C & H Transp. Co., Inc. v. I.C.C.

• Decision Date: 13 May 1983
• Docket Number: No. 81-4361,81-4361
• Citation: 704 F.2d 850
• Parties: C & H TRANSPORTATION CO., INC. and J.H. Rose Truck Line, Inc., Petitioners, v. INTERSTATE COMMERCE COMMISSION and United States of America, Respondents.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 850

704 F.2d 850

C & H TRANSPORTATION CO., INC. and J.H. Rose Truck Line Inc., Petitioners, v. INTERSTATE COMMERCE COMMISSION and United States of America Respondents.

No. 81-4361.

United States Court of Appeals Fifth Circuit.

May 13, 1983.

James M. Doherty, Austin, Tex., Thomas E. James, Dallas, Tex., for petitioners.

Craig M. Keats, I.C.C., Robert B. Nicholson, Antitrust Div., U.S. Dept. of Justice, Washington, D.C., for respondents.

David Earl Tinker, Washington, D.C., for W.P. Johnson Equipment, intervenor.

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

Before THORNBERRY, REAVLEY and GARWOOD, Circuit Judges.

GARWOOD, Circuit Judge:

This is a petition for review of an order of the Interstate Commerce Commission ("ICC") granting the intervenor's application for a motor common carrier certificate of convenience and necessity to transport construction, mining, industrial, electrical, and agricultural machinery and equipment between points in the United States. The primary question is whether the ICC's grant of nationwide authority to transport these commodities is supported by substantial evidence. We hold that the nationwide authority granted intervenor is not supported by substantial evidence, and that the ICC, in granting such authority, acted arbitrarily and capriciously, for there is no rational relationship between the geographical breadth of the authority granted intervenor and the limited geographical scope of the public need for which there is any evidentiary support in the record. We therefore vacate the ICC's order and remand the matter to it for further proceedings consistent with this opinion.

THE FACTS

On December 11, 1980, intervenor W.P. Johnson, d/b/a W.P. Johnson Equipment and Materials ("Johnson") filed an application with the ICC requesting a certificate of convenience and necessity to transport construction, mining, industrial, electrical, and agricultural machinery and equipment, including overweight and overdimensioned machinery and equipment, over irregular routes between points in the United States. Before filing this application, Johnson held no previous motor carrier operating authority from the ICC.

Johnson's application shows that he owns a four-bay terminal in Bedford County, Virginia, six power units, and seven trailers. ¹ The application also contains an undated financial statement which shows that Johnson has assets of $513,000 and a net worth of $371,000. Johnson proposed to provide a complete transportation service to the shippers utilizing his service, including transportation to remote locations such as mining and construction sites "where service is not presently available from existing carriers." The application also states "[t]he shippers supporting this application have customers throughout the United States. Therefore, in order to meet their transportation needs it is important that I be granted authority to operate between points in the United States."

Ten shippers supported Johnson's application by filing verified certificates of shipper support. ² Several of the shippers expressed an inability to obtain carrier commitments to transport their overdimensioned equipment in a timely manner. Eight of the supporting shippers are domiciled in Virginia, one in Delaware, and one in Texas. These certificates are each on an ICC form which contains, among other things, a blank in which the shipper is to state "Representative origins and destinations of supporting shipper's traffic." Nine of the ten supporting shippers filled in this blank in the identical manner, with nothing more than the words, "[b]etween points in the United States." One shipper, domiciled in Virginia, filled in this blank, "Between points in VA, WV, TN, KY, OH, and IN." None of the other information supplied by the supporting shippers, nor any other evidence in the record or of which the ICC purported to take, or may be assumed to have taken, expert administrative notice, gave any indication about the geographic scope of the shipping needs, or even of the businesses, of these shippers, or of the geographic scope of the need for Johnson's proposed transportation service.

Eleven carriers, including petitioners C & H Transportation Company, Inc. ("C & H") and J.H. Rose Truck Line, Inc. ("Rose"), two large and well-established nationwide carriers, opposed Johnson's application based upon his alleged lack of fitness to perform a nationwide service, his alleged failure to demonstrate a need for the proposed service, and the alleged potential loss of their revenue and traffic to him. Petitioners requested an oral hearing on Johnson's application, but the ICC denied the request, because it held that there were no material facts in dispute. The ICC decided the application under its modified procedure, 49 C.F.R. 1100.43, ³ and on April 21, 1981, the ICC's Review Board No. 3 granted Johnson the authority sought in his application. On June 29, 1981, the Review Board's decision was affirmed by the ICC's Division No. 1 acting as an appellate division. ⁴

FITNESS

Petitioners' first contention is that Johnson failed to make a prima facie showing that he was able to provide a responsive nationwide service. Before issuing a certificate of public convenience and necessity, the applicant must prove, and the Commission must find, in addition to a public need for the transportation services proposed by the applicant, that the applicant is "fit, willing, and able" to provide those services. 49 U.S.C. Sec. 10922(a). ⁵ To satisfy the "fit, willing, and able" requirement, the applicant must show (1) that it has the financial fitness or ability to perform the character of service it seeks to provide; (2) that it is willing to comply with the Interstate Commerce Act and the rules and regulations promulgated thereunder; and (3) that it has the ability to perform the proposed service in a safe and proper manner for the protection of the public. Curtis, Inc. v. Interstate Commerce Commission, 662 F.2d 680, 685 (10th Cir.1981).

Petitioners argue that Johnson failed to demonstrate that he could provide a responsive nationwide service because of his limited fleet, his limited financial resources, and his failure to submit a plan of operation "consistent with the scope of the certificate requested." In short, petitioners challenge the operational feasibility, from a quantitative standpoint, of Johnson's proposal. As we have stated before, the ICC is not required to consider, as a controlling factor, the operational quantitative feasibility of an applicant's proposal to serve the needs of all or most of its potential customers throughout all the area covered by its application. C & H Transportation Co., Inc. v. Interstate Commerce Commission, 704 F.2d 834 (5th Cir.1983); Steere Tank Lines, Inc. v. Interstate Commerce Commission, 675 F.2d 103, 105 (5th Cir.1982); Central Freight Lines, Inc. v. United States, 669 F.2d 1063, 1071 (5th Cir.1982). See also Star Delivery & Transfer v. United States, 659 F.2d 81, 85-86 (7th Cir.1981).

In its decision, the Review Board considered Johnson's financial fitness to perform the proposed service, and it noted his small size, but stated that "although it is possible that applicant may not own all the equipment necessary to conduct the entire service authorized, its financial statements do not indicate that it will be unable to acquire additional equipment in the future." We are unwilling to set aside this determination by the Commission.

The record shows that Johnson's equipment is of the type appropriate to the service it seeks to perform and that Johnson has the financial resources to conduct the character of operations proposed, and to lease or purchase additional equipment when and if needed, to serve shippers upon reasonable request. Petitioners concede that Johnson has the ability to comply with the Interstate Commerce Act and the rules and regulations thereunder, and there is evidence that Johnson has the ability to perform the proposed service in a safe and proper manner. We therefore hold that the ICC applied the proper standard in finding that Johnson is "fit, willing, and able" to perform the proposed service, and that its finding is supported by substantial evidence, and is neither arbitrary nor capricious. ⁶

PUBLIC NEED

Petitioners' next contention is that there is no substantial evidence to support the ICC's geographically broad grant of authority to Johnson. We agree. While the supporting shippers' testimony establishes a need for a carrier to transport their oversized commodities, the evidence respecting the geographical scope of that need does not rationally justify the grant of nationwide authority.

Evidence of the geographical scope of the public need shown need not be precise, Prefab Transit Company, Extension-Nationwide General Commodities, 132 M.C.C. 409, 413 (1981), especially where, as in the instant case, the goods concerned do not lend themselves to precise information respecting their movements. See Amber Delivery Service, Inc., Common Carrier Application, 131 M.C.C. 801, 808-09 (1979). The ICC, however, must have before it substantial evidence of (or take proper expert administrative notice of facts showing) the present or future direction of the traffic the applicant proposes to transport so that the breadth of authority granted him by the ICC will reasonably conform to the public need so shown. Prefab, 132 M.C.C. at 413.

In the instant case, Johnson, in his verified statement, stated that the shippers supporting his application "have customers throughout the United States," and that he therefore needed nationwide authority to serve their needs. Nine of the ten shippers stated that their shipments moved "[b]etween points in the United States" without listing specific states or portions of the nation. Both Johnson's and the shippers' testimony provides practically no information to the ICC respecting the present or...