O-J Transport Co. v. U.S.

• Decision Date: 04 June 1976
• Docket Number: O-J,No. 75-1671,75-1671
• Citation: 536 F.2d 126
• Parties: TRANSPORT COMPANY, Petitioner, v. UNITED STATES of America and Interstate Commerce Commission, Respondents, and Associated Truck Lines, Inc., et al., Intervenors.
• Court: U.S. Court of Appeals — Sixth Circuit

Page 126

536 F.2d 126

O-J TRANSPORT COMPANY, Petitioner, v. UNITED STATES of America and Interstate Commerce Commission Respondents and Associated Truck Lines, Inc., et al., Intervenors.

No. 75-1671.

United States Court of Appeals Sixth Circuit.

Argued Feb. 11, 1976.

Decided June 4, 1976.

Robert E. McFarland, Bloomfield Hills, Mich., for petitioner.

Joel H. Steiner, Axelrod, Goodman, Steiner & Bazelon, Chicago, Ill., Jack B. Josselson, Cincinnati, Ohio, for intervenor Courier-Newsom.

Fritz R. Kahn, Henri F. Rush, Gen. Counsel, I. C. C., Washington, D. C., Edward H. Levi, U. S. Atty. Gen., John H. D. Wigger, Dept. of Justice, Washington, D. C., for respondents.

Before PECK, MILLER ^* and LIVELY, Circuit Judges.

LIVELY, Circuit Judge.

This is a petition for review of a final order of the Interstate Commerce Commission (Commission) denying the application of petitioner O-J Transport Company (O-J) for a certificate of convenience and necessity under § 207(a) of the Interstate Commerce Act, 49 U.S.C. § 307(a). O-J is a small trucking company owned by two black residents of Detroit, Michigan. It has been engaged in hauling malt beverages from Milwaukee, Wisconsin to Detroit under temporary authority since September 1, 1973. Its application sought a certificate of public convenience and necessity authorizing transportation of automobile parts over irregular routes between designated points in the Detroit, Michigan area on the one hand and Chicago, Illinois and Janesville, Kenosha and Milwaukee, Wisconsin on the other, as well as the transportation of malt beverages between Milwaukee and Detroit. The Commission directed that a certificate issue for the transportation of malt beverages, but denied the application for authority to transport automobile parts. See O-J Transport Company Common Carrier Application, 120 M.C.C. 699 (1974). That portion of the order which granted the certificate for transportation of malt beverages is not before this court and our review is concerned only with the denial of O-J's application for authority to haul automobile parts.

O-J's application was supported by the "big three" automobile manufacturers, General Motors, Ford and American Motors, and was opposed by a large number of trucking companies which hold certificates that permit, inter alia, the transportation of automobile parts between the points designated in the application. The protesting carriers have transported automobile parts for one or more of the automobile manufacturers who supported the application. The administrative law judge to whom the application was referred for hearing and initial decision found that the protesting carriers could perform services for which O-J sought a certificate, but that Ford Motor Company had "expressed reservations as to the adequacy of the service it is receiving and American Motors that the proposed service is of the type it prefers using." He discounted the supporting documents of General Motors as being too indefinite to have probative value in a public convenience and necessity proceeding. Finding further that neither Ford nor American Motors intended to divert more than a small fraction of its available traffic from existing carriers if O-J's application were granted, the administrative law judge concluded (with exception of the request for service from or to Janesville, Wisconsin) that "the service proposed in this application will serve a useful public purpose, responsive to a public need without endangering or impairing the operation of existing carriers contrary to the public interest." He then made the specific finding that public convenience and necessity required the operation by O-J as a motor common carrier in the manner set forth in the application (excluding service to and from Janesville, Wisconsin) and that O-J was able properly to perform such services. The protesting carriers filed exceptions and, upon review, the Commission denied the auto parts application by a two-to-one vote, Commissioner O'Neal dissenting.

In these review proceedings O-J first contends that the Commission abused its discretion by denying O-J's application on the sole basis of a finding that the existing carriers are capable of providing the service sought to be rendered in the application while ignoring other criteria, and that its findings are not supported by substantial evidence in the record. In Interstate Commerce Commission v. J-T Transport Co., Inc., 368 U.S. 81, 88, 82 S.Ct. 204, 7 L.Ed.2d 147 (1961), a contract carrier case, the Supreme Court held that the Commission must consider the adequacy of existing services, but that this factor is "not determinative." This principle has also been applied in common carrier cases. See, e. g., Warren Transport, Inc. v. United States, 525 F.2d 148, 149 (8th Cir. 1975), quoting from Feature Film Service, Inc. v. United States, 349 F.Supp. 191, 201 (S.D.Ind.1972), as follows:

The adequacy or inadequacy of existing service is a basic ingredient in the determination of public convenience and necessity, but it is not and may not be used as the sole test in determining whether public convenience and necessity exist. . . . Successful past operations of the applicant, along with other factors, are also entitled to consideration in determining public need.

A careful reading of the Report of the Commission does not lead to the conclusion that the majority relied solely on the finding that existing service is adequate in denying O-J's application. The Commission pointed out that the applicant has the burden of establishing that its proposed operation is or will be required by present or future public convenience and necessity and then paraphrased often-quoted Commission language from Pan-American Bus Lines Operation, 1 M.C.C. 190, 203 (1936), as follows:

In considering to what extent this statutory requirement has been met, we must determine whether the new operation will serve a useful purpose, responsive to a public demand or need; whether this purpose can or will be served as well by existing carriers; and whether it can be served by applicant with the new operation or service proposed without endangering or impairing the operations of existing carriers contrary to the public interest. 120 M.C.C. at 702.

In addition to adequacy of existing service and facilities the Commission considered the very general nature of the statements of the supporting shippers intended to establish public convenience and necessity and the evidence of the protesting carriers "of an imbalance of traffic terminating in the Detroit area and . . . a need for additional traffic outbound from Detroit to balance their operations."

In Interstate Commerce Commission v. Parker, 326 U.S. 60, 65, 65 S.Ct. 1490, 89 L.Ed. 2051 (1945), the Supreme Court pointed out that the role of the Commission is to find the facts and make determinations of whether public convenience and necessity require additional motor carrier service in a particular situation where an application has been made. In exercising this discretionary function the Commission may rely on a wide variety of circumstances which its expertise indicates are relevant to a particular determination. In reviewing a determination by the Commission of the existence or non-existence of public convenience and necessity in a given case the courts must examine the Commission's evaluation of the record to determine that the Commission has exercised its discretion "in conformity with the declared policies of the Congress" as set forth in the statement of National Transportation Policy, 49 U.S.C. preceding § 1. Shaffer Transportation Co. v. United States, 355 U.S. 83, 87-88, 78 S.Ct. 173, 2 L.Ed.2d 117 (1957). We believe the Commission's holding in this case was based on substantial evidence related to factors required to be considered under existing transportation policies.

Though the Commission's finding that public convenience and necessity do not require the granting of O-J's application is supported by substantial evidence, this does not end the court's inquiry. As the Supreme Court stated in Bowman Transportation, Inc. v. Arkansas-Best Freight System, Inc., 419 U.S. 281, 284, 95 S.Ct. 438, 42 L.Ed.2d 447 (1974), it is possible for a finding to be supported by substantial evidence and yet reflect arbitrary and capricious action. There the Court pointed out that the Administrative Procedure Act (APA) in 5 U.S.C. § 706 provides six separate standards of review. These standards are stated in the disjunctive and an agency's action, findings and conclusions may satisfy one of these criteria and not another. However, when the substantial evidence test has been met the scope of review is quite narrow and the court must avoid substituting its judgment for that of the Commission. The APA does not require an agency to furnish detailed reasons for its decision so long as its conclusions and underlying reasons may be discerned with confidence. Lemmon Transport Co., Inc. v. United States, 393 F.Supp. 838, 841 (W.D.Va.1975). Stated another way, the Commission's decision must be sufficiently clear so that a court is not required to speculate as to its basis. Ross Express, Inc. v. United States, 529 F.2d 679, 682 (1st Cir. 1976).

In Bowman, supra the Court also noted that the Commission is not bound by the findings of its examiner (administrative law judge), 419 U.S. at 288 n.4, 95 S.Ct. 438, 42 L.Ed.2d 447. Nevertheless the agency "must articulate a 'rational connection between the facts found and the choice made,' " quoting from Burlington Truck Lines v. United States, 371 U.S. 156, 168, 83 S.Ct. 239, 9 L.Ed.2d 207 (1962). Id. at 285, 95 S.Ct. at 442. Finally, in summarizing the scope of judicial review the Court stated: "While we may not supply a reasoned basis for the agency's action that the agency itself has not given, . . . we will uphold a decision of less than ideal clarity if the agency's path may reasonably be discerned." Id....