Lynden Transport, Inc. v. State

• Decision Date: 24 February 1975
• Docket Number: Nos. 2100 and 2114-2117,s. 2100 and 2114-2117
• Citation: 532 P.2d 700
• Parties: LYNDEN TRANSPORT, INC., et al., Appellants, v. STATE of Alaska et al., Appellees. STATE of Alaska and Alaska Transportation Commission et al., Cross-Appellants, v. LYNDEN TRANSPORT, INC., et al., Cross-Appellees. Howard and Alice BAYLESS et al., Cross-Appellants, v. LYNDEN TRANSPORT, INC., et al., Cross-Appellees. ALASKA TRUCK TRANSPORT, INC., Cross-Appellant, v. LYNDEN TRANSPORT, INC., et al., Cross-Appellees. SOURDOUGH EXPRESS, INC., et al., Cross-Appellants, v. LYNDEN TRANSPORT, INC., et al., Cross-Appellees.
• Court: Alaska Supreme Court

Page 700

532 P.2d 700

LYNDEN TRANSPORT, INC., et al., Appellants, v. STATE of Alaska et al., Appellees.

STATE of Alaska and Alaska Transportation Commission et al., Cross-Appellants, v. LYNDEN TRANSPORT, INC., et al., Cross-Appellees.

Howard and Alice BAYLESS et al., Cross-Appellants, v. LYNDEN TRANSPORT, INC., et al., Cross-Appellees.

ALASKA TRUCK TRANSPORT, INC., Cross-Appellant, v. LYNDEN TRANSPORT, INC., et al., Cross-Appellees.

SOURDOUGH EXPRESS, INC., et al., Cross-Appellants, v. LYNDEN TRANSPORT, INC., et al., Cross-Appellees.

Nos. 2100 and 2114-2117.

Supreme Court of Alaska.

Feb. 24, 1975.

Milton M. Souter, Anchorage, for appellant and cross-appellee Lynden Transport, Inc.

H. John DeNault, III, Rice, Hoppner, Blair & Hedland, Fairbanks, for appellees H & S Warehouse, Inc. and Charles A. Powell.

John M. Stern, Jr., Anchorage, for appellee and cross-appellant Alaska Truck Transport, Inc.

Roger A. McShea, Anchorage, for appellees and cross-appellants Howard and Alice Bayless, Richard, Robert and Ellis Roberts.

George L. Benesch, Anchorage, for appellees and cross-appellants Sourdough Express and Mukluk Freight Lines.

Allen McGrath, Graham & James, Anchorage, Amicus curiae for Arctic Motor Freight, Inc.

Timothy G. Middleton, Asst. Atty. Gen., Anchorage, and Norman C. Gorsuch, Atty. Gen., for appellee and cross-appellant State of Alaska and Alaska Transportation Commission.

Before RABINOWITZ, C. J., and CONNOR, ERWIN, BOOCHEVER and FITZGERALD, JJ.

BOOCHEVER, Justice.

This appeal involves the constitutionality of certain amendments to the Alaska Motor Freight Carrier Act, AS 42.10.030 et seq. which were enacted by the state legislature in 1972 and which became effective on September 9 of that year. The amendments added new subsections (d), (e) and (f) to AS 42.10.130 granting certain resident 'grandfather' carriers intrastate operating authority coextensive with the carriers' Alaska interstate operating authority without requiring a showing of public convenience and necessity.

The section as amended is set forth in its entirety in the Appendix. However, the focus of the constitutional attack on these amendments is the residency requirment contained in AS 42.10.130(d) which reads:

(d) Notwithstanding the provisions of (a)-(c) of this section, a common carrier or contract carrier constituting a business entity which is a corporation organized under and existing by virtue of the laws of this state, whose principal business office is in this state and 51 percent or more of whose stock is owned by residents of Alaska, or a sole proprietorship and the sole proprietor is a resident of Alaska, or a partnership and each partner is a resident of Alaska, and has continuously operated as a common carrier or contract carrier in the state since January 3, 1959, possessing Alaska interstate operating authority under a grant of grandfather rights in Alaska by the Interstate Commerce Commission, shall, by action of the Alaska Transportation Commission under this subsection, be granted Alaska intrastate operating authority coextensive with the carrier's Alaska interstate operating authority. However, no carrier otherwise eligible under the provisions of this section is ineligible by virtue of having had transferred either its Alaska interstate or Alaska intrastate operating authority, or both, from one form of business entity to another, so long as the same persons possessing the operating authority before the transfer possess at least 51 percent of the equity in the business entity after the transfer. A carrier eligible under this subsection shall, within 30 days of September 10, 1972, file an application with the Alaska Transportation Commission requesting reconciliation of its Alaska intrastate operating authority with its Alaska interstate operating authority. A carrier's failure to file an application within the 30-day period constitutes an absolute bar to the granting of operating authority under this subsection. (emphasis added)

The plaintiffs in the action below (and the appellants herein) are corporate motor carriers that possess the requisite 'grandfather' rights but do not qualify as residents under the act. Three of the plaintiffs are foreign corporations: Lynden Transport and Smyth Overseas Van Lines are incorporated in Washington; Weaver Brothers, Inc. is an Oregon corporation. The other two plaintiffs are Alaska corporations, but more than 51 percent of the ownership of each is held by nonresidents.

These plaintiffs sought a declaratory judgment to the effect that the residency requirement of AS 42.10.130(d), (e) and (f) is an unconstitutional discrimination versus nonresidents. They also sought permanent injunctive relief barring the Alaska Transportation Commission (A.T.C.) from issuing any permits pursuant to the disputed provisions and barring the 15 defendants, who were competing trucking firms seeking expanded permits under the new provisions, from operating under any such permits issued by the A.T.C.

The trial court granted the declaratory relief requested on the ground that the residency-nonresidency distinction violated the plaintiffs' rights under the equal protection clause of the fourteenth amendment. However, their request for the permanent injunction was denied on the ground that the invalid residency requirement was severable from the remainder of AS 42.10.130(d), (e) and (f).

The Plaintiffs below appeal the trial court's decision regarding the severability issue. The State of Alaska and the A.T.C., as cross-appellants, seek the reversal of that portion of the trial court's decision invalidating the questioned provision. The remaining defendants generally seek affirmance of the severability decision, and those defendants who had sought unsuccessfully to uphold the constitutionality of the enactment also appear as cross-appellants with the state. ¹

Although motor carriers were essentially unregulated during the territorial period, shortly after Alaska became a state dual enactments by the federal government and the state legislature brought these carriers within a comprehensive regulatory scheme encompassing both their interestate and intrastate activities. ² Both the federal and the state acts required a showing of public convenience and necessity in order to obtain an operating permit. Both exempted from this requirement those resident and nonresident carriers who could establish that they had regularly carried a certain type of commodity between different geographical points within Alaska or between a point in Alaska and one anywhere else in interstate commerce.

Under these grandfather provisions, carriers endeavored to establish their rights to both interstate and intrastate operating authority. Proceedings were held before a joint board of the Interstate Commerce Commission (I.C.C.) and the Alaska Public Service Commission (A.P.S.C.)-the predecessor of the Alaska Transportation Commission (A.T.C.). The findings, conclusions, and recommended orders of the joint board were to be submitted to the A.P.S.C. and the I.C.C. There is no evidence that such findings were ever filed with the A.P.S.C. Since the state commission made no findings of its own, the only findings and conclusions of record are those of the joint board in its report to the I.C.C.

The two administrative agencies then issued respective grandfather permits to the applicant, authorizing the carrier to continue to transport the same commodities between the same geographical points that it had established were regularly transported by it over those routes prior to statehood. The benefits to be derived from grandfather status were dependent upon the extent of business carried on during the stated period and the maintenance of records sufficient to prove the scope of operations. All of the plaintiff and all of the defendant carriers herein received broader grandfather permits from the I.C.C. than from the A.P.S.C.

The fact that the operating permits were not coextensive created various inefficiencies and administrative difficulties for all concerned. ³ The definition of interstate goods and the segregation of different loads were an added burden on the carrier and on the A.T.C., whose task it was to supervise intrastate carriers and to exact compliance with its rules. ⁴

The smaller resident grandfather carriers were, it seems, more adversely affected by the discrepancy than the larger nonresident grandfather carriers who relied more on interstate business anyway, and who tended to have the more well developed through-service ties with other inter-state carriers. This situation was recognized by the I.C.C. in Al Renk & Sons, Inc.-Alaska 'Grandfather' Application, 89 M.C.C. 91, 94 (1962):

The nature of their (the smaller resident carriers') operations makes them particularly susceptible to the through competition of the larger motor and water carriers and the Alaska Railroad, a government There are no official records, committee reports, etc. of the state legislature which would provide an insight into the legislative history of AS 42.10.130(d), (e) and (f). ⁵ The only commonly accepted sources of evidence of legislative intent existing here are the language of the statute itself and the declaration of policy which is the preamble to the Alaska Motor Freight Carrier Act, AS 42.10.010. ⁶

owned and operated rail carrier whose main line runs between Seward on the south and Fairbanks on the north via Moose Pass, Anchorage, and McKinley Park; and over whose dock at Seward most of Alaska's inbound freight passes. The great preponderance of Alaska's population is concentrated in the so-called rail belt, a factor tending to make particularly vulnerable the smaller irregular-route carriers, who, for practical reasons, cannot solicit and transport freight in conjunction in the water carriers and the railroad.

It is with this background that we confront the legal issues so hotly and ably presented by the multiple...