Global Van Lines, Inc. v. I. C. C., Nos. 79-1185

CourtUnited States Courts of Appeals. United States Court of Appeals (District of Columbia)
Writing for the CourtBefore TAMM, ROBB and MIKVA; MIKVA
Citation627 F.2d 546
PartiesGLOBAL VAN LINES, INC., Wheaton Van Lines, Inc., and American Red Ball Transit Company, Inc., Petitioners, v. INTERSTATE COMMERCE COMMISSION and United States of America, Respondents. REFRIGERATED TRANSPORT CO., INC., et al., Petitioners, v. INTERSTATE COMMERCE COMMISSION and United States of America, Respondents, American Trucking Associations, Inc., et al., National Tank Truck Carriers, Inc., Intervenors.
Docket Number79-1264,Nos. 79-1185
Decision Date02 July 1980

Page 546

627 F.2d 546
201 U.S.App.D.C. 87
GLOBAL VAN LINES, INC., Wheaton Van Lines, Inc., and
American Red Ball Transit Company, Inc., Petitioners,
v.
INTERSTATE COMMERCE COMMISSION and United States of America,
Respondents.
REFRIGERATED TRANSPORT CO., INC., et al., Petitioners,
v.
INTERSTATE COMMERCE COMMISSION and United States of America,
Respondents,
American Trucking Associations, Inc., et al., National Tank
Truck Carriers, Inc., Intervenors.
Nos. 79-1185, 79-1264.
United States Court of Appeals,
District of Columbia Circuit.
Argued Feb. 11, 1980.
Decided July 2, 1980.

Stanley I. Goldman, Washington, D. C., with whom Alan F. Wohlstetter, Washington, D. C., was on brief, for petitioners in No. 79-1185.

Richard M. Tettelbaum, Atlanta, Ga., with whom Alan E. Serby and Bruce E. Mitchell, Atlanta, Ga., on brief, for petitioners in No. 79-1264.

James P. Tuite, Deputy Associate Gen. Counsel, I. C. C., Washington, D. C., with whom Robert S. Burk, Acting Gen. Counsel, Henri F. Rush, Associate Gen. Counsel, I. C. C., John J. Powers, III, Asst. Chief, Antitrust Division and Robert Lewis Thompson, Atty., Dept. of Justice, Washington, D. C., were on brief, for respondents.

Harry C. Ames, Jr., and Elizabeth A. Purcell, Washington, D. C., were on brief for intervenor, Nat. Tank Truck Carriers, Inc. in No. 79-1264.

Nelson J. Cooney, Kenneth E. Siegel, Alan J. Thiemann, and Robert A. Hirsch, Washington, D. C., were on brief, for intervenor, American Trucking Associations, Inc., et al., in No. 79-1264.

Before TAMM, ROBB and MIKVA, Circuit Judges.

Opinion for the Court filed by Circuit Judge MIKVA.

MIKVA, Circuit Judge:

Petitioners challenge newly promulgated Interstate Commerce Commission regulations governing leasing practices in the trucking industry. We find that the regulations are valid and affirm the Commission's order promulgating them.

I. REGULATORY HISTORY

In 1973 the nation's independent (owner-operated) truckers experienced their winter of discontent. In a concerted protest, they shut down operations to protest a host of economic problems with which they were beset. The impact was sufficient to set in motion a series of congressional hearings on the plight of independent truckers. 1 The strike also motivated the Interstate Commerce Commission to commence its own hearings, staff studies, and eventually a rulemaking proceeding which resulted in the regulations here under review. 2

Page 548

Under the existing scheme of federal regulation of the trucking industry, as established by Congress in the Interstate Commerce Act ("Act"), a carrier must receive operating authority from the Commission before engaging in most forms of interstate motor transportation for hire. 49 U.S.C. § 10921. Independent truckers usually own and operate one, or perhaps a few, trucks for hire. Because of the small size of their operations, they do not seek their own interstate operating authority; rather they lease their equipment and services to a regulated carrier, transporting interstate under the regulated carrier's operating authority and aegis.

Truck leases, which range in duration from three months to one year, 3 usually involve a split of gross revenue equalling 25 percent for the regulated carrier and 75 percent for the independent. H.R. Rep. No. 1812, 95th Cong., 2d Sess. 5-6 (1978) ("House Report "). The independent generally must cover his own costs, including fuel, insurance, emergency repairs, road taxes, etc. Id. In addition, many lease contracts require the independent to deposit in escrow with the regulated carrier an amount ranging from about $500 to $2,000 to insure performance and to cover repair expenses, license and permit costs, and any claims that might arise out of carriage of the goods. House Report at 11. Escrow accounts are generally maintained for a number of months after termination of the leasing contract, a practice defended on the ground that claims are permitted to be made long after property has been transported. 4

The various hearings uncovered a number of problems and abuses suffered by independent truckers. The owner-operators were found to be "caught in a continuing cost crunch," faced with rising costs, inflexible income, difficulties in obtaining long-term financing and questionable industry practices. House Report at 6-7. As a result of its own hearings, and at least partly in response to the prod from the congressional hearings, 5 the Commission commenced a rulemaking proceeding "to determine whether modified leasing rules . . . should be proposed." 42 Fed.Reg. 59984 (Nov. 23, 1977). The notice recited the previous congressional hearings, the staff studies and field hearings, and stated that "the Commission is inclined to the view that the establishment of minimum standards for leasing contracts is a desirable starting point for an overall revision of the existing leasing regulations." Id.

The notice invited comments on ten areas of inquiry into leasing practices. 6 After considering the first round of comments from numerous parties, the Commission proposed some specific regulations in July, 1978. Lease and Interchange of Vehicles, 129 M.C.C. 700 (1978), 43 Fed.Reg. 29812-18 (July 11, 1978). The proposed rules covered most of the areas set out for consideration

Page 549

in the notice. Relevant to this petition for review, the Commission proposed that regulated carriers pay interest at rates comparable to those paid by commercial banks on funds held in escrow. The proposal also required the return of escrow deposits within 45 days after termination of the leasing arrangement.

There followed another round of public comments, and the Commission issued its final order in January, 1979. Lease and Interchange of Vehicles, 131 M.C.C. 141 (1979). With respect to the regulations governing escrow accounts, the 45-day refund rule was made final by the Commission. 131 M.C.C. at 153. Because of complaints about the uncertainty of commercial bank interest rates, the rule proposed in the July, 1978 report was modified to require payment at a rate "at least equal to the average yield . . . on 91 day, 13 week Treasury bills." Id. The final rules were scheduled to become operative on February 22, 1979, but a 30-day delay was allowed for the carriers to amend their procedures to comply with the new rules. Finally, on March 26, 1979, the new rules became effective. 7

The history of the generation of the subject regulations illustrates how gradually the wheels of change turn in the regulated trucking field. Not until six years after the impetus of the independent trucker strike and protest did the Commission effect final changes in the regulations. Many of the final regulations were noncontroversial. 8 Others generated some disagreement but were not challenged on appeal. 9 However, petitioners assert that the regulations governing escrow accounts exceed the statutory authority granted the Commission under the Act and that they further are arbitrary and capricious. Despite the contentions of

Page 550

petitioners, we hold that the changes instituted by the Commission are rationally supported and well within the statutory authority of the Commission.

II. AUTHORITY OF THE COMMISSION

The seminal case on the Commission's authority to regulate leasing activities is American Trucking Associations v. United States, 344 U.S. 298, 73 S.Ct. 307, 97 L.Ed. 337 (1953). Prior to Commission action in that case, carriers had generally used single-trip leasing, with compensation measured as a percentage of gross revenue derived from the single trip. The Commission abolished this practice, ordering that leases be of at least 30 days' duration and that compensation be calculated on other than a gross revenue basis. These rules were challenged on the ground that the Act did not contain any express delegation of power to regulate leasing practices, and that such power could not be implied from the separate provisions of the Act granting regulatory authority. Conceding the absence of express authority in the Act, the Supreme Court nevertheless rejected this attack, stating that "Our function . . . does not stop with a section-by-section search for the phrase 'regulation of leasing practices' among the literal words of the statutory provision." Id. at 309, 73 S.Ct. at 314. The Court took the position that "the promulgation of these rules for authorized carriers falls within the Commission's power, despite the absence of specific reference to leasing practices in the Act." Id. at 312, 73 S.Ct. at 315. In reaching this holding, the Court looked to the Commission's general regulatory authority, concluding that since the aim of the rules was to promote "the maintenance of sound transportation services" and to prevent conditions which may "frustrate the success of the regulation undertaken by Congress," the Commission's action was within its rulemaking power, which is "coterminous with the scope of agency regulation itself." Id. at 310, 311, 73 S.Ct. at 315.

In 1956, shortly after the decision in American Trucking, Congress amended the Act to address specifically the subject of trip leasing. One part of the amendment clarified congressional intent that carriers of agricultural products, which are otherwise exempt from the operation of the Act, should also be exempt from regulations governing leasing arrangements. 49 U.S.C. § 11101(c). 10 The other part of the amendment enacted into law certain of the regulations upheld in American Trucking. 49 U.S.C. § 11107. 11 The Commission was specifically authorized to require written leases governing transport of non-exempt products, and to promulgate regulations necessary to assure full direction and control of leasing operations by the regulated carriers. Id. Petitioners interpret this amendment as delimiting the authority of the Commission with respect to regulation of leasing. They argue that this is all the Commission is authorized to do, and that the present...

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  • Checkosky v. S.E.C., Nos. 92-1396
    • United States
    • U.S. Court of Appeals — District of Columbia Circuit
    • May 20, 1994
    ...865 F.2d 382, 385 (D.C.Cir.1989); Action on Smoking & Health v. CAB, 699 F.2d 1209, 1212 (D.C.Cir.1983); Global Van Lines, Inc. v. ICC, 627 F.2d 546, 551 (D.C.Cir.1980), cert. denied, 449 U.S. 1079, 101 S.Ct. 860, 66 L.Ed.2d 802 3 Securities Act: Hearings on S. 875 before the Senate Comm. o......
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    • United States
    • United States Courts of Appeals. United States Court of Appeals (5th Circuit)
    • November 21, 1983
    ...procedures. We find the Commission's actions undertaken here to be within the " 'zone of reasonableness,' " Global Van Lines, Inc. v. ICC, 627 F.2d 546, 552 (D.C.Cir.1980), cert. denied 449 U.S. 1079, 101 S.Ct. 860, 66 L.Ed.2d 802 (1981), traditionally afforded an administrative agency in m......
  • In re Inc., No. 09–3463.
    • United States
    • United States Courts of Appeals. United States Court of Appeals (6th Circuit)
    • March 3, 2011
    ...a series of hearings, which uncovered numerous problems and abuses suffered by the independent truckers. Global Van Lines, Inc. v. ICC, 627 F.2d 546, 548 (D.C.Cir.1980). The owner-operators “were found to be caught in a continuing cost crunch, faced with rising costs, inflexible income, dif......
  • Request a trial to view additional results
17 cases
  • Checkosky v. S.E.C., Nos. 92-1396
    • United States
    • U.S. Court of Appeals — District of Columbia Circuit
    • May 20, 1994
    ...865 F.2d 382, 385 (D.C.Cir.1989); Action on Smoking & Health v. CAB, 699 F.2d 1209, 1212 (D.C.Cir.1983); Global Van Lines, Inc. v. ICC, 627 F.2d 546, 551 (D.C.Cir.1980), cert. denied, 449 U.S. 1079, 101 S.Ct. 860, 66 L.Ed.2d 802 3 Securities Act: Hearings on S. 875 before the Senate Comm. o......
  • Waldo v. North American Van Lines, Inc., Civ. A. No. 82-2668.
    • United States
    • United States District Courts. 3th Circuit. United States District Court (Eastern District of Pennsylvania)
    • September 4, 1987
    ...by the ICC the moment he entered into the Contractor Operating Agreement with NAVL. In Global Van 669 F. Supp. 733 Lines, Inc., v. I.C.C., 627 F.2d 546, 550 (D.D.C.1980), the court noted that "carriers of agricultural products, which are otherwise exempt from the operation of the Act, shoul......
  • American Transfer & Storage Co. v. I.C.C., No. 81-4072
    • United States
    • United States Courts of Appeals. United States Court of Appeals (5th Circuit)
    • November 21, 1983
    ...procedures. We find the Commission's actions undertaken here to be within the " 'zone of reasonableness,' " Global Van Lines, Inc. v. ICC, 627 F.2d 546, 552 (D.C.Cir.1980), cert. denied 449 U.S. 1079, 101 S.Ct. 860, 66 L.Ed.2d 802 (1981), traditionally afforded an administrative agency in m......
  • In re Inc., No. 09–3463.
    • United States
    • United States Courts of Appeals. United States Court of Appeals (6th Circuit)
    • March 3, 2011
    ...a series of hearings, which uncovered numerous problems and abuses suffered by the independent truckers. Global Van Lines, Inc. v. ICC, 627 F.2d 546, 548 (D.C.Cir.1980). The owner-operators “were found to be caught in a continuing cost crunch, faced with rising costs, inflexible income, dif......
  • Request a trial to view additional results

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