Appleyard's Motor Transp. Co., Inc. v. I. C. C., 78-1287

• Decision Date: 16 February 1979
• Docket Number: No. 78-1287,78-1287
• Citation: 592 F.2d 8
• Parties: APPLEYARD'S MOTOR TRANSPORTATION CO., INC., Petitioner, and Coastal Tank Lines, Inc. and Gault Transportation, Inc., Intervening Petitioners, v. INTERSTATE COMMERCE COMMISSION and United States of America, Respondents, and Petroleum Carriers, Inc., Intervening Respondent.
• Court: U.S. Court of Appeals — First Circuit

Page 8

592 F.2d 8

APPLEYARD'S MOTOR TRANSPORTATION CO., INC., Petitioner and Coastal Tank Lines, Inc. and Gault Transportation, Inc. Intervening Petitioners, v. INTERSTATE COMMERCE COMMISSION and United States of America Respondents and Petroleum Carriers, Inc., Intervening Respondent.

No. 78-1287.

United States Court of Appeals, First Circuit.

Argued Dec. 4, 1978.

Decided Feb. 16, 1979.

Maxwell A. Howell, Washington, D. C., for petitioner.

Gerald B. Fleming, Atty., I. C. C., Washington, D. C., with whom Mark L. Evans, Gen. Counsel, and Frederick W. Read, III, Associate Gen. Counsel, Washington, D. C., were on brief, for respondent, I. C. C.

Robert Lewis Thompson, Atty., Dept. of Justice, Washington, D. C., with whom John H. Shenefield, Asst. Atty. Gen., and Robert B. Nicholson, Asst. Chief, Appellate Section, Antitrust Division, Washington, D. C., were on brief, for respondent, United States.

Dwight L. Koerber, Jr., Washington, D. C., with whom Harry C. Ames, Jr., Washington, D. C., Francis E. Barrett, Jr., Hingham, Mass., and Ames, Hill & Ames, P. C., Washington, D. C., were on brief, for intervening petitioners, Coastal Tank Lines, Inc., and Gault Transportation, Inc.

Lawrence R. Ehrhard, Springfield, Mass., with whom David M. Marshall, and Marshall & Marshall, Springfield, Mass., were on brief, for intervening respondent, Petroleum Carriers, Inc.

Before COFFIN, Chief Judge, CAMPBELL and BOWNES, Circuit Judges.

BOWNES, Circuit Judge.

This is an appeal from the granting of a certificate of public convenience and necessity by the ICC authorizing Petroleum Carriers, Inc., to transport petroleum products ¹ on irregular routes from points in Rhode Island to points in Massachusetts, and from points in Massachusetts to points in New Hampshire. The matter was handled under the Commission's modified procedure. ² Six shippers supported the application and four competing carriers opposed it. ³

Review Board No. 1 of the Commission initially denied Petroleum a carrier's application on the ground "that the evidence fails to establish a need for applicant's proposed service which cannot be met by existing carriers." This finding was reversed by Division 1 of the Commission which found that a certificate of public convenience and necessity was justified. The petitioners claim that the decision of the Commission is not supported by substantial evidence and was arbitrary and capricious and, therefore, violated the Administrative Procedure Act. 5 U.S.C. § 706(2)(A), (E).

Our role as a reviewing court is limited. "The Commission is the guardian of the public interest in determining whether certificates of convenience and necessity shall be granted." United States v. Detroit Navigation Co., 326 U.S. 236, 241, 66 S.Ct. 75, 77, 90 L.Ed.2d 38 (1945). It has long been recognized that determination of public convenience and necessity lies within the judgment and discretion of the ICC. ICC v. Parker, 326 U.S. 60, 65, 65 S.Ct. 1490, 89 L.Ed. 2051 (1945); Hilt Truck Line, Inc. v. United States, 532 F.2d 1199, 1201 (8th Cir. 1976). Against this backdrop, we review the findings of the Commission to determine if they were based on substantial evidence and/or were arbitrary and capricious. Substantial evidence has, since Universal Camera Corp. v. NLRB, 340 U.S. 474, 477, 71 S.Ct. 456, 459, 95 L.Ed. 456 (1951), been defined as "more than a mere scintilla. It means such relevant evidence as a reasonable mind might accept as adequate to support a conclusion." For repetition of this same theme, see Richardson v. Perales, 402 U.S. 389, 401, 91 S.Ct. 1420, 28 L.Ed.2d 842 (1971); Illinois Central Railroad Co. v. Norfolk & Western Railway Co., 385 U.S. 57, 69, 87 S.Ct. 255, 17 L.Ed.2d 162 (1966); Consolo v. Federal Maritime Commission, 383 U.S. 607, 619-620, 86 S.Ct. 1018, 16 L.Ed.2d 131 (1966).

In Bowman Transportation, Inc. v. Arkansas-Best Freight System, Inc., 419 U.S. 281, 285, 95 S.Ct. 438, 442, 42 L.Ed.2d 447 (1974), Reh'g denied, 420 U.S. 956, 95 S.Ct. 1340, 43 L.Ed.2d 433 (1975), the Court, in applying the arbitrary and capricious standard, stated:

Under the "arbitrary and capricious" standard the scope of review is a narrow one. A reviewing court must "consider whether the decision was based on a consideration of the relevant factors and whether there has been a clear error of judgment . . . . Although this inquiry into the facts is to be searching and careful, the ultimate standard of review is a narrow one. The court is not empowered to substitute its judgment for that of the agency." Citizens to Preserve Overton Park v. Volpe, supra, (401 U.S. 402, 91 S.Ct. 814, 28 L.Ed.2d 136) at 416, 91 S.Ct. at 824. The agency must articulate a "rational connection between the facts found and the choice made." Burlington Truck Lines v. United States, 371 U.S. 156, 168 (83 S.Ct. 239, 9 L.Ed.2d 207) (1962). While we may not supply a reasoned basis for the agency's action that the agency itself has not given, SEC v. Chenery Corp., 332 U.S. 194, 196 (67 S.Ct. 1578, 91 L.Ed. 1995) (1947), we will uphold a decision of less than ideal clarity if the agency's path may reasonably be discerned. Colorado Interstate Gas Co. v. FPC, 324 U.S. 581, 595 (65 S.Ct. 829, 89 L.Ed. 1206) (1945).

We first address the question of whether there was substantial evidence to support the Commission's action. The Commission carefully considered the affidavits of the five supporting shippers which were substantially similar. All of the shippers stated essentially as follows: that they used private carriage for their present needs, that they intended to expand and increase their business, that they were familiar with the operations and equipment of Petroleum, that they wanted to use Petroleum to meet their future needs because of its reliability, schedule flexibility, and excellent equipment and that they were not interested in using the services of any other carrier. The core of the Commission's decision is to be found in the following paragraph.

As noted, shippers for the most part have not utilized the existing service of protestants, and it cannot be said on this record that their existing service is inadequate. However, we note that inadequacy of existing service is not indispensable to a finding of need for the proposed service. Nashua Motor Express, Inc. v. United States, 230 F.Supp. 646, 653 (D.N.H.1964). Furthermore, we cannot ignore the praise expressed by the supporting shippers for the service now provided by applicant within the limited scope of its existing authority. Expansion of a high quality service is certainly consistent with the public convenience and necessity. We do not believe that it would be appropriate to frustrate applicant's apparent willingness and ability to offer its good service to a larger market area. The beneficial effects of additional competition is also another factor to be considered, especially where the commodities sought to be transported are various petroleum products and related to the Nation's continuing energy concerns. Moreover, since most of the involved traffic has been transported in private carriage, we do not believe that protestants will be adversely affected by a grant of authority to an extent contrary to the public interest. We conclude that a grant will, however, enhance the effectiveness and usefulness of applicant's present service to the supporting shippers. On balance, we find that the beneficial effects resulting from a grant of the proposed service outweigh the harm, if any, to protestants.

Given the Commission's acknowledged primacy in deciding what determines public convenience and necessity, we find that there was substantial evidence to anchor the Commission's decision. ⁴

The claim of arbitrary and capricious action, in addition to a general buckshot attack, specifically alleges that the Commission ignored its past precedents as set forth in Pan-American Bus Line Operation, 1 MCC 190 (1936), and Novak Contract Carrier Application, 103 MCC 555 (1967). In Pan-American, the Commission, in what has by now become a hackneyed litany for rebuffed applicants and thwarted protestants, stated:

The question, in substance, is whether the new operation or service will serve a useful public purpose, responsive to a public demand or need; whether this purpose can and will be served as well by existing lines or carriers; and whether it can be served by applicant with the new operation or service proposed without endangering or impairing the operations of existing carriers contrary to the public interest.

Id. at 203. This language is a guideline, not a straitjacket. The important thing is the protection and promotion of the public interest, not that of the certificated carriers. Hilt Truck Line, Inc. v. United States, supra, 532 F.2d at 1203. In Bowman Transportation, Inc. v. Arkansas-Best Freight System, supra, 419 U.S. at 298, 95 S.Ct. at 448, the Court made the pertinent observation. "Our decisions have dispelled any notion that the Commission's primary obligation is the protection of firms holding existing certificates."

Petitioners argue, in effect, that, since the Commission found that the existing service was not inadequate, the granting of the application amounts to a disavowal of the principles enunciated in Pan-American. This completely ignores the current case law. In Hilt Truck Line, Inc. v. United States, supra, 532 F.2d at 1203, the court accurately reflected the present state of the law.

In making its determination, the Commission may take into account not only present needs but also future requirements of shippers, and the ability of existing carriers to supply such projected service will not preclude the Commission from granting authority to an applicant. Interstate Commerce Commission v. Parker, supra, 326 U.S. at 70, 65 S.Ct. at 1495, 89 L.Ed. at 2061. See United States v. Dixie Highway Express, Inc., 389 U.S. 409, 411, 88 S.Ct. 539, 540, 19 L.Ed.2d 639, 641 (1967); Schaffer...