C.F.R. Sec. 1042.1 (1982), were quite similar to those governing deviation routes. Just as with a deviation route, a carrier could obtain a superhighway route only upon a showing that the route "[would] not materially change the competitive situation" between the applicant and any other carrier. Id. Sec. 1042.1(a). For present purposes, there were two differences between superhighway and deviation routes. First, although a deviation route could not include any points not included on the underlying certificated route, a carrier could petition for a superhighway route to serve points that it had not been permitted to serve or that were not even located on the underlying certificated route. Second, the Commission granted certificates for superhighway routes, rather than the letter notice authorities it granted for deviation routes.
In 1982 Congress passed the BRRA, which was designed to eliminate unnecessary regulation of the bus industry. One of the evils addressed in BRRA was the inefficiency and waste of energy resources caused by intermediate point restrictions. Section 7 of BRRA therefore provided bus companies an opportunity to have intermediate point restrictions "automatically" removed from its routes via an abbreviated proceeding before the Commission. The carrier had only to file an application for removal and, unless a protestant could show that removal of the restriction would have an adverse impact on commuter bus operations, the Commission was required to grant the application within 90 days. BRRA Sec. 7, 96 STAT. 1108 (1982), 49 U.S.C.A. Sec. 10922(i)(4) (1983).
On September 22, 1982 the Commission issued a notice of proposed rulemaking to implement Section 7. 49 Fed.Reg. 42921 (1982). As finally adopted, the rules permitted a carrier to use a Section 7 proceeding to seek "authority to perform interstate service at all intermediate points along a motor carrier of passenger's [sic ] existing interstate regular routes including superhighway and deviation routes." Ex Parte No. MC-142 (Sub-No. 3), Appendix (App.) at 3, Joint Appendix (JA) 72 (emphasis added) (quoting regulation to be codified at 49 C.F.R. Sec. 1165.31).
The Commission received a number of comments centering on its interpretation of the statute to permit automatic restriction removal from deviation routes. Trailways argued that the rule impermissibly expanded the reach of deregulation envisioned by the statute. Section 7 provided that "the Commission shall * * * remove any operating restriction imposed on the certificate in order to authorize interstate transportation to intermediate points on any route covered by the certificate * * *." 49 U.S.C.A. Sec. 10922(i)(4) (1983) (emphasis added). Trailways' argument was simple: No certificates are issued for deviation routes; therefore no restrictions can be "imposed on" a deviation route certificate and such routes are not "covered by" a certificate; therefore the automatic restriction removal provisions of Section 7 may not be used to remove restrictions on deviation routes. Although Trailways admitted that the language was sufficiently capacious to authorize automatic removal of restrictions on certificated routes (including both regular certificated and superhighway routes) Trailways believed that the language could not reasonably be read to authorize automatic removal of intermediate point restrictions from deviation routes.
The Commission rejected Trailways' contentions. It justified its action by stating:
Deviation notices are based on the underlying certificate and are inextricably related to it. They are not severable by sale or otherwise from the underlying certificated authority. * * * [D]espite the fact that deviation notice authority may be in letter form...
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