Keen Transport, Inc. v. United States

• Decision Date: 06 August 1976
• Docket Number: Civ. A. No. C75-170.
• Citation: 446 F. Supp. 5
• Parties: KEEN TRANSPORT, INC., Plaintiff, v. UNITED STATES of America et al., Defendants.
• Court: U.S. District Court — Northern District of Ohio

446 F. Supp. 5

KEEN TRANSPORT, INC., Plaintiff, v. UNITED STATES of America et al., Defendants.

Civ. A. No. C75-170.

United States District Court, N. D. Ohio, E. D.

August 6, 1976.

Paul F. Beery, Michael Spurlock, Columbus, Ohio, John A. Kundtz, Thompson, Hine & Flory, Cleveland, Ohio, for Keen Transport, Inc.

John H. D. Wigger, U. S. Dept. of Justice, Washington, D. C., for United States of America.

Peter A. Fitzpatrick, I. C. C., Washington, D. C., for I. C. C.

Before CELEBREZZE, Circuit Judge, LAMBROS and KRUPANSKY, District Judges.

MEMORANDUM

KRUPANSKY, District Judge.

Plaintiff Keen Transport, Inc. (Keen), seeks to enjoin enforcement of Order No. MC-111320 of the Interstate Commerce Commission (ICC or Commission) denying plaintiff's gateway elimination application. Keen operates as a common motor carrier, transporting specific commodities in interstate commerce between various points in the United States under a Certificate of Public Convenience and Necessity No. MC-111320 and Subs thereto as issued by the ICC. Plaintiff's Certificate contains separate grants of Irregular Route Authority which, by combination (tacking) at a common service point (gateway), permit through transportation.

On February 25, 1974, the ICC issued an Order adopting Section 1065.1, Title 45 of the Code of Federal Regulations, wherein it terminated tacking of irregular route certificates effective June 4, 1974, unless motor carriers had filed with the ICC either a letter notice, for direct highway mileage (from points of origin to destination) constituting 80% of the mileage via the gateway, or an OP-OR-9 application, for direct distances of less than 80% of the gateway mileage. See 119 M.C.C. 530.

On May 31, 1974, L. E. Gresh, Keen's Director of Transport Relations, filed 128 letter notices with the Commission in Washington, D. C. and conferred with Lewis Ames, legal counsel for the Commission's Operating Rights Section. Extension of the June 4 OP-OR-9 application filing deadline was requested. As a result of the conference, Gresh concluded that the filing deadline was extended to June 15, 1974.

On June 11, 1974, plaintiff submitted its OP-OR-9 application with a cover letter referencing the May 31 conference. On July 24, 1974, the Commission rejected Keen's application as late filed.

Plaintiff's Petition for Reconsideration was denied by Order No. MC-111320, on August 29, 1974 (August Order). Keen initiated this action on February 21, 1975. A Temporary Restraining Order, enjoining enforcement of the August Order pending a hearing on the merits, was granted March 5, 1975.

On October 24, 1975, a three-judge court convened in the Northern District of Oklahoma, issued its Opinion in Squaw Transit Company v. United States, 402 F.Supp. 1278 (N.D.Okl.1975) wherein it considered § 1065.1, Title 45 of the Code of Regulations as applied to OP-OR-9 applications. The facts of Squaw Transit disclose that, although the OP-OR-9 applications therein considered were timely filed, said applications were materially incomplete and, therefore, defective. Ignoring any uniformity in accepting the materially defective applications, the ICC rejected a number of said applications, including that of Squaw Transit. The Court reversed and remanded to the ICC for further consideration the rejected application of Squaw Transit, citing the Commission's lack of uniformity in accepting and rejecting applications, inability and inadequacy of the Commission's procedures to timely administer the gateway elimination program, and Squaw Transit's difficulties in timely complying with the ICC filing deadline. Judge Cook's concurring opinion in said decision characterized the Commission's actions as clearly arbitrary and capricious.

On January 15, 1976, in accordance with the mandate of Squaw Transit, the ICC modified its policy and accepted additional information to support the late-filed applications previously rejected for non-compliance with the provisions of 49 C.F.R. § 1065.1(d)(2).

On March 15, 1976, the plaintiff, before this Court, limited its challenge of the August Order to its assertion that the Commission acted arbitrarily and capriciously in failing to uniformly apply the filing deadline.¹

In response to Keen's challenge, the ICC disclaims arbitrary or capricious action as a result of a lack of uniformity in accepting and rejecting OP-OR-9 applications, and rationalizes its rejection of Keen's application, citing the reasons in its August Order: (1) the necessity for expedient action during the energy crisis; (2) the adequacy of the filing time allotted by 45 C.F.R. § 1065.1; and (3) the existence of an alternative remedy to Keen.

The recent Supreme Court decision in Bowman Transportation, Inc. v. Arkansas Best Freight Sys., Inc., 419 U.S. 281, 285-6, 95 S.Ct. 438, 442, 42 L.Ed.2d 447 (1974) details the proper standard of judicial review of ICC decisions:

Under the "arbitrary and capricious" standard the scope of review is a narrow one. A reviewing court must "consider whether the decision was based on a consideration of the relevant factors and whether there has been a clear error of judgment. . . . Although this inquiry into the facts is to be searching and careful, the ultimate standard of review is a narrow one. The Court is not empowered to substitute its judgment for that of the agency." The agency must articulate a "rational connection between the facts found and the choice made." 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. (Citations omitted).

The Commission is not bound by stare decisis and inconsistency does not necessarily import capriciousness, according to the pronouncements of Whitehouse Trucking, Inc. v. United States, 261 F.Supp. 9 (N.D.Ohio 1966); however, a lack of uniformity of treatment by an agency of similarly situated parties is clearly impermissible. Interstate Contract Carrier Corp. v. United States, 389 F.Supp. 1159 (D.Utah 1974); R-C Motor Lines, Inc. v. United States, 350 F.Supp. 1169 (M.D.Fla.1972), aff'd 411 U.S. 941, 93 S.Ct. 1925, 36 L.Ed.2d 406 (1973); Fraenkel v. United States, 320 F.Supp. 605 (S.D.N.Y.1970); H C & D Moving & Storage Co. v. United States, 298 F.Supp. 746 (D.Haw.1969).

Applying the foregoing, the Court is constrained to conclude that the Commission's denial of Keen's application while accepting both late-filed applications as well as woefully incomplete applications from other carriers was palpably arbitrary and capricious, thereby compelling reversal of the August Order.

The record before this Court is replete with examples of the Commission's complete disregard of a uniform policy in processing OP-OR-9 applications. The Commission concedes that at least two other late-filed applications were accepted. Further, Michael Erenberg, Assistant Deputy Director of the Commission's Operating Rights Section stated in his affidavit:

Respecting the June 4th deadline, the Commission has permitted disposition of some late-filed applications. In these cases, however, the applicant has demonstrated a good-faith attempt to comply with the June 4, 1974, deadline, as for example where the mailing was accomplished prior to June 4, 1974, but received for filing a date (sic) or so late. Therefore, it has not been our policy to deny an application solely for the reason that it was

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