American Trucking Associations, Inc. v. I.C.C.

Decision Date14 January 1983
Docket NumberNo. 81-1602,81-1602
Citation697 F.2d 1146
PartiesAMERICAN TRUCKING ASSOCIATIONS, INC., and Common Carrier Conference-Irregular Route, Petitioners, v. INTERSTATE COMMERCE COMMISSION and United States of America, Respondents.
CourtU.S. Court of Appeals — District of Columbia Circuit

Robert A. Hirsch and Robert R. Harris, Washington, D.C., with whom Nelson J. Cooney, Leonard A. Jaskiewicz and Edward J. Kiley, Washington, D.C., were on the brief, for petitioners.

Robert J. Grady, Washington, D.C., for respondents.

John Broadley, Gen. Counsel, Robert S. Burk, Deputy Gen. Counsel, and Cecelia E. Higgins, Atty., I.C.C., Robert B. Nicholson and Andrea Limmer, Attys., Dept. of Justice, Washington, D.C., were on the brief, for respondents. Margaret G. Halpern, Atty., Dept. of Justice, and Kathleen M. Dollar, Atty., I.C.C., Washington, D.C., also entered appearances for respondents.

Before WILKEY, BORK and SCALIA, Circuit Judges.

Opinion for the Court filed by Circuit Judge SCALIA.

SCALIA, Circuit Judge:

This is a proceeding under 28 U.S.C. Secs. 2321(a) and 2342(5) (1976) to enjoin or suspend an order of the Interstate Commerce Commission. Petitioners are associations of carriers who would be adversely affected by competition which the Order permits. At issue is the Commission's interpretation and enforcement of provisions of the Motor Carrier Act of 1980, Pub.L. No. 96-296, 94 Stat. 793 et seq. (codified in scattered sections of 49 U.S.C. (Supp. IV 1980)) (the "Act"), which exempt from some regulatory requirements owner-operators who carry certain agricultural commodities.

The Order that is challenged was promulgated on March 20, 1981 in the Commission's proceeding Ex Parte No. MC-143, Owner-Operator Food Transportation, 132 M.C.C. 521. This appeal was filed within 60 days, see 28 U.S.C. Sec. 2344. The Commission has since rejected three successive motions for reconsideration by one or both of these Petitioners. *

To qualify as carriers, applicants generally must show that they are fit and that the transportation they offer is either required by public convenience and necessity, see 49 U.S.C. Sec. 10922(a) (certificates for common carriage), or consistent with the public interest, see 49 U.S.C. Sec. 10923(a) (permits for contract carriage). These showings need not be made, however, by applicants for

transportation by motor vehicle of food and other edible products (including edible byproducts but excluding alcoholic beverages and drugs) intended for human consumption, agricultural limestone and other soil conditioners, and agricultural fertilizers if--

(i) such transportation is provided with the owner of the motor vehicle in such vehicle, except in emergency situations; and

(ii) after issuance of the [certificate or permit, certain annual tonnage limits are observed] and the owner of the motor vehicle certifies to the Commission annually that he is complying with the provisions of this clause and provides to the Commission such information and records as the Commission may require.

49 U.S.C. Secs. 10922(b)(4)(E), 10923(b)(5)(A).

The Order at issue here adopts rules to implement this provision. Petitioners' principal complaint is the definition of "owner" which it prescribes--namely, "any person with an ownership interest of 10-percent or greater in the motor vehicle used to provide regulated transportation." 49 C.F.R. Sec. 1138.2 (1981). We are asked to decide whether this is "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law." 5 U.S.C. Sec. 706(2)(A) (1976). We conclude that it is not.

The first step in our analysis is to determine whether the term "owner" was used by Congress in a sense that was meant to refer to a well-established legal definition or series of legal precedents, in which case we should not defer to the agency's interpretation; or rather in a sense that was meant to be informed by the nature and purpose of the statutory scheme which the Commission is charged with elaborating. See NLRB v. Hearst Publications, Inc., 322 U.S. 111, 120, 124, 64 S.Ct. 851, 855, 857, 88 L.Ed. 1170 (1944). We find the latter to be the case. The highly flexible nature of the term, and the subordination of rigid legalities to the overall purpose of the provision is amply demonstrated by the discussion in the House Report. Since this is the portion of the legislative history most extensively discussing the provisions at issue here, and since it is relevant for various purposes in this appeal, it bears reproduction in full:

The intent of this provision is to allow the individual who owns and operates his or her own truck to haul processed foods, soil conditioners, and fertilizers with a minimum of Federal regulation. In order to assure that this provision was limited to independent owner-operators, the Committee considered adding language to the bill stating that the "sole" owner must be in the vehicle. The Committee decided that it was not necessary to add this language since it believed the intent of the provision was already clear. In addition, the Committee was concerned that the term "sole owner" might be interpreted in an unduly restrictive manner. For example, it is not the Committee's intent to preclude an independent owner-operator from obtaining a certificate under this provision simply because the vehicle might be jointly owned by the owner-operator and his or her spouse or other family member. In addition, there was concern that the term "sole owner" might be interpreted to prohibit the issuance of a certificate to an owner-operator who is financing his vehicle on the grounds that the bank or other lending institution is the real owner. This is clearly not the Committee's intent. The Committee also wants to make it clear that an independent owner-operator who, for legitimate business reasons, sets up a partnership or family-type corporation would still be able to obtain a certificate under this provision. The Commission is urged, however, to monitor this closely to assure that sham corporations are not set up in an attempt to circumvent the intent of this provision. Furthermore, the Committee wants to note that it does not believe that the limitations with respect to this provision are unduly restrictive. The small businessman or the independent owner-operator who wants to expand his or her business can do so under the liberalized entry provisions in new section 10922(b)(1) of title 49, United States Code. The fitness-only provision for processed foods and fertilizers is intended to help the individual who owns and operates his own vehicle.

H.R.Rep. No. 96-1069, 96th Cong., 2d Sess. 16-17, reprinted in 1980 U.S.Code Cong. & Ad.News 2283, 2298-99 (the "House Report"). The lack of such well-defined legal content in the word "owner" as would preclude deference to administrative interpretation is further demonstrated by the following statement on the Senate floor by Senator Packwood, one of the sponsors of the Act, in an exchange with Senator Cannon, the floor manager, and with which the latter apparently agreed:

One final thing. I am concerned about the independent owner-operator section relating to transportation of processed foods. I can see from the House report that there is no intention that that section be read narrowly. For example, if a truck is owned by a husband and wife, either should be allowed to drive the truck, or if a partner owns a significant interest in the truck, that person should be able to drive the vehicle.

126 Cong.Rec. S7686 (daily ed. June 20, 1980). Our task, then, is to determine whether the Commission's interpretation of the word "owner" is so unreasonable as to go beyond the bounds of interpretive discretion which Congress evidently afforded.

THE QUANTITATIVE TEST

Petitioners argue, first of all, that any purely quantitative definition of owner is forbidden. We disagree. It seems to us that a quantitative interest in the value of the truck is the only element that the concept of ownership necessarily embraces--so that, for example, one who holds title entirely as trustee for another would not qualify. This quantitative aspect of ownership is the only element which the legislative history explicitly addresses--in the House Report's rejection of the limitation to "sole owner," and in the floor debate's assumption that a partner should be able to drive a qualifying vehicle only if he "owns a significant interest" in it.

Petitioners assert, however, that the word "owner" should, so to speak, be made to carry other freight as well. They favor "a qualitative standard of ownership," Petitioners' This is especially so since loading all "sham"-avoidance onto the qualifying definition would have the effect of complicating and prolonging the authorization process. Petitioner American Trucking Associations acknowledged--indeed argued--before the Commission that its qualitative approach, which does not "[look] to the form rather than substance of the operator's relationship with his equipment," requires "a case-by-case analysis." ATA Petition for Reconsideration in Ex Parte No. MC-143 at 3, Jt.App. at 68. While it asserted that this case-by-case approach "provides the only mechanism by which the Congressional objectives can be met," id., we do not think so. "Shams" unrelated to the requisite quantitative interest may well be detected and avoided by a system of spot checks or audits, instead of a requirement that impedes or prevents initial authorization.

Reply Brief at 4 n. 1, which will make the definition the vehicle for avoiding the "sham" transactions which the House Report darkly (in more senses than one) alludes to, Petitioners' Brief at 10 n. 9. This may be possible (though Petitioners have not clearly told us how) but we are not persuaded that it is reasonably necessary, which is the burden Petitioners must bear. To the extent that the Commission must take into account...

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