Kenosha Auto Transport Corp. v. U.S.

• Decision Date: 06 August 1982
• Docket Number: No. 81-1368,81-1368
• Citation: 684 F.2d 1020
• Parties: KENOSHA AUTO TRANSPORT CORPORATION and Boat Transit, Inc., Petitioners, v. UNITED STATES of America and the Interstate Commerce Commission, Respondents, Recreational Products Transport, Inc. of Mendon, Ma., Intervenor.
• Court: U.S. Court of Appeals — District of Columbia Circuit

Page 1020

684 F.2d 1020

221 U.S.App.D.C. 498

KENOSHA AUTO TRANSPORT CORPORATION and Boat Transit, Inc., Petitioners, v. UNITED STATES of America and the Interstate Commerce Commission, Respondents Recreational Products Transport, Inc. of Mendon, Ma., Intervenor.

No. 81-1368.

United States Court of Appeals District of Columbia Circuit.

Argued Feb. 11, 1982.

Decided Aug. 6, 1982.

Petition for Review of an Order of the Interstate Commerce commission.

Paul F. Sullivan, Washington, D. C., with whom John T. Wirth, Denver, Colo., was on the brief, for petitioners.

Edward J. O'Meara, Atty., I. C. C., Washington, D. C., with whom Richard A. Allen, Gen. Counsel, Kathleen M. Dollar, Associate Gen. Counsel, Linda J. Joachim, Atty., I. C. C., Robert B. Nicholson and Susan J. Atkinson, Attys., Dept. of Justice, Washington, D. C., were on the brief, for respondents.

Mel P. Booker, Jr., Alexandria, Va., was on the brief, for intervenor.

Before MacKINNON, Circuit Judge, McGOWAN, Senior Circuit Judge, and NORTHROP, ^* Senior District Judge for the District of Maryland.

Opinion for the Court filed by Circuit Judge MacKINNON.

MacKINNON, Circuit Judge:

Two motor carriers specializing in the nationwide transportation of boats and related equipment here petition for review of the certification by the Interstate Commerce Commission (ICC and Commission) of a new common carrier entrant into that narrowly specialized field of transportation. Under the liberalized entry policies recognized by the Commission in 1979 (which were adopted by the Motor Carrier Act of 1980) we conclude that substantial evidence supports its decision and therefore affirm.

I. Background

A. Recreational's Application for Common Carrier Authority

Jesse F. White, Inc. (White), is a substantial boat distributor located in Mendon, Massachusetts that has been in business since 1940. ¹ In recent years White has purchased boats from manufacturers (App. 96.) located in Florida, Wisconsin, Nebraska, California, the far West, the Southeast and other parts of the country. (App. 77-79, 89, 92, 96, 105, 111-112; Exh. # 1 at App. 199.) These purchases result in a few shipments that move directly from the place of manufacture to customer/dealer locations but most move to White's facility at Mendon. (App. 95.) Many of these boats and related equipment were transported by White's own trucks and trailers. Such transportation is generally described as "private carriage." ² White owned "six tractors and nine trailers" that it employed in its private carriage. (App. 62.)

In 1979 White decided to seek motor common carrier operating authority to haul boats because it found the costs of private carriage to be prohibitive. ³ (App. 47-49.) The decision was prompted by increased fuel costs and the additional inefficiency caused by deadheading motor equipment where return loads could not be obtained. White in its relations with existing common carriers had also experienced difficulty with delayed deliveries and damage to boats. (App. 85, 87.)

White therefore incorporated Recreational Product Transportation, Inc. (Recreational), leased its tractors and trailers to Recreational (App. 69.), and used the same experienced personnel. (App. 53-56.) In 1979 Recreational obtained emergency temporary authority from the ICC to transport boats and related equipment for a period of four months. ⁴ During that period which ended in June 1979, Recreational operated with four tractors and four trailers. (App. 76.) In the four month period of operations Recreational handled 29 shipments ⁵ between various locations. ⁶ Twelve of the shipments originated in Mendon, Massachusetts and were received in the other New England states ⁷ or in New York. Nine shipments were destined for Mendon, six having originated in Florida and the remaining three in Arkansas, South Carolina, and Wisconsin. Eight shipments involved points outside Massachusetts but included the New England states, Florida, Maryland, New York or Virginia. (Exh. # 1, App. 199.) In so operating Recreational found that there was an increasing demand for common carrier services (App. 59-61.), including a limited demand from boat owners for secondary movements. ⁸ After the emergency temporary authority expired, and further temporary authority was denied, it had to refuse requests for private carriage from other companies because of the escalating costs of operating one way empty. (App. 88.) One of these companies was located in Nebraska and one in Wisconsin. (App. 77-78.) At the time of the hearing Recreational had available three licensed tractors, four trailers (App. 80.) and two experienced drivers. (App. 81.)

Accordingly, Recreational filed an application with the Commission for common carrier authority to transport boats and related equipment both locally and nationwide. The boating industry has four main centers: California, New England, the Great Lakes and Florida. (App. 143.) There are boat manufacturers in every state. (App. 185.) Essentially, the application by Recreational proposed to "carve out the private carrier operation of Jesse White and set it up as for hire on the side." (App. 98.)

B. The Protests to Recreational's Application

The record indicates that about 15 major common carriers compete nationwide in the boat hauling business. (App. 149, 170.) Only two of these companies opposed Recreational's application.

Boat Transit, Inc. was one of the protestors. At the time of its protest it operated 86 tractors and 176 trailers (App. 131.), and in 1978 had total annual revenues of $7,538,477. (App. 273.) Boat Transit has an excess of business for its company-owned equipment and to a certain extent employs outside owner-operators to transport boats and related equipment. (App. 139-140.) Its average shipments travelled 1,600 miles. (App. 147.) Its trucks operated 85% loaded in 1980 (App. 135.) and from the New England area its outbound traffic exceeded its inbound traffic by a ratio of two to one. (App. 134.)

Kenosha Auto Transport Corporation (Kenosha) was the other objector to Recreational's application. In 1980 Kenosha had 76 tractors and 258 boat hauling trailers. (App. 157.) It operated 82% loaded and most of its traffic from New England was outbound. (App. 166.) In 1979 its total revenues from all transport services were $46,091,580 (App. 178, 273.), of which it estimated that a maximum of three percent could be subject to diversion if Recreational's application were granted. (App. 178-179.) Kenosha's outbound traffic from New England was also in a ratio of two to one to its inbound traffic. (App. 180.)

C. The Hearing on the Application

Recreational's application was filed with the Commission on April 17, 1979. It came on for hearing before Administrative Law Judge Glennon (ALJ) on July 8, 1980, at which time the foregoing facts were adduced. The ALJ on October 10, 1980 granted Recreational's application. ⁹ The grant was divided into two parts which are referred to hereinafter as parts (a) and (b):

(a) To operate as common carrier, by motor vehicle, in interstate or foreign commerce, over irregular routes, transporting boats, and boat parts, supplies, and equipment moving in connection therewith, between Mendon, MA on the one hand and, on the other, points in the states of CT, MA, ME, NH, NY, RI and VT; and (b) between points in the states of CT, MA, ME, NH, RI, and VT on the one hand and, on the other, points in the United States except points in the states of AK, CT, DL, HI, MA, ME, NH, NJ, NY, RI and VT.

(App. 237.) This division is important because the protestants have stated that this petition for review is "essentially concerned with the grant of authority in part (b)." Initial Brief of Petitioners at 3.

Exceptions to the decision of the ALJ were filed by the two protestants (App. 238-248, 257-270.) and Recreational replied thereto. (App. 271-283.) On appeal to the ICC, Division I denied the appeal, ruling that the protestants' primary evidence was that they were transporting traffic subject to diversion and that such a showing did not establish an interest entitled to regulatory protection. ¹⁰ The protestants' petition for administrative review was subsequently denied by the full Commission by order. (App. 286.)

II. Applicable Law

An important preliminary determination is that of which law governs in this case. Recreational's application was filed on April 17, 1979, at a time when the old law, 49 U.S.C. § 10922 (Supp. III 1979), ¹¹ was in effect. The Motor Carrier Act of 1980, Pub.L.No.96-296, 94 Stat. 793 (1980) became effective on July 1, 1980. ¹² The hearing by the ALJ began on July 8, 1980 and his decision (App. 231-37.) was rendered on October 10, 1980.

That sequence of events raises the issue of whether the old law, or the Motor Carrier Act of 1980, was to be applied by the ALJ and the Commission in ruling on Recreational's application and petitions for administrative review. In Art Pape Transfer, Inc., Extension-Commodities in End-Dump Vehicles, 132 M.C.C. 84, 92-95 (1980), the Commission set forth procedures to be followed in processing applications that were pending at the time the Motor Carrier Act of 1980 was enacted. In such situations, where the parties submitted evidence under the statutory standards prevailing before the enactment of the new law, the Commission determined that it would first examine the application and evidence under the standards of the old law. The Commission assumed that in almost all cases if the application were satisfactory under the old law, it would also pass muster under the requirements of the new law. In the event the application would be denied, in whole or part, under the old law, the Commission would then examine it under the standards of the new law-allowing "the parties an opportunity to address the implications of the new law through the submission of evidence or argument." Id. at 95.

The ALJ properly proceeded in accordance with the procedures...