Milne Truck Lines, Inc. v. Public Service Com'n of Utah

• Decision Date: 20 June 1986
• Docket Number: No. 19237,19237
• Citation: Milne Truck Lines, Inc. v. Public Service Com'n of Utah, 720 P.2d 1373 (Utah 1986)
• Parties: MILNE TRUCK LINES, INC., Plaintiff, v. PUBLIC SERVICE COMMISSION OF UTAH; Brent H. Cameron, David R. Irvine and James M. Byrne, Commissioners of the Public Service Commission of Utah, and P.B.I. Freight Service, Inc., Defendants.
• Court: Utah Supreme Court

Page 1373

720 P.2d 1373

MILNE TRUCK LINES, INC., Plaintiff, v.PUBLIC SERVICE COMMISSION OF UTAH; Brent H. Cameron, David R. Irvine and James M. Byrne, Commissioners of the Public Service Commission of Utah, and P.B.I. Freight Service, Inc.Defendants.

No. 19237.

Supreme Court of Utah.

June 20, 1986.

Frank S. Warner, Douglas J. Holmes, Ogden, for appellant.

William S. Richards, David L. Wilkinson, Atty. Gen., James L. Barker, Jr., Div. of Public Service, Salt Lake City, for respondent.

STEWART, Justice:

The plaintiff, Milne Truck Lines, Inc., contends on this petition for review that the Public Service Commission(PSC) erred in denying it common carrier authority to haul general commodities over irregular routes between points within the Salt Lake-Utah County area.

The PSC denied Milne's application on the ground that (1) Milne failed to prove "either an inadequacy in the existing service or potential market growth justifying new service" and (2) even if inadequacy of existing service were assumed, additional competition from Milne in the market area was not in the public interest because it might seriously weaken the protestant PBI Freight Service Inc.(PBI) and result in a loss of motor common carriage of general commodities to remote areas of Utah outside the Salt Lake-Utah County area.

Rio Grande Motor Way, Inc., held the same intrastate authority as that sought by Milne until May 26, 1982, when Rio Grande abandoned its authority.The next day Milne was granted the same authority on a temporary basis.PBI, a motor common carrier which has general commodity authority over irregular routes in the same area, protested Milne's application on the alleged ground that competition from Milne would put PBI out of business.PBI is the only other carrier that has such authority in that area.

Milne contends that the Commission erred in four respects.It asserts that (1) the Commission applied an erroneous legal standard in requiring Milne to prove either inadequacy of existing service in the market area or potential market growth which would justify new service; (2) the Commission's finding that competition between Milne and PBI would be detrimental to the best interests of the state was not supported by substantial evidence; (3) Milne is entitled to a certificate as a matter of law because of unrebutted evidence which established a potential need for future service in the market area; and (4) Milne's application should have been judged under the standards which govern the transfer of existing authority rather than those that govern the grant of new authority because Milne sought the same authority that Rio Grande Motor Way had abandoned.

I.THE FACTS

The applicant, Milne Truck Lines, is a subsidiary of Sun Oil Company and has intrastate authority in Arizona, California, Nevada, Utah, and Wyoming, as well as interstate authority.The intrastate authority sought by Milne in Salt Lake and Utah Counties was held by Rio Grande Motor Way from approximately 1970 until May 26, 1982.When Milne submitted its application to the Commission on May 27 for the same authority as that abandoned by Rio Grande, it was granted temporary intrastate authority in the Salt Lake-Utah County area, pursuant to which it has served approximately 220 shippers in that area.Following the hearing on Milne's application for permanent authority, the PSC found that Milne had run a system-wide deficit over the previous two years, but found it financially fit and operationally able to serve the area.

PBI Freight Service, Inc., has intrastate common carrier authority in Utah, roughly from Salt Lake County south, including points in Utah, Grand, Kane, Millard, Sevier, and San Juan counties.PBI also has interstate authority into Arizona, California, and Nevada.With the withdrawal of Rio Grande, PBI became the only permanently authorized intrastate general commodity carrier between Salt Lake and Utah counties, although specialized carriers compete in the market area to some extent.PBI has, according to the Commission's findings, a reasonably sizeable net worth, but was experiencing a cash flow problem at the time of the hearing.For the period January 1 through October 1, 1982, D and H Investment Co., PBI's parent company, had gross revenue of $2,824,758, which included operating revenue of $1,347,185, interstate truckload revenue of $414,468, contract revenue of $1,046,941, and other revenue of $16,164.For the same period, it earned a net income of $22,660, of which approximately $8,000 was from operations.The Commission's finding that PBI suffered an $80,000 deficit is simply in error.The Commission also found that PBI has idle equipment and can "easily provide the proposed service at present levels or substantially increased levels."

In denying Milne's application, the Commission found that PBI's traffic into Utah County had been "steadily declining" over the preceding three years as a result of the "generally poor economy, federal deregulation which had allowed an increase in the number of interstate carriers hauling into Utah County, and increased specialized carrier competition."The Commission also found that the traffic "over the past two to three years had been at best marginal for the support of two general commodity common carriers."

The Commission ruled that since Milne was applying for the same authority that an existing carrier already had, Milne had the burden of proving either inadequacy of existing service or a future need for additional service and that Milne had failed to meet its burden.The Commission held that even if PBI's service were deficient, the public interest nevertheless required a denial of the application because of the potential impact of the loss of PBI service to areas outside the Salt Lake-Utah County market area.

II.INADEQUACY OF SERVICE AS PREREQUISITE TO AUTHORIZATIONOF NEW AUTHORITY

The Commission erred in ruling that Milne had to prove an inadequacy of existing service or a future need for expanded service as a prerequisite to obtaining the authority sought.It is decidedly not the law that established motor common carriers should be protected by the Commission from new competition as long as they provide a reasonably adequate service and can meet growing demands for common carrier service.Big K Corp. v. Public Service Commission, 689 P.2d 1349(Utah1984);Ashworth Transfer Co. v. Public Service Commission, 2 Utah 2d 23, 268 P.2d 990(1954).Utah law does not grant certificated common carriers a vested interest in the market areas they serve; their certificates of authority do not confer the right to exclude competition simply to protect their own self-interest.On the contrary, it is the policy of the act to foster competition, unless the public convenience and necessity dictates otherwise, because competition in most cases stimulates better service and lower rates far more effectively and efficiently than the Commission can by regulation.

As this Court stated in Big K, supra:

In determining whether the public interest and necessity are served by additional service, the Commission must consider numerous factors.It must weigh the benefits to be derived from increased competition, such as the potential beneficial effect upon rates, customer service, the acquisition of equipment more suitable to customer needs, the efficient use of equipment, greater responsiveness in meeting future shipper needs, and greater efficiency in the use of route structures and interlining arrangements.In Union Pacific Railroad Co. v. Public Service Commission, 103 Utah 459, 466, 135 P.2d 915, 918(1943), this Court stated that "regulated competition is as much within the provisions of [§ 54-6-5] as is regulated monopoly....No one can have a vested right to be free from competition, to have a monopoly against the public."

Id. at 1354.

In Big K, supra, the Commission denied a carrier's application for route authority which competed with existing carriers because the applicant failed to prove an inadequacy of service by the existing carriers.This Court reversed on the ground that the Commission had erred in holding that an applicant's failure to prove "inadequacy of service" required denial of the application.The Court held that U.C.A., 1953, § 54-6-5, which governs the issuance of certificates of public convenience and necessity for motor common carriers, was not intended to protect the private interests of existing carriers in a given market, that "competition is almost always an affirmative factor in furthering the public convenience and necessity[,]" and that diversion of revenue from existing carriers by additional competition "is not a valid reason by itself to justify a denial of additional authority."Id. at 1355.The Court stated:

The ultimate criterion against which all relevant factors are to be evaluated is the "public good and convenience,"Salt Lake & Utah Railroad Corp. v. Public Service Commission, 106 Utah 403, 408, 149 P.2d 647, 649(1944), not the existing carriers' convenience and necessity.SeeLake Shore Motor Coach Lines, Inc. v. Welling, 9 Utah 2d 114, 120, 339 P.2d 1011, 1014-15(1959)....[C]ompetition is almost always an affirmative factor in furthering the public convenience and necessity.

Id.

Proof of inadequate service may require the Commission to grant new authority, but it does not follow that proof of adequate service requires a denial of new authority.The Commission's duty is to protect the public interest, not the entrenched rights of the industry it is charged with regulating.The adequacy of existing service is only one factor which the Commission should consider in determining whether the issuance of additional authority is consistent with the public convenience and necessity.¹The existence of adequate service in a market area does not mean that service could not be improved by competition.Although the Commission should not allow a carrier to engage in...