CTS Enterprises, Inc. v. Louisiana Public Service Com'n

• Decision Date: 13 March 1989
• Docket Number: No. 88-CA-2061,88-CA-2061
• Citation: 540 So.2d 275
• Parties: CTS ENTERPRISES, INC. v. LOUISIANA PUBLIC SERVICE COMMISSION.
• Court: Louisiana Supreme Court

Page 275

540 So.2d 275

CTS ENTERPRISES, INC. v. LOUISIANA PUBLIC SERVICE COMMISSION.

No. 88-CA-2061.

Supreme Court of Louisiana.

March 13, 1989.

Robert L. Rieger, Jr., Baton Rouge, for defendant-appellant.

V. James Stewart, William C. Shockey, Shockey & Ziober, Baton Rouge, for plaintiff-appellee.

Kenneth W. Campbell, Ruston, for intervenor-appellee.

CALOGERO, Justice.

The appeals of the Louisiana Public Service Commission and REB Transport, Inc. in this case and the appeal of CTS Enterprises, Inc. in a companion case (No. 88-CA-2374) involve similar motor contract carrier permit applications. The cases were appealed, argued and briefed separately, and not formally consolidated. Because the subject matter is identical, the cases involve similar contract carrier permit applications (one by REB, the other by Daniel Grafton Murphy), a common support shipper (Louisiana Laminates, Inc.) and an identical opponent, (CTS Enterprises, Inc.) we resolve the legal issues for both cases in this opinion, while rendering separate opinions this day.

This case involves a contract carrier permit application by REB Transport, Inc. The other, an application by Daniel Grafton Murphy, is treated in the companion opinion, CTS Enterprises, Inc. v. Louisiana Public Service Commission, 540 So.2d 285 (La.1989) (Daniel Grafton Murphy, d/b/a Grafton Crossing Trucking, intervenor) No. 88-CA-2374, (decided March 13, 1989).

REB Transport, Inc., an interstate motor carrier, applied to the Louisiana Public Service Commission for a contract carrier permit to operate as an intrastate contract motor carrier, transporting general commodities throughout the state for five unnamed shippers. Upon receiving notice of opposition from a number of motor carriers, REB restrictively amended its application, thereby limiting its request to the transportation of building materials, lumber and wood products throughout the state. Thereafter, plaintiff CTS Enterprises, Inc. persisted in its opposition to REB's application. After a public hearing, the Public Service Commission granted REB a contract carrier permit, finding that "the authority as restrictively amended would be in the public interest". Louisiana Public Service Commission Order No. T-17575, October 21, 1987.

CTS Enterprises, Inc. appealed that decision to the district court in East Baton Rouge Parish. Honorable Carl Guidry, Judge of Division K of that Court, rescinded the Louisiana Public Service Commission's order. He also cancelled and revoked the contract carrier permit issued to REB Transport, Inc., finding essentially that the Commission lacked a reasonable basis for granting the permit. The judge found the evidence lacking in facts upon which the Public Service Commission could reasonably have concluded that the issuance of the permit was in the public interest. ¹ REB Transport, Inc. and the Louisiana Public Service Commission appealed to this Court, protesting the district court's rescission of the Public Service Commission order and revocation of the contract carrier permit. Appellants argue that the district court committed error of law by substituting its judgment for that of the Public Service Commission, when the Commission's finding was reasonable and supported by the evidence in the record.

Before we address sufficiency of the evidence in support of the Commission's granting the contract carrier permit, we believe that it is appropriate to discuss the legal principals governing the authority of the Louisiana Public Service Commission and its granting of contract motor carrier permits. Although there are numerous cases decided by this Court involving common carrier applications, some granted, and some denied by the Commission [e.g., see M & G Fleet Service, Inc. v. Louisiana Public Service Commission, 443 So.2d 574 (La.1983); Florane v. Louisiana Public Service Commission, 433 So.2d 120 (La.1983); Dreher Contracting & Equipment Rental, Inc. v. Louisiana Public Service Commission, 396 So.2d 1265 (La.1981); Truck Service, Inc. v. Louisiana Public Service Commission, 263 La. 588, 268 So.2d 666 (1972); Saia Motor Freight Line, Inc. et al v. Louisiana Public Service Commission, 243 La. 787, 147 So.2d 390 (1962) ], there is only one case in our jurisprudence involving a contract carrier permit applicant, Southern Sugar Transport, Inc. v. Louisiana Public Service Commission, 324 So.2d 435 (La.1975). In Southern Sugar, this Court affirmed the Public Service Commission's issuance of a contract carrier permit, finding that some evidence existed which supported the Commission's order, that the Commission's order was not arbitrary and capricious, and that the issuance of the permit was "in the public interest." Southern Sugar, supra at 437, 438.

The "some evidence" and "arbitrary and capricious" standards recited in Southern Sugar were drawn from decisions of this Court delineating the scope of judicial review of orders granting common carrier certificates of public convenience and necessity. In fact we stated in Southern Sugar that those decisions are applicable to the review of orders granting or refusing contract carrier permits. Southern Sugar, supra at p. 437 (citing, Herrin Tank Lines, Inc. v. Louisiana Public Service Commission, 247 La. 826, 174 So.2d 644 (1965) and Truck Service, Inc. v. LPSC, 263 La. 588, 268 So.2d 666 (1972)).

Our latest expression on the standard of review (in a common carrier setting) is found in Miller Transporters, Inc. v. Public Service Commission, 518 So.2d 1018 (La.1988) wherein we said "Upon judicial review of the Commission's determination of whether the applicant has made such a showing [i.e. that the public convenience and necessity would be materially promoted by issuance of a certificate], a court will not upset the agency's finding unless it is based on an error of law or is one which the Commission could not have found reasonably from the evidence." 518 So.2d 1018 at 1020. This is the standard which we will apply in this case.

Furthermore, that sole contract carrier case in our jurisprudence, Southern Sugar Transport, Inc. v. Louisiana Public Service Commission, supra, did not fully discuss the considerations which the Louisiana Public Service Commission should take into account in determining whether a given contract carrier permit should or should not be granted to an applicant. For the latter reason we discuss here those considerations.

Louisiana's 1938 Motor Carrier Act (Act 301 of 1938) ² parallels the U.S. Congress' Motor Carrier Act of 1935 (49 U.S.C. Secs. 301 et seq.). It regulates motor carriers by requiring the issuance of motor carrier permits and the imposition of rates and tariffs. The Louisiana statute declares that the business of operating motor vehicles for hire as common or contract carriers of persons or property for compensation upon the public highways and bridges of this state is a business affected with a public interest. La.R.S. 45:161. ³ It divides regulated motor carriers into two classes, common and contract. In Louisiana, a "common carrier by motor vehicle" is defined essentially as a person in the business of transporting persons or property for compensation and available to the public generally, whereas "contract carrier by motor vehicle" is any person not a common carrier who transports passengers or property by vehicle for compensation under special and individual contracts or agreements. La.R.S. 45:162(4), (5). ⁴

Barriers to entry for both common and contract carriers are established through the Public Service Commission's exercise of its power to limit the number of carriers issued motor carrier authority. La.R.S. 45:164 establishes the requirements for the issuance of new or additional motor carrier authority:

No motor carrier shall operate as a common carrier without first having obtained from the commission a certificate of public convenience and necessity, which shall be issued only after a written application made and filed, a public hearing, due notice given to applicant and all competing common carriers, and a finding by the commission that public convenience and necessity require the issuance of a certificate. No new or additional certificate shall be granted over a route where there is an existing certificate, unless it clearly be shown that the public convenience and necessity would be materially promoted thereby.

No motor carrier shall operate as a contract carrier without having had a public hearing and obtained from the commission a permit to do so, which permit shall not be issued unless in the public interest and until the applicant shall have complied with the requirements of R.S. 45:161 through R.S. 45:172. (emphasis provided)

Thus, the issuance of common carrier authority is governed by "the public convenience and necessity" (Saia Motor Freight Line, Inc. v. Louisiana Public Service Commission, supra; Truck Service, Inc. v. Louisiana Public Service Commission, supra), whereas the issuance of contract carrier authority must simply be "in the public interest". Southern Sugar Transport, Inc. v. Louisiana Public Service Commission, supra. Just what constitutes the public interest is not made clear by either Louisiana's statutes or jurisprudence.

The Interstate Commerce Commission, under the Motor Carrier Act of 1935 (Title 49 U.S.C., Ch. 8 Interstate Commerce Act, Part II, Motor Carriers, Sections 301-327), also regulates the motor carrier industry primarily through the imposition of rates and tariffs, and the creation of barriers to industry entry and exit. ⁵ Motor carrier entry is controlled by the issuance of motor carrier authority, such authority being required for the operation of any motor carrier business offered to the public. 49 U.S.C. Sec. 303(c) The Motor Carrier Act divides motor carriers into three groups; motor common carriers, motor contract carriers, and private carriers. ⁶

Federal common carrier authority is granted when the applicant demonstrates, under the...