Assure Competitive Transp., Inc. v. U.S., 79-2308

• Court: United States Courts of Appeals. United States Court of Appeals (7th Circuit)
• Writing for the Court: Before FAIRCHILD, Chief Judge, SWYGERT, Circuit Judge, and CAMPBELL; SWYGERT
• Citation: 635 F.2d 1301
• Parties: 11 Envtl. L. Rep. 20,458 ASSURE COMPETITIVE TRANSPORTATION, INC., Petitioner, Red Arrow Freight Lines, Inc., J. H. Rose Truck Line, Inc., C&G Transportation Co. Inc., and Billy Frank d/b/a Frank Bros., Arrow Truck Lines, Inc., Charter Express, Inc., Dixie-West Express, Inc., et al., Intervening Petitioners, v. UNITED STATES of America and Interstate Commerce Commission, Respondents. AMERICAN TRUCKING ASSOCIATIONS, INC., Petitioner, B and P Motor Lines, Inc., Donney Motor Express, Inc., Watkins Motor Lines, Inc., Arrow Truck Lines, Inc., Charter Express, Inc., and Dixie-West Express, Inc., et al., Intervening Petitioners, v. UNITED STATES of America and Interstate Commerce Commission, Respondents, National Industrial Traffic (the League), Party Respondent.
• Docket Number: No. 79-2308,79-2391,79-2308
• Decision Date: 30 December 1980

Page 1301

635 F.2d 1301 11 Envtl. L. Rep. 20,458 ASSURE COMPETITIVE TRANSPORTATION, INC., Petitioner,
Red Arrow Freight Lines, Inc., J. H. Rose Truck Line, Inc.,
C&G Transportation Co. Inc., and Billy Frank d/b/a Frank
Bros., Arrow Truck Lines, Inc., Charter Express, Inc.,
Dixie-West Express, Inc., et al., Intervening Petitioners,
v.
UNITED STATES of America and Interstate Commerce Commission,
Respondents.
AMERICAN TRUCKING ASSOCIATIONS, INC., Petitioner,
B and P Motor Lines, Inc., Donney Motor Express, Inc.,
Watkins Motor Lines, Inc., Arrow Truck Lines,
Inc., Charter Express, Inc., and
Dixie-West Express, Inc., et
al., Intervening Petitioners,
v.
UNITED STATES of America and Interstate Commerce Commission,
Respondents,
National Industrial Traffic (the League), Party Respondent. No. 79-2308, 79-2391. United States Court of Appeals,
Seventh Circuit. Argued Sept. 19, 1980.
Decided Dec. 30, 1980.

Page 1303

Gregory A. Stayart, Chicago, Ill., Kenneth E. Siegel, Washington, D. C., for petitioner.

Lawrence I. Richman, McDermott Will & Emery, Chicago, Ill., for Nat. Indus. Traffic.

Before FAIRCHILD, Chief Judge, SWYGERT, Circuit Judge, and CAMPBELL, Senior District Judge. ^*

SWYGERT, Circuit Judge.

On October 17, 1979, the Interstate Commerce Commission issued a policy statement that modified the traditional criteria used by the Commission in deciding whether to grant an application for a certificate of public convenience and necessity authorizing motor common carrier operations under section 10922 of the Interstate Commerce Act, 49 U.S.C. § 10922. ¹ Petitioners challenge the Commission's action as unlawful on the basis that:

1) the new decisional standards contradict the applicable provisions of the Interstate Commerce Act, 49 U.S.C. § 10922, and existing case law;

2) the new standards are arbitrary and capricious and are not supported by substantial evidence;

3) the Commission has violated section 102(2)(C) of the National Environmental Policy Act of 1969, 42 U.S.C. § 4332(2)(C), section 382(b) of the Energy Policy and Conservation Act of 1975, 42 U.S.C. § 6362(b), and its own regulations by

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failing to prepare environmental and energy impact statements. ² I

In December 1978, the Commission published notice of its intention to adopt a policy statement modifying the criteria used to decide motor common carrier applications. Specifically, the Commission proposed eliminating the second of the three Pan-American criteria, "whether (the useful public purpose to be served by the new service) can and will be served as well by existing lines or carriers," in order to give more weight to the benefits of competition and emphasize less the protection of existing carriers. ³

The Commission received extensive public response to its proposal, including comments from numerous carriers, carrier organizations, shippers, shipper organizations, and state and federal government agencies. In October 1979, the Commission decided to adopt the policy statement as proposed. It was published in the Federal Register on October 19, 1979, to become effective in 30 days.

Assure Competitive Transportation, Inc. (ACT), American Trucking Associations, Inc. (ATA), and several motor carriers petitioned the Commission for administrative review, and ATA filed a motion with this court for judicial stay. On November 20, 1979, we entered a temporary stay, but on November 30, 1979 we vacated the stay and denied ATA's request. On January 18, 1980, the Commission denied the petitions for administrative review and issued a Notice stating that the new policy statement would be applied in motor common carrier application proceedings published in the Federal Register on or after November 30, 1979.

The petitions for judicial review filed by ACT, ATA, and intervening petitioners have been consolidated. The National Industrial Traffic League is an intervening respondent.

II

Petitioner ATA and intervenors assert that the elimination of the second Pan-American criterion violated the Interstate Commerce Act, 49 U.S.C. § 10922, and relevant case law interpreting that statute. ⁴ We do not agree. Section 10922, 49 U.S.C. § 10922, does not on its face require that consideration be given to whether the purpose to be served by the new service can be served as well by existing carriers. Rather it provides that the Commission shall issue a certificate of motor common carrier authority if the Commission finds, inter alia, that "the transportation to be provided under

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the certificate is or will be required by the present or future public convenience and necessity." 49 U.S.C. § 10922(a)(2). Nowhere does the statute define "public convenience and necessity."

The purpose of Congress was to leave to the Commission authoritatively to decide whether additional motor service would serve public convenience and necessity.... This, of course, gives administrative discretion to the Commission ... to draw its conclusion from the infinite variety of circumstances which may occur in specific instances.

Interstate Commerce Commission v. Parker, 326 U.S. 60, 65, 65 S.Ct. 1490, 1492, 89 L.Ed. 2051 (1945) (citations omitted).

In fact, the Commission was specifically directed to administer its statute in light of the nation's changing needs:

... (T)he Commission, faced with new developments or in light of reconsideration of the relevant facts and its mandate, may alter its past interpretation and overturn past administrative rulings and practice.... In fact, ... this kind of flexibility and adaptability to changing needs and patterns of transportation is an essential part of the office of a regulatory agency. Regulatory agencies do not establish rules of conduct to last forever; they are supposed, within the limits of the law and of fair and prudent administration, to adapt their rules and practices to the Nation's needs in a volatile, changing economy. They are neither required nor supposed to regulate the present and the future within the inflexible limits of yesterday.

American Trucking Ass'ns, Inc. v. Atchison, T. & S.F. Ry., 387 U.S. 397, 416, 87 S.Ct. 1608, 1618, 18 L.Ed.2d 847 (1967).

Interpreting the "public provision and necessity" language in a predecessor provision to section 10922, the Commission in Pan-American Bus Lines Operations, 1 M.C.C. 190, 203 (1936) determined that:

the question, in substance, is (1) whether the new operation or service will serve a useful public purpose, responsive to a public demand or need; (2) whether this purpose can and will be served as well by existing lines or carriers; and (3) 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.

As the Commission explained in proposing the policy statement at issue here, the second Pan-American criterion articulated a "protectionist" policy adopted to promote the sound development of the motor carrier industry at a time when that industry was in its infancy. In light of the present maturity of the industry and substantially changed economic conditions, the Commission has in recent years found that the public convenience and necessity required that more weight be given to the benefits of healthy competition and less to protecting existing carriers. ⁵ That change of emphasis is clearly within the Commission's discretion so long as applications are granted on the basis of a finding that the transportation is required by the present or future public convenience and necessity. The elimination of the second Pan-American criterion results from the Commission's determination that the public convenience and necessity no longer requires observing a protectionist policy appropriate for a different time. Further, to the extent that existing

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carriers require protection from competition that would endanger their ability to perform service needed by the public, the third Pan-American criterion offers that safeguard:

... whether (a useful public purpose) 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.

(emphasis added.)

The contention that the new policy violates existing case law is also without merit. Petitioners, alleging that the elimination of the second Pan-American criterion will result in decisions being made solely on the basis of the benefits of competition, remind us that in Bowman Transp. v. Ark.-Best Freight System, 419 U.S. 281, 298, 95 S.Ct. 438, 448, 42 L.Ed.2d 447 (1974) (citation omitted), the Supreme Court stated:

The Commission, of course, is entitled to conclude that preservation of a competitive structure in a given case is overridden by other interests....

Petitioners also cite an opinion by this court rejecting a Commission decision for considering only one factor. Sawyer Transport, Inc. v. United States, 565 F.2d 474 (7th Cir. 1977).

We cannot accept the suggestion that by eliminating the second Pan-American criterion, the Commission intends to consider only the benefits of competition. According to the new test for deciding what service is required by the present and future public convenience and necessity:

(1) An applicant must demonstrate that the service proposed will serve a useful public purpose, responsive to a public demand or need.

(2) The Commission will grant common carrier authority commensurate with the demonstrated need unless it is established by those opposing the application that the entry of a new carrier into the field would endanger or impair the operations of existing common carriers contrary to the public interest.

Those standards, restatements of the first and third Pan-American criteria, satisfy the Commission's duty to "weigh the competing interests and arrive at a balance that is deemed 'the public convenience and necessity' " Bowman Transp. v. Ark.-Best Freight...