Cross-Sound Ferry Services, Inc. v. I.C.C.

• Decision Date: 28 April 1989
• Docket Number: 88-1456,Nos. 88-1455,CROSS-SOUND,s. 88-1455
• Citation: 873 F.2d 395
• Parties: FERRY SERVICES, INC., Petitioner, v. INTERSTATE COMMERCE COMMISSION and United States of America, Respondents, Viking Starship, Inc., Intervenor.
• Court: U.S. Court of Appeals — District of Columbia Circuit

Page 395

873 F.2d 395

277 U.S.App.D.C. 182

CROSS-SOUND FERRY SERVICES, INC., Petitioner, v. INTERSTATE COMMERCE COMMISSION and United States of America Respondents Viking Starship, Inc., Intervenor.

Nos. 88-1455, 88-1456.

United States Court of Appeals District of Columbia Circuit.

Argued Feb. 28, 1989.

Decided April 28, 1989.

Eugene D. Gulland, with whom Richard G. Slattery, Washington, D.C., was on the brief, for petitioner.

Craig M. Keats, Deputy Associate Gen. Counsel, I.C.C., with whom Charles F. Rule, Asst. Atty. Gen., Robert S. Burk, Gen. Counsel, I.C.C., Dennis J. Starks, Atty., I.C.C., and Catherine G. O'Sullivan and David Seidman, Attys., Dept. of Justice, Washington, D.C., were on the joint brief, for respondents.

Edward D. Greenberg and Mark T. Priesing, Washington, D.C., were on the brief, for intervenor.

Before MIKVA, SILBERMAN, and SENTELLE, Circuit Judges.

Opinion for the Court filed by Circuit Judge MIKVA.

MIKVA, Circuit Judge:

This petition for review concerns a decision by the Interstate Commerce Commission ("ICC" or "Commission") that certain water carriage services provided by Viking Starship, Inc. ("Viking") were ferry services exempt from ICC regulation by statute, 49 U.S.C. Sec. 10544(a)(4). See Viking Starship, Inc.--Common Carrier Application (Montauk, NY), 4 I.C.C.2d 634 (1988) ("Viking Starship "). One of Viking's competitors, Cross-Sound Ferry Services, Inc. ("Cross-Sound"), challenges both the exemption granted by the ICC to Viking and earlier Commission decisions finding Viking fit and authorizing temporary operations. We hold that the Commission failed to explain adequately its change in policy with respect to the ferry exemption, and we remand for a fuller exegesis of the Commission's views. We find, however, that the Commission's grant of temporary operating authority to Viking was lawful and premised on an adequate record, so that Viking may continue to provide service while the Commission revisits this proceeding.

I.

The ICC, in a series of unpublished decisions in 1987 and early 1988, granted Viking emergency temporary authority ("ETA") and later temporary authority ("TA") to provide water carrier operations transporting passengers and their baggage between: (1) Montauk, New York, and Block Island, Rhode Island; and (2) Montauk and a point between Groton and New London, Connecticut ("Groton/New London"). See 49 U.S.C. Sec. 10928(a); 49 C.F.R. Secs. 1162, 1163 (1987) (providing the basis of authority to grant ETA and TA). In this appeal, Cross-Sound contests Viking's service only between Montauk and Groton/New London. In the ETA and TA proceedings, Cross-Sound had protested the grant of operating authority to Viking, principally on three grounds: (1) there was no public need for Viking's operations, as required by 49 U.S.C. Sec. 10922(a)(2); (2) Viking was "unfit" within the meaning of 49 U.S.C. Sec. 10922(a)(1), because it had provided service for several years without applying to the ICC for required operating authority; and (3) Viking was "unfit" because it was using docking facilities in violation of Groton zoning ordinances.

The Commission, however, rejected these objections in granting Viking ETA and TA. It first found that Viking had shown sufficient need for its services. Viking had submitted statements from numerous businessmen who confirmed that many of their customers relied on Viking's services. The Commission noted that it previously had recognized the difficulties in obtaining testimony from individuals, especially tourists, and often had relied on declarations from travel agents and other businessmen who had actual knowledge of the need for passenger transportation. In addition, the ICC dismissed Cross-Sound's suggestion that its route between New London, Connecticut, and Orient Point, New York, some 75 miles from Montauk, eliminated the need for Viking's service.

The Commission next rejected Cross-Sound's suggestion that Viking was unfit because it had conducted water carrier operations without ICC approval for several years. Viking admitted that it previously had operated without an ICC certificate, but maintained that it had believed that its service was a ferry exempt from Commission regulation under 49 U.S.C. Sec. 10544(a)(4), and in support of its position cited North Rip Fish Harvest, Ltd., No. W-1325 (May 13, 1980) ("North Rip ") (finding transportation of passengers between Montauk and Block Island to be exempt ferry service). The Commission accepted this explanation and noted that Viking had cooperated with the ICC's Office of Compliance and Consumer Assistance when a question arose as to Viking's operating authority.

The Commission also found that a zoning dispute between the City of Groton and the owner of the docks used by Viking on a rental basis did not impugn Viking's fitness. The owner, Mr. Frank Scheetz, allegedly delayed in informing Viking that the city had ordered it to stop using the docks. There was every indication, however, that when Mr. Scheetz finally told Viking to cease, the company complied with the order. The ICC concluded that Viking was at most an interested third party to the dispute and had not committed any wrongdoing.

In addition, the Commission rejected Cross-Sound's argument that Viking's ETA and TA applications should be denied because Groton's zoning laws rendered it "unable" to offer Montauk-Groton/New London service, see 49 U.S.C. Sec. 10922(a)(1). The ICC found that the ruling against Mr. Scheetz precluded Viking's service only temporarily because Mr. Scheetz might eventually be able to obtain zoning permission for Viking's use of his docks, and because Viking might be able to find alternate docking facilities. The Commission concluded that Viking was fit, willing, and able to provide Montauk-Groton/New London service, and it granted emergency, and later temporary, operating authority.

Viking then sought a permanent certificate to operate as a water carrier transporting passengers and their baggage along both the Montauk-Groton/New London and the Montauk-Block Island routes. By a decision dated June 1, 1988, the ICC found that the proposed service was a ferry service under 49 U.S.C. Sec. 10544(a)(4), see Viking Starship, 4 I.C.C.2d at 635. Ferry operations are exempt from ICC jurisdiction except to the extent that the Commission finds regulation necessary to carry out the national transportation policy of 49 U.S.C. Sec. 10101. The Commission rejected Cross-Sound's arguments that the operations were not ferriage because the distances between the points involved (30 miles for Groton/New London and 15 miles for Block Island) were too great; the routings, although direct, involved nominally different bodies of water (the Long Island and Block Island Sounds); and the seasonal nature of the service, twice-daily during the summer, was not frequent or regular enough. The Commission found that "the involved route is simply a substitute for a bridge between Montauk and the Connecticut mainland, and, thus, within the scope of the ferry exemption." Viking Starship, 4 I.C.C.2d at 637. The Commission then analyzed the requirements of national transportation policy and concluded that "[b]y delaying [Viking's] entry into this local market we would only harm the affected public," 4 I.C.C.2d at 638, because there was a clearly demonstrated need for Viking's services.

Cross-Sound petitions for review of the ICC's decisions both to exempt Viking's operations as a ferry service, and to grant Viking ETA and TA. Cross-Sound argues that the Commission misconstrued the ferry exemption; that it erred in denying Cross-Sound an opportunity for additional discovery and a hearing; that its decision to apply the ferry exemption violated the Coastal Zone Management Act, 16 U.S.C. Sec. 1456, and the National Environmental Policy Act, 42 U.S.C. Sec. 4332; and that it failed to consider relevant evidence and statutory requirements in granting Viking ETA and TA.

II.

A.

We first examine the Commission's decision that Viking's service between Montauk and Groton/New London constituted "ferry" service exempt from ICC regulation under the Interstate Commerce Act, 49 U.S.C. Sec. 10544(a)(4). The statute does not define the term "ferry," and there is no legislative history on the point, so that this case is governed by the familiar "second prong" of Chevron, U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984). Because "the statute is silent or ambiguous with respect to the specific issue," the question is whether the Commission's interpretation is a "reasonable" one, Chevron, 467 U.S. at 843, 845, 104 S.Ct. at 2782, 2783, i.e., one that is "rational and consistent with the statute." NLRB v. United Food & Commercial Workers Union, Local 23, 484 U.S. 112, 108 S.Ct. 413, 421, 98 L.Ed.2d 429 (1987); see also Mobil Oil Corp. v. EPA, 871 F.2d 149, 151-152 (D.C.Cir.1989) (per curiam ).

The Commission has great latitude in determining the scope of the ferry exemption and in modifying it from time to time as the Commission sees fit. See Chevron, 467 U.S. at 863-64, 104 S.Ct. at 2792 ("An initial agency interpretation is not instantly carved in stone. On the contrary, the agency, to engage in informed rulemaking, must consider varying interpretations and the wisdom of its policy on a continuing basis."); see also General American Transportation Corp. v. ICC, 872 F.2d 1048, 1053-1054 (D.C.Cir. 1989). The Commission may also announce changes in the construction of its enabling statute on a case-by-case basis through adjudications, see ANR Pipeline Co. v. FERC, 870 F.2d 717, 722 (D.C.Cir.1989). This, of course, does not mean that the ICC may "casually ignore its own past decisions"; it is well known that "[d]ivergence from agency precedent demands an explanation." Hall v. McLaughlin, 864 F.2d 868, 872 (D.C.Cir.1989); see also United Food & Commercial Workers Union, 108 S.Ct. at 421 n....