Boston Carrier, Inc. v. I.C.C., No. 82-2140

CourtUnited States Courts of Appeals. United States Court of Appeals (District of Columbia)
Writing for the CourtBefore WILKEY, BORK and SCALIA; BORK
Citation241 U.S. App. D.C. 238,746 F.2d 1555
Docket NumberNo. 82-2140
Decision Date30 October 1984
PartiesBOSTON CARRIER, INC., Petitioner, v. INTERSTATE COMMERCE COMMISSION and United States of America, Respondents.

Page 1555

746 F.2d 1555
241 U.S.App.D.C. 238
BOSTON CARRIER, INC., Petitioner,
v.
INTERSTATE COMMERCE COMMISSION and United States of America,
Respondents.
No. 82-2140.
United States Court of Appeals,
District of Columbia Circuit.
Argued Oct. 19, 1983.
Decided Oct. 30, 1984.

Page 1556

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

Robert K. Goren, Philadelphia, Pa., for petitioner.

Robert J. Grady, Atty., I.C.C., Washington, D.C., with whom Robert S. Burk, Acting Gen. Counsel, Ellen D. Hanson, Associate Gen. Counsel, I.C.C., Robert B. Nicholson and George Edelstein, Attys., Dept. of Justice, Washington, D.C., were on the brief, for respondents. Henri F.

Page 1557

Rush, Associate Gen. Counsel, I.C.C., Washington, D.C., also entered an appearance for respondents.

Before WILKEY, BORK and SCALIA, Circuit Judges.

Opinion for the Court filed by Circuit Judge BORK.

BORK, Circuit Judge:

Petitioner Boston Carrier, Inc. ("BC") asks us to review and set aside a decision of the Interstate Commerce Commission denying BC's application for motor common carrier authority. For the reasons set out below, we affirm the Commission.

I.

By application dated October 12, 1980, BC sought from the Interstate Commerce Commission a grant of authority to transport general commodities from points in Rhode Island to other points in the United States. The application met with protests from two motor carriers, Del Transport, Inc. ("Del"), 1 and Coastal Tank Lines, Inc., and from two former employees of BC, Kathleen M. Larrabee and Colette A. Bedel.

The matter came before the Commission's Review Board Number 1, and on February 1, 1982, that Board decided "that there is a question whether applicant is fit, willing, or able properly to perform the service proposed and to conform to the provisions of the Act and the Commission's requirements, rules and regulations thereunder ...." J.A. at 11. The Review Board ordered an oral hearing on the application and provided the Commission's Office of Compliance and Consumer Assistance with a copy of the decision "so that it can evaluate whether to participate in this matter." Id. at 12. The hearing was scheduled to begin on March 16, 1982, at Providence, Rhode Island.

On March 3, 1982, a three-member panel of the Commission, Division 1, issued a decision outlining the issues to be addressed at the March 16 hearing. That decision stated in part:

In their verified statements protestants Larrabee and Bedel contend, among other things, that applicant has been conducting interstate property transportation without the requisite authority from this Commission; that it has been engaging in fraudulent practices relative to the Commission's fuel surcharge program; and that it may knowingly have submitted false information to the Commission and otherwise unlawfully interfered with Commission investigation of its operations. Although applicant denies the allegations, it appears that questions exist concerning applicant's fitness....

J.A. at 25. The panel also directed the Office of Compliance and Consumer Assistance ("OCCA") to participate in the proceeding. Id.

Petitioner resisted this procedure. On March 1, BC requested a pre-hearing conference. On March 5, BC sought review of the Review Board's order that an oral hearing be held. On March 9, BC moved to postpone the hearing stating that the Board's order to OCCA to participate in the hearing had left the carrier without adequate notice of the issues which OCCA would pursue at the hearing. On March 12, the motion for postponement was denied, and no pre-hearing conference took place.

The Providence hearing commenced on March 16 and concluded on March 19. Briefs were submitted on May 10, 1982. Del, Bedel, and Larrabee testified at the hearing, as did BC's vice-president. BC's

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president, Alan Bernson, did not attend the hearing despite the fact that the presiding Administrative Law Judge suggested to BC's counsel that Bernson should be present and testify. J.A. at 40. The ALJ later stated, Bernson "should have testified. It is apparent that only he, not his vice-president, could have responded to some of the allegations." Id. at 43. Several shippers submitted certifications in support of BC, but only one, E. Rosen, appeared in support of the application, and he testified that BC had knowingly transported goods illegally.

The ALJ concluded that "the applicant has failed to establish that it is fit ... properly to conduct the proposed operation and to conform to the requirements of the Interstate Commerce Act and the Commission's rules and regulations thereunder." J.A. at 43. The ALJ wrote in part:

The unrebutted testimony reveals that applicant knowingly and willfully transported numerous unauthorized shipments in violation of the Act. Moreover, the evidence is not clear that these shipments were done in the good belief that the applicant carrier had proper operating authority. Also Commission investigators were consistently frustrated in many ways, [further,] mishandling the fuel surcharge, and failure to inspect vehicle equipment regularly took place.

Id. at 42-43. The ALJ concluded that given the lack of applicant's fitness, "no purpose would be served as to any finding or conclusion regarding public need." Id. at 43.

BC appealed the decision of the ALJ on June 5, 1982. The ICC, Division 1, denied BC's appeal by decision of August 23, 1982. The Commission wrote that:

The record as summarized by the Administrative Law Judge discloses a repeated history of applicant's noncompliance with rules and regulations of this Commission, manifesting a general pattern of conduct of purposely and willfully engaging in illegal activities. The subject violations, as discussed in the initial decision by the Administrative Law Judge are varied, numerous, and extremely serious. In our opinion, such conduct represents a flagrant and persistent disregard of the provisions of the Interstate Commerce Act and Commission rules and regulations. The Administrative Law Judge, who had opportunity to observe the demeanor of the witnesses at the hearing, reasonably concluded that based upon the evidence presented, applicant's past conduct and attitude toward the law and rules and regulations of the Commission, precluded a finding of fitness. We perceive no basis for disagreeing with this conclusion.

J.A. at 45-46 (footnote omitted).

BC then filed a Petition for Stay and a discretionary Petition for Administrative Review on September 7. The ICC denied both petitions on September 14. J.A. at 48-49. BC has now sought review in this court.

II.

The standard of review governing ICC actions on motor carrier applications for operating authority is well established. Before the Commission, the applicant has the burden of establishing that he is fit, willing, and able to provide the service and to comply with the statute and regulations. See Curtis, Inc. v. ICC, 662 F.2d 680, 687 (10th Cir.1981). If that is done, the applicant must show that the service he proposes will serve a useful public purpose. See 49 U.S.C. Sec. 10922(b)(1) (1982). Evidence of past disregard for the law is not conclusive as to the applicant's future compliance but it raises a reasonable inference, which an applicant must overcome, that the applicant is likely to continue such misbehavior. 2 Our review of the Commission's decision

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about an applicant's fitness is limited to insuring that it meets the requirements of section 706(2) of the Administrative Procedure Act, 5 U.S.C. Sec. 706(2) (1982), including that it is supported by substantial evidence and is not otherwise arbitrary, capricious, or an abuse of discretion. We must also be attentive to procedural guarantees; we must be sure that the Commission has complied with the rules designed to guarantee the carrier-applicant the full and fair opportunity to present and defend its application.

BC advances four arguments on appeal: that the notice given it was inadequate; that its former employees should not have been permitted to testify; that the Commission improperly found that BC mishandled the fuel surcharge and frustrated Commission investigation; and that the Commission improperly used the fitness finding regarding unauthorized transportation as a punitive measure. We address these contentions seriatim.

A.

BC's first argument is a claim of inadequate notice. BC asserts that an application proceeding is an adjudicatory proceeding subject to section 554(b)(3) of the APA, which requires that "[p]ersons entitled to notice of an agency hearing ... be timely informed of ... (3) the matters of fact and law asserted." 5 U.S.C. Sec. 554(b)(3) (1982). The carrier alleges that it was denied any such notice and that as a result it was continually buffeted at the hearing on its application by surprise allegations and previously unanticipated assertions of damaging facts. Brief of Petitioner BC at 8-9. This lack of notice, BC concludes, destroys the credibility of the findings of the Administrative Law Judge, including the ultimate finding that BC lacked the fitness necessary to gain its requested authority.

The ICC does not deny its obligation to give some notice of the issues to be addressed at a fitness hearing, but contends that the notice was adequate here. An applicant understands from the burden of proof he undertakes that all his operations are subject to review. This is an implicit notice from the nature of the proceedings. Here, moreover, BC fails "even [to] attempt to...

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    ...give every [Respondent] a complete bill of particulars as to every allegation that [it] will confront.'' Boston Carrier, Inc. v. ICC, 746 F.2d 1555, 1560 (D.C. Cir. Having reviewed the pre-hearing statements, I conclude that the Government gave Respondent fair notice that the import allegat......
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