B.J. McAdams, Inc. v. I.C.C.

Decision Date14 January 1983
Docket NumberNo. 82-1271,82-1271
Citation698 F.2d 498
PartiesB.J. McADAMS, INC., Petitioner, v. INTERSTATE COMMERCE COMMISSION and United States of America, Respondents.
CourtU.S. Court of Appeals — District of Columbia Circuit

Petition for Review of an Order of the Interstate Commerce commission.

James W. Woods, North Little Rock, Ark., for petitioner.

Robert J. Grady, I.C.C., Washington, D.C., with whom John Broadley, Gen. Counsel, and Robert S. Burk, Deputy Gen. Counsel, I.C.C., Washington, D.C., were on the brief for respondents.

Robert B. Nicholson, Stephen F. Ross, John J. Powers, III, Dept. of Justice, and Henri F. Rush, Associate Gen. Counsel, I.C.C., Washington, D.C., also entered appearances for respondents.

Before GINSBURG and SCALIA, Circuit Judges, and GESELL, * United States District Judge for the District of Columbia.

Opinion for the Court filed by Circuit Judge GINSBURG.

GINSBURG, Circuit Judge:

B.J. McAdams, Inc. ("McAdams") seeks to set aside a decision of the Interstate Commerce Commission granting the application of Freight Express, Inc. ("Freight Express") to broaden the territories its certificate of public convenience and necessity permits it to serve. A certificate of August 29, 1980, authorized Freight Express to transport "[g]eneral commodities" (with some designated exceptions) between "the facilities of National Brands, Inc., Troy, MI, and Feather Lite Manufacturing Company, a Division of National Brands, Inc., at Hot Springs, AR, on the one hand, and, on the other, points in the United States, including Alaska but excluding Hawaii." Brief of the ICC at 14. On May 13, 1981, Freight Express applied, pursuant to the Motor Carrier Act of 1980, Pub.L. 96-296, 94 Stat. 793 (1980), to broaden its authority to operate "[b]etween Oakland County, MI., and Garland County, AR., on the one hand and on the other all points in the United States." Appendix (App.) 4. Notice of Freight Express' application was published in the Federal Register and McAdams and its affiliates submitted adverse comments. The ICC's Restriction Removal Board granted Freight Express' application on July 30, 1981, App. 53; McAdams' appeal to the Commission was denied on January 7, 1982. App. 78. McAdams then petitioned for review in this court as authorized by 28 U.S.C. Sec. 2342(5).

Three issues are raised on appeal. Does McAdams have standing to challenge this ICC decision? Did the ICC adequately assess the fitness of applicant Freight Express in the restriction removal proceeding? Did Freight Express sufficiently address, in its application, the factors the statute prescribes as grounds for removing certificate restrictions? For the reasons set forth below we uphold the ICC's decision granting Freight Express' application except insofar as it authorizes Freight Express to transport commodities to and from Hawaii.

I. STANDING

McAdams and Freight Express hold operating authority in the same territory. 1 This is enough, the Commission recognizes, to permit McAdams to file comments with the agency opposing broadened territorial authority for Freight Express. 2 But authority to carry general commodities within the same territory does not suffice to support McAdams' petition for judicial review, the ICC argues. 3 To cross the standing threshold established by the "case or controversy" requirement of Article III of the Constitution, 4 McAdams must demonstrate "injury in fact." 5 McAdams has not done this, the Commission maintains.

The ICC acknowledged at argument that the standing question it raises here is novel. 6 It is settled that a disappointed applicant for an exclusive license has standing to challenge the grant of the license to a competitor, see, e.g., Scripps-Howard Radio, Inc. v. FCC, 316 U.S. 4, 62 S.Ct. 875, 86 L.Ed. 1229 (1942); it is equally clear that a business enterprise generally does not have standing to challenge the economic regulation of a competitor. See, e.g., Sprunt & Son, Inc. v. United States, 281 U.S. 249, 254, 50 S.Ct. 315, 317, 74 L.Ed. 832 (1930); Rural Electrification Administration v. Northern States Power Co., 373 F.2d 686 (8th Cir.), cert. denied, 387 U.S. 945, 87 S.Ct. 2079, 18 L.Ed.2d 1332 (1967). But we know of no case that squarely addresses the standing of a non-exclusive licensee challenging a regulatory agency's grant of overlapping authority to a competitor. 7

We need not decide whether the mere fact that two licenses entail overlapping authority confers standing on one licensee to challenge an agency's grant of the second license. In the case before us McAdams alleges, in addition to an overlap in authority, actual operations which the newly-granted authority will expose to competition with Freight Express. Specifically, McAdams states that it is "serving on a continuous basis within the scope of [Freight Express'] Restriction Removal Application (transporting general commodities between points in Oakland County, Michigan, and Garland County, Arkansas, on the one hand, and, on the other, points in the United States)." Reply Brief at 7. 8 In our view, existence of such exposure to competing operations within the same territory does suffice to satisfy the "case or controversy" threshold. We leave for another day the question whether a licensee who alleges only overlapping authority--but no overlapping routes or shared customers--has standing to challenge in court the grant of a new or expanded license to a competitor.

The ICC invites us, alternately, to hold that McAdams, which itself has no authority to serve Hawaii, lacks standing to challenge the removal of Freight Express' Hawaii restriction. Brief of the ICC at 29-30. 9 If carriers are in actual, head-to-head competition in any region, however, each will be injured, in some degree, by any expansion of the other's territory. A carrier gains a competitive advantage in all areas it serves when it is granted broadened authority; the grant equips the carrier to offer better service to existing or potential customers for whose trade others operating in the region compete.

II. FITNESS

Freight Express sought, and the ICC granted, the removal of two types of territorial restriction from Freight Express' certificate. The names of designated plant sites were replaced by those of the counties in which the plants were situated. And Hawaii was included with the rest of the United States in the description of territories Freight Express was allowed to serve.

McAdams protested to the Commission that Freight Express was engaged, with other carriers, in a conspiracy to obtain nationwide general commodities authority inconsistent with congressional intent, and through procedures intended to circumvent standard ICC review of requests for such authority. Freight Express, McAdams contended, was not "fit" to operate under the enlarged authority requested, indeed, it was not even fit for the original grant of authority. App. 9. But the ICC held that a restriction removal proceeding, governed by rules designed to expedite decision, was not an appropriate occasion to explore McAdams' broad allegations of conspiracy. App. 53-54. The Restriction Removal Board therefore disregarded McAdams' charges and agreed, as Freight Express requested, to effect site-to-county expansions and to remove the restriction on service to Hawaii.

A. Restriction removal and fitness

In Ritter Transportation, Inc. v. ICC, 684 F.2d 86 (D.C.Cir.1982), petition for cert. filed, 51 U.S.L.W. 3448 (U.S. Oct. 4, 1982) (No. 82-594) ("Ritter I" ), we considered the ICC's removal of restrictions on the commodities a carrier was allowed to transport. We held that the ICC's restriction removal mandate under the Motor Carrier Act of 1980 to "reasonably broaden the categories of property authorized by the carrier's certificate," 49 U.S.C.A. Sec. 10922(h)(1)(B)(i), entails considering whether the applicant is "fit, willing, and able" to provide the additional transportation for which it seeks authorization. 684 F.2d at 87. In so holding, we aligned this Circuit with precedent initiated in the Fifth Circuit, most immediately, Steere Tank Lines, Inc. v. ICC, 666 F.2d 255 (5th Cir.1982), reh'g denied, 671 F.2d 1380 (March 8, 1982), petition for cert. filed, 51 U.S.L.W. 3013 (U.S. July 9, 1982) (No. 82-41). We quoted, with approval, this passage from Steere:

We believe that an applicant for removal of a restriction should be required to make a prima facie showing in its application that it is fit, willing and able to provide the transportation for which it is seeking authorization. We do not suggest that such a showing must be elaborate. What form that showing should take and how detailed it should be are, in the first instance, matters that should be addressed by the Interstate Commerce Commission.

666 F.2d at 258.

The logic of Ritter I and its Fifth Circuit antecedents is applicable to the territorial restriction removals challenged here. In removing commodity or territorial restrictions, the ICC must consider the applicant's fitness to take on the expanded authority sought. 10 However, as explained below, the Commission need not entertain, in restriction removal proceedings, issues relating to a carrier's fitness to hold a prior certification. Further, the ICC may rely on published guidelines that provide a reasonable basis to infer, from prior certification or experience, fitness for described expansions.

B. Scope of the fitness examination

The Motor Carrier Act of 1980 requires the ICC, on application by individual carriers, promptly to remove unreasonably narrow restrictions in operating authority. The Act provides that restriction removal proceedings may be informal, without opportunity for oral evidentiary hearings. 49 U.S.C.A. Sec. 10922(h)(2). The ICC is to "process expeditiously" each restriction removal application, "not later than 120 days after the date the application is filed," except in "extraordinary...

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