Ace Lines, Inc. v. United States

• Decision Date: 27 January 1960
• Docket Number: Civ. No. 4-992.
• Citation: 197 F. Supp. 591
• Parties: ACE LINES, INC., Plaintiff, v. UNITED STATES of America and the Interstate Commerce Commission, Defendants.
• Court: U.S. District Court — Southern District of Iowa

197 F. Supp. 591

ACE LINES, INC., Plaintiff, v. UNITED STATES of America and the Interstate Commerce Commission, Defendants.

Civ. No. 4-992.

United States District Court S. D. Iowa.

January 27, 1960.

James R. Austin, Ralph R. Randall and Dick A. Witt, Des Moines, Iowa, for plaintiff.

Robert A. Bicks, Acting Asst. Atty. Gen., James H. Durkin, Attorney, Department of Justice, Washington, D. C., Robert W. Ginnane, General Counsel, Arthur J. Cerra and Carroll T. Prince, Jr., Asst. General Counsel, Interstate Commerce Commission, Washington, D. C., for defendants.

Before VAN OOSTERHOUT, Circuit Judge, DELEHANT and VAN PELT, District Judges.

VAN OOSTERHOUT, Circuit Judge.

This action is brought by Ace Lines, Inc. (hereinafter Ace), under §§ 1336, 2284 and 2321 to 2325 of Title 28 U.S. C.A., to restrain, annul, enjoin, and set aside a report and orders of the Interstate Commerce Commission dated December 31, 1958, and July 6, 1959, entered in Docket No. MC-C-2134, Ace Lines, Inc., Investigation and Revocation, reported at 78 M.C.C. 523.

Pursuant to statute, this case came on for final hearing before a duly designated three-judge District Court on the 30th day of November, 1959. This court has jurisdiction over this case.

The complete record made before the Commission, including all reports and orders, was introduced in evidence. The case was orally argued by respective counsel, written briefs were filed, and the case was submitted.

Ace holds certificate of convenience and necessity No. MC-52751, authorizing it to transport over irregular routes within geographical limitations not here in dispute various commodities including "building materials".

The dispute which arises is whether certain items transported by Ace are beyond the scope of the "building materials" transportation authorized by its certificate. The Interstate Commerce Commission, Division I, pursuant to Sections 204(c) and 212(a) of the Interstate Commerce Act (49 U.S.C.A. §§ 304 (c) and 312(a)), instituted an investigation to determine whether Ace "is or has been transporting commodities not authorized by its certificate of public convenience and necessity, in violation of Section 206(a) of the Act, with the view to the entry, if such violation is found, of an appropriate order to compel plaintiff to refrain from further violation under penalty of revocation of its certificate."

The shipments claimed to be beyond the scope of Ace's authority to transport are listed in the appendix to the Commission's report. 78 MCC at page 529.

A hearing was had before a hearing examiner. The parties appeared at such hearing and introduced evidence. The hearing examiner filed a report, finding that Ace was transporting certain of the listed commodities in violation of 206(a) of the Act, and recommended that the Commission enter an order requiring Ace to cease and desist from the operations found to be unlawful. Exceptions to the examiner's report were filed by Ace and by the Bureau of Inquiry and Compliance. The report and order of the Commission, Division I, issued December 31, 1958, as revised by the order of the full Commission upon reconsideration dated July 6, 1959,¹ finds and concludes that Ace's certificate:

"* * * insofar as it authorizes the transportation of building materials, does not authorize the transportation of steel bars, flats; steel bars, reinforcing; steel bars, rounds; annealed wire; galvanized steel wire; plain steel wire; and welded fabric, unless at the time of transportation they are without further processing or manufacture, in a form and condition to be used in the construction or repair of a building and are at such time intended with reasonable certainty to be so used; and that to the extent that respondent has engaged in the transportation of those commodities as set forth in the appendix, with the exception of those listed in items 4, 5 and 6 therein, such transportation has been beyond the scope of its authority, and was unlawful.

"An order will be entered requiring respondent to cease and desist from all operations in interstate or foreign commerce of the character herein found to be unauthorized and unlawful."

Ace in its complaint claims that the order of the Commission is erroneous, arbitrary, capricious, and an abuse of discretion, for reasons stated in substance as follows:

1. The Commission incorrectly interpreted the words "building materials" as used in Ace's certificate to mean only materials transported for use in buildings, whereas such words should be interpreted as being synonymous with construction materials.

2. The Commission, in arriving at its conclusion, erroneously relied upon a prior, unrelated proceeding, i. e., Descriptions in Motor Carrier Certificates, 61 MCC 209, and in particular upon Appendix VI thereof, purporting to contain a list of articles under the commodity description "building materials."

3. The method prescribed by the Commission for using the Descriptions list, i. e., authorizing transportation of commodities on the list providing there is no knowledge of an intended use other than as a building material, renders the list unreliable because Ace is unable to determine the meaning of the word "knowledge" as used in the Commission's report.

4. The Commission's report and order mingles and confuses the application of various tests and fails to make sufficient explication to enable Ace to determine with a fair degree of assurance just what character of operation is unlawful.

As a foundation for our consideration of the errors urged, we shall consider the scope of judicial review of orders of the Interstate Commerce Commission.

It now seems to be well settled that in a suit to enjoin enforcement of an I.C.C. order, the three-judge court is governed by the scope of review provisions of the Administrative Procedure Act. (5 U.S.C.A. § 1009(e)). E. g., Minneapolis & St. Louis Ry. v. United States, 361 U.S. 173, 80 S.Ct. 229, 4 L.Ed. 2d 223; Riss & Co. v. United States, 341 U.S. 907, 71 S.Ct. 620, 95 L.Ed. 1345; Schaffer v. United States, D. C., 139 F. Supp. 444.

The relevant portions of § 1009(e) are as follows:

"So far as necessary to decision and where presented the reviewing court shall decide all relevant questions of law, interpret constitutional and statutory provisions, and determine the meaning or applicability of the terms of any agency action. It shall * * * (B) hold unlawful and set aside agency action, findings, and conclusions found to be (1) arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law; (2) contrary to constitutional right, power, privilege, or immunity; (3) in excess of statutory jurisdiction, authority, or limitations, or short of statutory right; (4) without observance of procedure required by law; (5) unsupported by substantial evidence in any case * * * reviewed on the record of an agency hearing provided by statute; * * *".

In Nelson v. United States, 355 U.S. 554, at page 558, 78 S.Ct. 496, at page 499, 2 L.Ed.2d 484, the Supreme Court states:

"* * * the ordinary meaning of the words used in the permit is determinative. In ascertaining that meaning, we are not given carte blanche; just as `the precise delineation of an enterprise which seeks the protection of the "grandfather" clause has been reserved for the Commission.' Noble v. United States, 319 U.S. 88, 93 63 S.Ct. 950, 952, 87 L.Ed. 1277 (1943), subsequent construction of the grandfather permit by the Commission is controlling on the courts unless clearly erroneous. Dart Transit Co. v. Interstate Commerce Comm'n, D. C., 110 F.Supp. 876, affirmed, 345 U.S. 980, 73 S.Ct. 1138, 97 L.Ed. 1394 (1953)."

In Dart Transit Co. v. Interstate Commerce Commission, D.C., 110 F.Supp. 876, 880, the court, speaking through Judge Sanborn, states:

"It is our opinion that in an action such as this, a court may not substitute its judgment for that of the Commission with respect to the question of the scope or coverage of a permit which the Commission has issued to a motor carrier, if that question is at all doubtful. * * *

"In the interest of uniformity in the regulation and policing of the motor carrier industry, it is of course essential that the Commission be subjected to as little judicial interference as the law will permit."

In Malone Freight Lines v. United States, D.C., 107 F.Supp. 946, 949, affirmed 344 U.S. 925, 73 S.Ct. 497, 97 L.Ed. 712, the court says:

"Our function does not involve a de novo construction of the certificate or a re-evaluation of the undisputed facts relating to the services being performed under the pretended warrant of its authority. We are not concerned with the weight of the evidence. The scope of our review is necessarily confined to the interpretation placed by the Commission upon a certificate of its own creation. We are bound by that interpretation unless we are persuaded that it was capricious or arbitrary, that it constituted an abuse of discretion, or that it did violence to some established principle of law. It is beyond our province to consider `the soundness of the reasoning by which its conclusions were reached'".

From the foregoing authorities, it is apparent that courts are required to respect the expert knowledge of the Commission in the interpretation field and that courts should set aside orders made by the Commission only when such orders are shown to have been induced by prejudicial departure from legal standard or when such decision is arbitrary or the result of an abuse of discretion.

The Commission in its report states "a grant of authority limited to `building materials' is one denoting a class of commodities which may be described or identified by reference to the use to be made thereof." Identification of certificate authority to transport commodities by reference to the intended use of such commodities is a technique frequently used by the Commission and approved by the courts. Nelson v. United States, supra; Dart v. I.C.C....