Greyhound Corp. v. I. C. C., 75-2062

• Decision Date: 21 January 1977
• Docket Number: No. 75-2062,75-2062
• Citation: 551 F.2d 414,179 U.S.App.D.C. 228
• Parties: The GREYHOUND CORPORATION, Petitioner, v. INTERSTATE COMMERCE COMMISSION and United States of America, Respondents.
• Court: U.S. Court of Appeals — District of Columbia Circuit

Page 414

551 F.2d 414

179 U.S.App.D.C. 228

The GREYHOUND CORPORATION, Petitioner, v. INTERSTATE COMMERCE COMMISSION and United States of America Respondents.

No. 75-2062.

United States Court of Appeals District of Columbia Circuit.

Argued Dec. 9, 1976.

Decided Jan. 21, 1977.

E. Barrett Prettyman, Jr., Washington, D. C., with whom Robert R. Bruce, and W. L. McCracken, Phoenix, Ariz., were on the brief for petitioner.

Edward E. Lawson, Atty., Dept. of Justice, with whom Robert B. Nicholson, Atty., Dept. of Justice, Washington, D. C., was on the brief for United States of America; Carl D. Lawson and Laurence K. Gustafson, Attys., Dept. of Justice, Washington, D. C., also entered appearances for respondent United States of America.

Walter H. Walker, III, Atty., I. C. C., Washington, D. C., for respondent I. C. C.; Robert S. Burk, Acting Gen. Counsel, I. C. C., Washington, D. C., at the time the brief was filed, with whom Charles H. White, Jr., Associate Gen. Counsel and Kenneth G. Caplan, Atty., I. C. C., Washington, D. C., were on the brief for respondent I. C. C.

Before WRIGHT and ROBB, Circuit Judges and GESELL, ^* United States District Judge for the United States District Court for the District of Columbia.

PER CURIAM:

The Greyhound Corporation petitions this court for review of orders of the Interstate Commerce Commission. The challenged orders require Greyhound to obtain prior ICC approval of all its securities transactions pursuant to section 20a of the Interstate Commerce Act, 49 U.S.C. § 20a (1970). Greyhound asserts that the orders impermissibly deviate, without explanation, from the ICC's own precedents. We agree, and accordingly remand the case for the ICC to rectify or explain the deviations.

This dispute has its origin in events which occurred in 1963. Prior to that year Greyhound was a motor carrier. In 1963 Greyhound sought to become a holding company by transferring its transportation rights and properties to a subsidiary, and the ICC approved the transfer in an order entitled California Parlor Car Tours Co. Pur. Greyhound Corp., 93 M.C.C. 392 (1963) (cited hereafter as "the 1963 order"). In the same order the ICC imposed the requirements of Section 20a of the Interstate Commerce Act, 49 U.S.C. § 20a, obligating Greyhound to obtain prior ICC approval of all its securities transactions. Section 5(3) of the Act, 49 U.S.C. § 5(3), permits the ICC to impose such requirements on a party acquiring control over a carrier.

The ICC imposed its securities jurisdiction upon Greyhound because in 1963 the principal sources of Greyhound's income were regulated transportation activities. See the 1963 order, 93 M.C.C. at 395. At the time 80% of Greyhound's total revenues were generated by transportation-related businesses. By 1972, however, only 20% of Greyhound's total revenues and 40% of its net income were derived from transportation-related activities. Consequently, Greyhound petitioned the ICC to rescind that part of the 1963 order which required Greyhound to obtain prior ICC approval of all its securities transactions.

In 1974 the ICC entered an unpublished order denying Greyhound's petition. California Parlor Car Tours Co. Pur. Greyhound Corp., No. MC-F-8531 (ICC Div. 3, March 21, 1974) (cited hereafter as "the 1974 order"). Greyhound petitioned for reconsideration of the 1974 order and the ICC denied reconsideration in 1975. California Parlor Car Tours Co. Pur. Greyhound Corp., No. MC-F-8531 (ICC Div. 3, acting as App.Div., September 12, 1975).

Greyhound then petitioned this court for review contending that the ICC has deviated without explanation from the standards and results announced in previous ICC decisions. We hold that the ICC has in fact so deviated and remand the case for further consideration by the Commission.

This court emphatically requires that administrative agencies adhere to their own precedents or explain any deviations from them. See Columbia Broadcasting System, Inc. v. F. C. C., 147 U.S.App.D.C. 175, 454 F.2d 1018 (1971); Greater Boston Television Corp. v. F. C. C., 143 U.S.App.D.C. 383, 444 F.2d 841 (1970), cert. denied, 403 U.S. 923, 91 S.Ct. 2229, 29 L.Ed.2d 701 (1971); F. T. C. v. Crowther, 139 U.S.App.D.C. 137, 430 F.2d 510 (1970); Marine Space Enclosures, Inc. v. F. M. C., 137 U.S.App.D.C. 9, 420 F.2d 577 (1969). Of course, the agency is free to make reasoned changes in its policies. However, as this court noted in Columbia Broadcasting System, Inc. v. F. C. C., supra, there is an "equally essential proposition that, when an agency decides to reverse its course, it must provide an opinion or analysis indicating that the standard is being changed and not ignored, and assuring that it is faithful and not indifferent to the rule of law." 147 U.S.App.D.C. at 183, 454 F.2d at 1026 (footnote omitted).

The ICC's orders in this case contain no such assurance of conformity to the "rule of law" not even a passing reference to previous decisions in which the agency employed a different standard and reached substantially different results.

The ICC gave two grounds for its 1974 decision: first, Greyhound controlled a major portion of the busing industry; and second, the principal sources of Greyhound's net income were transportation-related operations. See the 1974 order. These grounds and the results achieved depart materially from the ICC's precedents in three respects. ¹

First, the Commission has shifted its definition of what constitutes a company's "principal source" of income for the purposes of deciding whether to require ICC approval of the company's securities transactions. In the past the agency has clearly interpreted "principal source" of income to mean the source of over 50% of the company's income. See Chicago & N. W. Ry. Co. Merger Chicago Great W. Ry. Co., 333 I.C.C. 236, 240-41 (1968); Wells Fargo Armored Service Corp. Control Armored Motor Service Co., 75 M.C.C. 285, 295 (1958) (cited hereafter as "Wells Fargo" ). Yet in the present case, the Commission has interpreted "principal source" of income to include sources of less than half of the company's income 20% of Greyhound's total revenues and 40% of its net income. See the 1974 order. The Commission's orders neither explain this shift nor acknowledge that it has even occurred.

The Commission has not only shifted its definition of the "principal source of income" from more than half to something less; the Commission has also shifted without explanation from a gross income test to a net income test. The ICC imposed its securities jurisdiction upon Greyhound in part because Greyhound's principal source of net income was transportation. See the 1974 order. The income test utilized by the Commission in the past was based upon the percentage of total revenues (rather than net...